Spotlight on Surety: Opportunities Abound with a Career in Surety

Whether you are just starting out or considering a mid-career pivot, there’s a lot to be said for a career in insurance – but often lesser known are opportunities in surety.

What is surety?

While surety is a mechanism of insurance, it isn’t insurance. Sureties generally operate as unsecured creditors evaluating a business and/or individual’s credit worthiness in deciding whether to provide surety support in the form of a surety bond. The underwriting process often involves deep financial analysis of the entity or individual’s financial statements requiring the bond, an examination of their collective business experience/business acumen and credit history among other areas in the underwriting process.

Surety bonds are almost always provided by insurance companies who have a dedicated group of underwriting and administrative professionals. Sureties generally operate their businesses focusing in two areas – Contract and Commercial. Contract underwriters focus on the construction industry while Commercial underwriters focus on all non-construction business and individual surety needs.

A key facet of a Contract Surety Underwriter’s job is working with construction companies who pursue bonded work, building anything from large facilities to roads, bridges and other key infrastructure.

For example, when a construction project is bonded, contractors are required to provide performance and payment bonds usually in the amount of the construction contract. The bonds guarantee that the contractor will meet their requirements in the construction contract and that all subcontractors and material suppliers who supplied labor or material to a project will be paid. If the contractor fails to do these things, the project owner can file a claim under the performance bond and if there are subcontractors or material suppliers who haven’t been paid, they can file a claim under the payment bond. Should the surety suffer a loss, the contractor in this example is responsible for full restitution to the surety company for its loss and expenses.

So how can a surety underwriter demonstrate that their contractor is capable and support them with a bonded project that can cost millions of dollars? They review the bond request and the contract, and follow-up by asking questions to gain a better understanding of the project and the contractor. Surety underwriters will also review the construction schedule, the contract start date and how that date will be handled with contracts already in progress, warranty, and payment terms — and more — all to better understand the risks of the project. At this point, the surety also has a strong point of view of the contractor’s financial, organizational and experiential capabilities.

Beyond construction, surety underwriters evaluate a wide variety of industries that require surety bonds, including motor vehicle businesses, the long-haul transportation industry, retailers, hospitality, residential and commercial developers, healthcare, financial institutions and a host of others.[1]

Surety professionals do it all

Essentially, a surety underwriter needs to be part accountant, part lawyer, part contractor or business owner, part salesperson and part business consultant to their customers.

With a surety bond, entities requiring the bond, also known as obliges, can minimize their risk. A surety bond serves as prequalification that the business or individual in need of the bond has the financial resources, experience and other attributes to discharge the bonded obligation.

The road to a career in surety

When it comes to career potential, surety has a lot to offer, including traditional insurance jobs like underwriting, claims and distribution (agency/brokerage). There are also administrative and operational roles like account managers, strategic initiatives and leadership positions.

For entry-level underwriting and claim roles, a bachelor’s degree in finance, accounting, risk management, construction management or law are preferred. Yet if a mid-career professional does not have the preferred educational background but has years of transferable experience from other industries such as banking, areas of credit and financial analysis or construction management, they may be a great fit too.

Here are few skills that are common to surety professionals:

1. Excellent relationship building and interpersonal skills
2. A high level of intellectual curiosity, with an interest in a broad range of industries
3. A desire to constantly improve and grow
4. Analytical skills
5. Business oriented
6. Problem-solving mindset

Now’s the time to consider a career in surety

For anyone making career plans, now’s the time to consider surety because there’s a need for more talent.

A considerable number of professionals will be retiring over the next several years, so the industry is doing what it must to recruit and train the next generation of surety underwriters and agents.

To address their talent needs, a number of companies, including IAT, offer summer internships to college students and also have trainee programs designed for entry-level roles — both in surety and other insurance jobs.

The industry also is doing more to foster diversity. IAT’s Surety business unit, for example, sponsors a scholarship for the Surety and Fidelity Association of America’s (SFAA) Surety Foundation, which works to increase diversity in the surety and fidelity industry.

For more information on what a career in surety at IAT can offer, please visit our website.

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[1] Surety Bonds Direct “4 of the Biggest Industries That Require Surety Bonds,” February 5, 2021.