Goldleaf Surety

Interview With a Contract Bond Underwriter – Meet Rita Jorgenson

This week I would like you to meet GRita_8980eoldleaf Account Specialist, Rita Jorgenson.  Rita is married with one child.  Being able to spend time with her family is the most important thing to Rita.  She enjoys spending time at the lake, as well as watching her child, nieces and nephews participant in various sporting events.  She and her husband enjoy motorcycling together with other friends.   One fact you may not know about Rita – she is part of a military family and her husband has served several tours overseas.

In basic terms, what is a bond?  How is it different from insurance?

Basically, a surety bond is a three-party agreement between the surety company, an obligee and a principal.   The surety guarantees that the obligations of the principal will be performed in accordance with a contract, statue or regulation.  A bond is used to protect public and private funds from financial loss.

A surety bond and an insurance policy are not the same.  Surety bonds are credit instruments – not insurance policies.  The surety indemnity agreement gives the surety the right to go back to the company and any personal indemnitors to collect what they may have paid out.

For insurance, the costs of assumed losses are calculated into the price of an insurance policy premium.  A bond is an extension of credit with the expectation that the legal obligation will be fulfilled and, subsequently, there will be no loss. Losses are not included in the cost of bond premiums, only underwriting expenses are factored into the rates.

Do you have limitations on what types of bond you can place?

There is a small segment of the marketplace Goldleaf does not handle including certain hazardous classes of bonds, bail bonds, or customs bonds.

In addition, there are certain types of bonds for which we do have some market access but which are extremely difficult to place.   These would include reclamation bonds, subdivision bonds and bonds which are requested by a foreign-owned entity, where the transaction to be bonded is with a foreign-owned customer, or where the work is performed abroad.