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Understanding Surety Underwriting Criteria

Surety Bond

Gearing up to apply for your first surety bond?

Surety agencies run an extensive background check on each applicant before they can be qualified for the bond. For this reason, the process of obtaining surety bonds can seem fairly complicated to those with minimum to no experience in the field.

To minimize the possibility of disapproval, it’s important to understand the criteria against which surety underwriters judge the application of each client.

Here’s everything you need to know about surety underwriting criteria.

Identification of Risks

Individuals interested in acquiring a surety bond for themselves or their firms are supposed to fill out a bond application form, with details regarding their bonding requirements. Once the application has been received, the surety underwriters evaluate it to identify the bonding risks involved.

The level of risk associated with each application depends largely on the actual obligation, along with factors such as terms, conditions and regulations written in the bond and the principal’s performance.

Terms and Conditions:

After identification of risks, the surety company reviews terms and conditions of the bond the applicant has applied for. Found in the bond form, these terms and conditions outline specific regulations and statutes governing the bond.

The Three Cs:

Next, the applicants are evaluated on the basis of 3C’s of underwriting, which are as follows:

Assessment of Character

Before any surety agency can approve a bond application, they assess the character of the applicant and their firm. Underwriters examine the character of a company on the basis of its reputation in the market.

In addition to reviewing the company’s professional history, the underwriters may also request to view the personal history of the applicant to assess the character accurately.

Assessment of Capacity

Capacity assessment is yet another crucial aspect of the bond pre-qualification process. In this step, the applicant is judged on the basis of their company’s skills, knowledge and manpower. In other words, surety underwriters determine whether the company’s performance has been up to the mark.

Assessment of Capital

This is where the underwriters will judge your company’s financial standing and cash flow. A financially stable firm, with good credit and a tangible net worth is more likely to perform consistently, which in turn decreases the possibility of claims.

Applying for a surety bond for the first time can seem daunting to some. However, with the help of a reliable surety agency, such as BondPro, you can learn the basics of the process and acquire the comprehensive surety solution you need with ease.

BondPro offers extensive surety underwriting services across 50 states. The team of underwriting experts at BondPro guides clients through every step of the process to ensure that the surety needs of our clients are fulfilled successfully.

For details, you can reach out to our team at 918 337 4100 or send us an email at any of the following addresses:

Phil Faust

Muriel Faust

David Faust

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