The Independent Agent’s Role in the Surety ‘Trust Triangle’
This post is part of a series sponsored by Old Republic Surety.
Large surety accounts aren’t handled as mere transactions. They require a relationship based on mutual trust in which the independent agent plays a critical role.
Any definition of surety will list the three signing parties in a contract surety relationship: the principal (or contractor), the obligee (or owner of the project) and the surety. But often overlooked is the trio of surety players who work together for mutual benefit: the surety, the principal and an independent agent.
Steve Hanson, recently retired independent surety agent, Eugene, Oregon, describes that three-way surety relationship as a “trust triangle.” He observes that the “trust derived from shared experience and evolving (over time) mutual respect, both professional and personal,” is the most important building block of a business relationship. That is especially true for large surety contract accounts because they are not handled transactionally.
In fulfilling their roles in the trust triangle, Hanson explains that surety producers and underwriters “recognize what the other needs in order to properly and effectively do our jobs and roles” in supplying surety for the contractor. “We each strive to provide the information and tools that enable one another to fulfill our duties while working effectively toward mutual goals in good faith with one another.”
As the backbone of any contract project, each of the three must consider the circumstances and best interests of the other two — all while serving the best interests of the project owner/obligee. They establish mutual trust and understanding through personal visits, project site visits, and attendance at the agent’s and the contractor’s association events, among other learning opportunities.
Inexperienced surety underwriters sometimes do not fully understand the role of the independent surety agent in the “trust triangle.” As my longtime friend and mentor, Hanson demonstrated that valuable producers serve several roles. First, the agent acts as advisor and facilitator for the principal. Second, the agent functions as a matchmaker, connecting a contractor/principal with the most appropriate surety company and underwriter. The agent also helps sell the contractor’s business plan and its potential to the surety company.
Mike Gale of the Buckner Company in Ogden, Utah ― another longtime friend and surety partner ― offers this practical illustration of the agent’s value in the surety relationship: “The surety person might know all there is to know about surety, but if he or she does not know the market the agent resides in, it is difficult to build a relationship that benefits the surety, agent and client.” The underwriter must be respectful and receptive to learning about the agent and contractor and to learning from them ― expecting that respect and receptiveness to be reciprocated.
Topics
Agencies
Surety
Interested in Agencies?
Get automatic alerts for this topic.