surety association of canada

04 March 2013 0

SURETY BONDS- Why you need them!

Fort McMurrayFuture Projects SummitMarch 1, 2013

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Inscription found in the Temple of Apollo in Delphi Greece

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I – THE SURETY INDUSTRYSurety Companies•SAC members write 95% + of all bonds in Canada

– There are hundreds of sureties listed on OSFI’s website roster – fewer than 20 are SAC members and they write almost all the bonds

Surety Brokers• Look for SAC member brokers – they are

dedicated to providing superior service

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Who speaks for the Industry?Surety Association of Canada (SAC)

• SAC is your resource for bonding information

– Advocacy– Training & Education– Product innovation– Owner relationships

Construction Pyramid

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Owner

General Contractor

Subcontractor

Second-tier Subs

Second-tier Subs

Subcontractor

Second-tier Subs

Surety is not

Insurance

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Non cancelable!

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It’s a “relationship

business”

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Did someone mention “paperless” ??!!!

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Prequalification…

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I had no idea you looked at things

that way…

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Site visit

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Indemnity?

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You’re kidding –right??

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Other issues

•Bonding subs is not double bonding

•Broad form L and M

•Bond premium

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Construction Pyramid

OWNER

Sub Contractor-Sub-subs…

GENERAL CONTRACTOR

Sub Contractor-Sub-subs…

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Bid bond

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Performance bond

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Labour & Material Payment Bond

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We have a newbond

wording

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Bonds are not

expensive

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50% is normally enough

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Don’t waive the L and M Bond!

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Are yourbonds

properly executed?

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Now wheredid I

put that bond?

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E Bonding is on the way

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Keep the Surety informed!

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V – Subcontractor Default Insurance Isn’t the Answer(nor are Letters of Credit)

SDI Protects Contractors not Owners• Designed to protect large G.C.’s against subcontractor

default

• NOT designed to protect owners from the default of General Contractor

• No payment protection for the subs and suppliers

• Insured General Contractor prequalifies subs – then is ‘judge and jury’ on performance: no independent third party

• Does not “save the owner money”

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V – WHAT’S NEW IN SURETY BONDS?

The industry, working through SAC, is constantly analyzing trends and meeting with owners to improve the surety product

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SURETY ONLINE LEARNING CENTRE• The Surety Online Learning Centre accessible from SAC website;

www.suretycanada.com.

• Five learning modules that introduce the basics of surety bonds and the suretyship process

• Learn at your own pace.

• Ideal for review or for colleagues who can’t attend a “live” information session.

• It’s FREE

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CONTACT US

•Phone: 403-612-4070

•email: bsloat@suretycanada.com

•or visit our www.suretycanada.com