Posted by: jmwilsonmga | August 30, 2011

Top 10 Surety Questions with Robyn Shepherd, AFSB : Part 2

Welcome to Part 2 of the Top 10 Surety Questions from our agents!

Robyn Shepherd, Surety Underwriter and Expert, will again be answering some of the most frequently asked questions that she hears.  What surety questions do you have?  Please share in the comments!

Question 6: Can premiums be financed?

  • Bond premiums are typically fully earned and cannot be financed.

Question 7 : What is a GIA?

  • A GIA (General Indemnity Agreement) is a contract between the principal and the surety company. The contract spells out the principal’s obligations to the surety company as well as steps to take in the event of a bond claim. The Principal must sign the GIA  as an indemnitor before a bond is issued.

Question 8 : What does it mean to be an indemnitor?

  • An indemnitor is a person or company that provides their indemnity. To indemnify means to protect against damage or loss. By signing as an indemnitor, the person or company promises to make the surety company whole in the event of a bond claim that is paid out on their behalf.

Question 9 : What are risks of a bond for the surety company?

Surety companies look at several different factors to determine if they’ll write a certain type of bond. The risks includes the following:

  1. The bond penalty or limit.
  2. Is the bond an indemnity bond or forfeiture bond?
  3. Term of the bond.
  4. How long is the claim tail on the bond?
  5. Is the bond cancellable or have an expiration date?
  6. Are there onerous term that could increase the bond penalty, such as legal fees?
  7. What are the claim terms?

 Question 10 : Important factors in Underwriting

    • Surety Bonds are a type of financial  instrument used to provide financial protection to the obligee. The surety company must determine if the principal has the ability to perform the obligation  and financially support a bond. 
    • Important factors that go into underwriting the majority of bonds are;
      • experience,
      • personal and business credit histories, and
      • personal and business financial statements.

    Meet The Expert : Robyn Shepherd, AFSB

Robyn has been a member of the J.M. Wilson Team for over three years and currently serves as Bond Underwriter.  She underwrites and researches surety markets for surety costumers. This includes license & permit bonds, public official bonds, fidelity bonds, probate bonds, and contract bonds.  Robyn enjoys helping principals and businesses stay compliant with state laws and meet all licensing requirements by finding the right surety market for their bonding needs.  In her spare time, Robyn loves spending time with her two small kids; doing crafts and attending soccer games/practices.  She also enjoys exercising, walking, reading, knitting, and attending events at her alma mater, Purdue.

Connect with Robyn on LinkedIn!

Disclaimer :  This article is for informational purposes only.  There is no legal advice being suggested or proffered.  The author assumes no responsibility or liability for the actions taken or not taken by the readers based upon such information.  This article is the opinion of the author and is not supported or endorsed by J.M. Wilson.  It should not be relied upon and may contain inaccuracies or content may have changed over time, contact your underwriter for the most current and accurate information.  Any comments or responses are the opinions of their authors.  Content on this site is believed to be covered under Fair Use.

Copyright 2011 J.M. Wilson Corporation

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