Posted by Darrel Lamb, CPCU, AFSB, for OldRepublicSurety
A few years ago one of my contractor clients wanted to bid a $24mm project. The project was about three times bigger than anything they had built to date, but the project made a lot of sense to them and after hearing the plan, it made sense to me, as a representative of the surety as well. We approved it and they got the job. Saying yes makes contractors and agents happy. It feels good to be the one delivering a yes.
The ink was barely dry on the contracts for the new project and the contractor wanted to bid another $14mm job right on top of it. There are a lot of factors that go into a decision, but adding a job that is nearly 2 times larger than anything they have completed on top of this new large project was going to be tough sell and I had my doubts that this project would make sense.
Every surety underwriter knows that saying no to a bid request is an invitation to have the account shop their business to another surety market and possibly lose the account. Much of the new business received by a contract surety underwriter is presented to them because another market said no to a bid.