Many surety agents cringe at the thought of dealing with subdivision bonds – and for good reason. While there are some agents (and underwriters) in the industry who enjoy the challenges posed by this class of business, the word “subdivision” turns many agents away. Why? Often it is because subdivision bonds are different from contract bonds, which can be scary. Below are two quick tips to help you conquer your fear of the unknown.

1. Get your documents ready.

There’s no getting around it: subdivision bonds require a lot more paperwork per bond than regular contract bonds. For a typical contractor who has an existing surety relationship, normally all that is needed to write a performance bond are bid results and a copy of the contract. Not so with subdivision. At a minimum, surety underwriters will ask for:

  • Details about the development
  • Subdivision agreement
  • Engineer’s estimate
  • Operating agreements of the developing entity and its owners
  • Confirmation of financing, often including a set-aside letter from the lender committing to financing the bonded improvements

And unlike contract bonds, the bond principal is normally set up for one project, which can mean a new general indemnity agreement for each project.

The good news is that most subdivision bonds renew annually, requiring little additional work once they are in the books.

2. Choose a surety that has a dedicated subdivision team.

Not all sureties are created equal. While most can underwrite basic bid, performance, and payment bonds, only a few have the experience, expertise, and capabilities to write subdivision bonds. The process for both agents and contractors will be much more efficient when working with a surety that has this specialization in house. Agents who select the right surety for their customers’ subdivision business become valuable partners.

Obtaining subdivision bonds doesn’t need to be difficult. In fact, it can be fairly straightforward when you know what to expect and when you work with the right surety.

Learn more about effective collaboration in surety on our surety page.

Related insights

This website is general in nature, and is provided as a courtesy to you. Information is accurate to the best of Liberty Mutual’s knowledge, but companies and individuals should not rely on it to prevent and mitigate all risks as an explanation of coverage or benefits under an insurance policy. Consult your professional advisor regarding your particular facts and circumstance. By citing external authorities or linking to other websites, Liberty Mutual is not endorsing them.

Modular construction is on the rise. Today many buildings are being manufactured in pieces to create dorms, hotels, apartments, and even new schools. The buildings are being built in an assembly-line manner, with individuals completing the same task repeatedly. These pieces are built off site, shipped to the job site, and installed to create a quality building with architectural features.  

One recent example is a CalTrans apartment complex which was built to provide temporary housing for snowplow drivers during the winter months. The individual components were manufactured in North Dakota, numbered, placed in a rail car, and shipped to Sacramento Valley where they were installed and placed in a staging yard. As construction started, the contractors would pull the numbered piece out from the staging yard, truck it to the job site, and install each piece. The pieces, all installed in North Dakota, contained most elements of an apartment building — cabinetry, Romex for electrical, drywall, shower tub combos, tile flooring, and granite countertop. The quality was everything you would expect from traditional construction, except these buildings were being built in pieces and fit together like Legos.

“Research suggests this particular type of construction will continue to grow by nearly 6 percent between 2020 and 2025. And why not? It is fast, environmentally friendly, safe, and cost-effective.”

Another example comes from Hickory Construction, a company that built a six-story apartment building with 77 apartments in 10 days after the site and underground work was completed. The total lead time was less than 12 months, which resulted in saved time and costs. 

Research suggests this particular type of construction will continue to grow by nearly 6 percent between 2020 and 2025. And why not? It is fast, environmentally friendly, safe, and cost-effective.  

Surety considerations for modular projects

As with any traditional construction project, when underwriting a performance and payment bond for a modular project, sureties must take into consideration several factors: 

1. Design elements

Piecing together a large apartment community requires more decisions to be made in the design and engineering stages. This requires architects, engineers, and contractors to be familiar with modular construction. Any failure within the design stage may trigger delays. If the contractor is responsible for designing the project, these delays can cause margins to suffer, or worse, eat into working capital and net worth. This impacts a contractor’s balance sheet, which is integral to surety underwriting decisions.

2. Supplier risk

Once the contract is signed, the manufacturer of the modular building will become a contractor’s main partner for the duration of the project. Key questions the contractor should ask include:

  • Can the manufacturer meet the timeline? 
  • What happens if the manufacturer cannot meet the schedule or ceases business operations? Can the contractor replace the manufacturer, or will the contractor need to go back to the design/engineering stage with a new manufacturer? 

Surety underwriters are very interested in how thoroughly the contractor prequalified the modular builder (i.e., manufacturer). The modular builder will have a sizeable portion of the contract and will be a critical path subcontractor for the duration of the project. Surety underwriters may encourage contractors to require a performance bond from the modular builder or want to know how the contractor prequalified the modular sub. 

3. Transportation 

In the CalTrans example, the modular buildings were manufactured in North Dakota. The pieces were placed on a rail car and transported 1,900+ miles from North Dakota, across Montana, and down through Oregon before arriving at the final destination in the Sacramento Valley. Contractors should take into consideration distance and evaluate the type of delays and damages that may occur during transport. When utilizing just-in-time delivery, contractors should understand the risks. Shipping delays and damages can result in other costs, trigger liquidated damages, or actual damages clauses. It is important that contractors review contract language pertaining to damage delay clauses to determine the best method of material delivery to minimize risk and complete a profitable project. Bottom line: surety underwriters want to make sure the contractor is comfortable with the timeline and ensure they have taken all these factors into consideration.    

4. Construction defects

The fast pace of modular projects is great for reducing project construction time, as evidenced by the Hickory example, where the company was able to build the foundation at the same time as the modular work was being done. Automation can provide quality modular builds with the right equipment and employees. Conversely, modular build quality can suffer with the wrong employees or equipment, devastatingly requiring repairs for multiple buildings once they are received at the project site.

“Regardless of the manner of completion, contractors should ensure they have the right labor in place, understand local legislation and always keep quality at the forefront.”

If the units are not constructed properly and repairs are not made, the risk of construction defects increases and can impact the quality and safety of the building. Contractors and manufacturers that participate in modular construction should have a detailed quality assurance program to ensure the work done before installation is of the highest quality. Poor build quality can require rework, causing delays and unexpected costs to occur.

To help with the underwriting process, modular contractors should be able to answer questions regarding their experience with the modular building supplier and what they have done to prequalify the supplier. 

5. State and local building codes

Modular building contractors must be aware of varying state and local building codes and adhere to those codes. For example, some municipalities allow modular buildings to be delivered with their walls closed, while others prevent walls from being closed until a local building inspector has had the opportunity to inspect the electrical or mechanical equipment. No matter how they are constructed, all projects must meet federal, state, and local codes. Surety underwriters ensure contractors are knowledgeable about these codes. If a contractor is moving into a new territory, surety underwriters will remind contractors that building code knowledge is key.

6. Prevailing wage issues

Contractors must be knowledgeable about prevailing wage issues. In the CalTrans example, a project labor agreement or a prevailing wage payment was a requirement on the project. Under California law, contractors are responsible for unpaid prevailing wages and unpaid penalties, even if a subcontractor or supplier completed the work. The contractor must assess its contractual obligation to determine if a modular builder will fall under a subcontractor, manufacturer, or supplier classification. This determination could mean the modular builder must pay prevailing wage.  

7. Labor

The difference in complexity between a single-story modular building and a high-rise or mixed-use development modular building can be exponential. If a mixed-use high-rise building is off by a quarter of an inch, it can make the next floor construction more difficult, eventually leading to structural flaws in the building. Construction labor availability continues to be a challenge, and the lack of experience assembling these buildings can make it more difficult for contractors looking to enter the modular building market. Contractors can turn to construction assembly professionals, who are becoming more and more proficient in modular construction. Surety underwriters will look to ensure the right labor is in place so that the project is completed within its parameters.

In short: labor, laws, and quality

The way a surety underwrites a modular construction project is not all that different from a traditional construction project. Regardless of the manner of completion, contractors should ensure they have the right labor in place, understand local legislation, and always keep quality at the forefront.

To learn more about contract surety, visit us online or contact your independent agent.

Featured insights

This website is general in nature, and is provided as a courtesy to you. Information is accurate to the best of Liberty Mutual’s knowledge, but companies and individuals should not rely on it to prevent and mitigate all risks as an explanation of coverage or benefits under an insurance policy. Consult your professional advisor regarding your particular facts and circumstance. By citing external authorities or linking to other websites, Liberty Mutual is not endorsing them.

Just like each state has its own law, so do tribal nations. Understanding this is key to an effective relationship between sureties, agents, contractors, and tribal nations. Here are some key factors your surety is taking into consideration when underwriting bonds for tribal nations.

1. Tribal nations are sovereign nations, meaning they have the authority to enact their own laws and have their own dispute resolution mechanisms.

2. A sovereign nation has sovereign immunity from suit, meaning they have immunity from suit in U.S. federal and U.S. state courts.

3. Every tribe is different and unique and although the process may be similar, there is no “one-size-fits-all” waiver/language.

4. Consider the sophistication of accounts when working with tribal nations (knowledge of tribal employment rights office/employment laws, taxes, and other tribal laws which may be applicable).

5. Absent a sovereign immunity waiver, a tribal entity is even immune from suit in its own tribal court.

6. Waivers of sovereign immunity are key when securing surety bonds.

  • Waivers must be clear, specific, and provide for all aspects of dispute resolution including enforcement of a judgment/collection.
  • All parties must understand who has authority to issue a waiver of sovereign immunity on behalf of the tribe and ensure such a waiver is executed properly.
  • Most often the waiver of sovereign immunity will be a limited waiver, which is acceptable if it provides a path to sufficient assets.
  • Waiver must specify which state law applies and the dispute resolution mechanism (i.e., either a specific state court or arbitration).
  • Waivers must apply specifically to the surety.

7. Performance and payment bonds must be tailored to address:

  • Dispute resolution in state court with state law governing
  • Incorporation of a waiver of sovereign immunity
  • Limit of potential claimants under the payment bond
  • Notice provisions

Featured insights

This website is general in nature, and is provided as a courtesy to you. Information is accurate to the best of Liberty Mutual’s knowledge, but companies and individuals should not rely on it to prevent and mitigate all risks as an explanation of coverage or benefits under an insurance policy. Consult your professional advisor regarding your particular facts and circumstance. By citing external authorities or linking to other websites, Liberty Mutual is not endorsing them.

Episode 2: Contractor financials and economic impacts

In part 2 of this series, Liberty Mutual experts discuss recent and current economic conditions and how problem-solvers in the construction industry are managing the impacts on their businesses.

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Episode 1: Watch outs and guidance for subcontractor default

In part 1 of a new series on managing construction risk, Liberty Mutual experts explain how contractors can protect themselves from subcontractor failure.

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This website is general in nature, and is provided as a courtesy to you. Information is accurate to the best of Liberty Mutual’s knowledge, but companies and individuals should not rely on it to prevent and mitigate all risks as an explanation of coverage or benefits under an insurance policy. Consult your professional advisor regarding your particular facts and circumstance. By citing external authorities or linking to other websites, Liberty Mutual is not endorsing them.

From the infrastructure bill to COVID-19, get the latest economic and construction industry trends, and learn what they mean for construction businesses and for the economy as a whole. Hear from Ben Beauvais, Construction Executive, North America Field Operations, Liberty Mutual, and Niladri Sannigrahi, Senior Director, Portfolio and Risk Management, Liberty Mutual Surety, as they discuss the latest in the construction industry.

Featured insights

This website is general in nature, and is provided as a courtesy to you. Information is accurate to the best of Liberty Mutual’s knowledge, but companies and individuals should not rely on it to prevent and mitigate all risks as an explanation of coverage or benefits under an insurance policy. Consult your professional advisor regarding your particular facts and circumstance. By citing external authorities or linking to other websites, Liberty Mutual is not endorsing them.

Con il termine “trasporto transfrontaliero dei rifiuti” si fa riferimento all’esportazione di rifiuti prodotti all’interno di un dato Stato verso uno Stato diverso da quello di origine nel quale tali rifiuti devono essere sottoposti a specifici procedimenti per il recupero della materia o a smaltimento in impianti certificati.

Il trasporto transfrontaliero dei rifiuti è disciplinato dal Regolamento CE 1013/2006 che ha istituito le procedure che devono essere messe in atto per poter effettuare la spedizione transfrontaliera e le procedure di controllo con cui assicurare un monitoraggio costante dell’intero itinerario (dall’ origine della spedizione sino alla destinazione finale). In particolare, a seconda delle caratteristiche del rifiuto e delle finalità delle spedizioni transfrontaliere, il Regolamento CE 1013/2006 prevede la procedura di notifica ed autorizzazione scritta preventiva (ex art. 4 ss.) e la procedura di informazione (ex art. 18).

Nell’ambito delle procedure sopra indicate, il Regolamento CE n. 1013/2006, all’art. 6, prevede che per effettuare spedizioni transfrontaliere di rifiuti soggette all’obbligo di notifica è necessario prestare la “garanzia finanziaria” (riferendosi con tale termine ad una garanzia fideiussoria).

Tale garanzia in Italia è regolata dal D.M. n. 370/98 che disciplina in modo specifico le modalità con cui essa deve essere prestata, compresi i criteri per il calcolo del massimale garantito e lo schema delle condizioni contrattuali. Le fidejussioni, in base a quanto previsto all’articolo 1, possono essere rilasciate da imprese di assicurazione autorizzate all’esercizio del ramo cauzioni assicurative (l’elenco è consultabile sul sito dell’IVASS) e dalle banche in conformità agli schemi contrattuali di cui rispettivamente all’Allegato 1 e all’Allegato 2.

Entrambi gli schemi contrattuali sopra citati, prevedono che la garanzia sia rilasciata a favore del Ministero dell’Ambiente a “copertura delle eventuali spese sostenute dalla pubblica amministrazione per il trasporto dei rifiuti, compresi i casi cui agli articoli 25 e 26 del Regolamento CEE n.259/93, il loro recupero o smaltimento e per la bonifica dei siti inquinati”.

Tenuto conto che il Regolamento CEE n.259/93 è stato sostituito dal Regolamento CE n. 1013/2006 è divenuta prassi consolidata procedere con l’integrazione degli schemi contrattuali mediante appendice del seguente tenore letterale:

“I richiami al Regolamento CEE n. 259/93 devono intendersi riferiti al nuovo Regolamento CE n. 1013/2006. La garanzia finanziaria copre anche le spese di deposito di 90 giorni di cui all’art. 6, comma 1, lettera c) del Regolamento 1013/06, fermo restando l’importo massimo complessivo indicato nella premessa della Polizza”.

La garanzia si svincola allo scadere del quarto mese successivo al ricevimento da parte della Regione o della Provincia Autonoma competente dei certificati di avvenuto corretto smaltimento o recupero relativi alle spedizioni garantite o, in caso di fidejussione prestata per più trasporti, allo scadere del quarto mese successivo al ricevimento del certificato di avvenuto corretto smaltimento o recupero relativo all’ultimo dei trasporti garantito.

L’importo della garanzia, in base a quanto previsto dall’allegato 3 del D.M. 370/98, viene calcolato attraverso l’utilizzo di una formula che tiene conto, a seconda dei casi, del tipo di trasporto (via terra o via mare), del numero dei chilometri tra il più vicino transito di confine italiano e il luogo previsto per lo smaltimento/recupero del rifiuto, della rotta marittima della spedizione, delle tonnellate dei rifiuti spediti, del numero e volume dei container, della tipologia di rifiuto e del tipo di trattamento del rifiuto a destino (smaltimento o recupero). Il risultato che si ottiene con l’applicazione di tale formula, indipendentemente dagli specifici parametri utilizzati per il calcolo, è sempre un ammontare decisamente elevato rispetto al valore economico dell’operazione, con la conseguente necessità da parte dei player specializzati di dover disporre di linee di affidamento di dimensioni tali da scongiurare rischi di limitazioni delle attività dovute al mancato reperimento delle garanzie.

In questo contesto caratterizzato da una elevata domanda di fidejussioni, per gli operatori risulta di vitale importanza poter disporre del supporto di partner assicurativi specializzati in grado di valutare accuratamente la reale entità del rischio associato a questa specifica tipologia di garanzie.

La maggiore disponibilità di garanzie fideiussorie offerte dal mercato assicurativo, unitamente all’interesse di preservare le disponibilità delle linee di credito del canale bancario, costituiscono ad oggi le principali motivazioni per le quali le aziende trovano maggior convenienza all’utilizzo delle polizze fideiussorie in luogo delle garanzie bancarie.

Featured insights

How healthcare companies can add critical protection with surety bonds

When most people think of surety bonds they think of construction. But surety bonds can mitigate risk for all types of business, including healthcare companies. See how these bonds function and the critical roles they can play for hospitals and other facilities.

The top three reasons healthcare companies need surety bonds

1. To comply with government regulations

Federal and state government often require healthcare companies to have surety bonds to protect their employees, government, and clients.

Common bonds for this purpose:

  • Self-insured workers compensation bond. For companies that self-insure their WC policy. Protects company employees by ensuring money is available to pay its obligations under WC law.
  • License & permit bonds. Required for pharmacy wholesalers to guarantee payment of fines or penalties imposed by state pharmacy boards related to a wholesale pharmacy permit.
  • Durable medical equipment, prosthetics, orthotics and supplies bond. Also known as a Medicare or Medicaid bond. Protects the federal government (and taxpayers) from medical billing fraud by physicians or medical practitioners. Guarantees reimbursement to Medicare for billings submitted at the wrong price, as well as payment of unpaid claims, civil monetary penalties, and assessments.
  • Patient trust fund or escrow bond. Sometimes called a nursing home bond. Guarantees patient trust funds are properly and ethically managed by care facilities and kept in separate bank accounts.

2. To improve liquidity

Surety bonds are often used as guarantees, in place of letters of credit, keeping bank lines open so companies can invest in other areas or boosting liquidity by freeing funds that are tied up in bank accounts.

Common bonds for this purpose:

  • Deductible bond. In lieu of posting 100% letters of credit, surety bonds can supplement the ILOC security allowing for a smaller ILOC amount to be posted under the insurance policy freeing up credit facilities.
  • Appeal bond. Guarantees payment of a judgement in a court case if lost on appeal. An alternative to posting irrevocable letters of credit or cash to the court.

3. To make site improvements

Companies often need site improvement bonds for projects that involve public land, such as a building expansion or sidewalk repair. These bonds protect the town or city by replacing cash or ILOCs posted as collateral freeing availability under credit facilities/bank accounts.

Learn more

There’s one more way surety bonds add protection for health care companies. In most cases surety companies won’t pay a claimant without first conducting an independent investigation.

To learn more about commercial surety, please visit us online or contact your independent agent.

Related insights

This website is general in nature, and is provided as a courtesy to you. Information is accurate to the best of Liberty Mutual’s knowledge, but companies and individuals should not rely on it to prevent and mitigate all risks as an explanation of coverage or benefits under an insurance policy. Consult your professional advisor regarding your particular facts and circumstance. By citing external authorities or linking to other websites, Liberty Mutual is not endorsing them.

When companies need a guarantee, they often turn to their bank. And whilst this may seem to be the simplest approach, decision-makers should understand the other options available to them—mainly purchasing surety from an insurance company. One key reason? To free up liquidity.

When companies obtain a guarantee from an insurance company, they don’t use up any of the limits under their bank lines, giving them additional credit to use in other ways to support their business. Often, insurance companies have better credit ratings than banks, a key factor when getting clients to accept guarantees. Two examples of guarantees that can free up cash include pension bonds and payment services regulation bonds.

Pension guarantees ensure that a corporation’s pension scheme is being funded, whilst at the same time deferring the actual cash payments. When a business chooses an insurance company for this type of guarantee instead of a bank, it keeps its credit lines available with its bank and frees up the cash it may have had to put into the scheme, keeping cash in the business. Additionally, if the company becomes insolvent, the surety company will ensure appropriate payments into the scheme—maintaining exactly the same protection for employees. Per recent legislation, directors could soon be liable if they take the appropriate steps to protect their employees’ pension plans.

As organizations look to address this legislation, firms and insurance brokers should be aware of how a surety company can help.

Payment services regulation guarantees, similar to money transmitter bonds in the U.S., are needed primarily by financial and technology companies that process people’s money (e.g., PayPal, Worldpay). This type of guarantee allows any guaranteed funds to be exempt from the requirement to be ring-fenced from the companies’ own cash, increasing the companies’ working capital and supporting their business. Similar to a pension bond, it also protects customers should the companies become insolvent and puts them in the same position as they would otherwise have been in.

In addition to enhancing liquidity, another reason companies should consider a guarantee from an insurance company is spread of risk. Historically banks and insurance companies haven’t always been on the same economic cycle. Should there be a recession, or the banking market is having trouble, an insurance company may not necessarily be experiencing the same challenges at the same time as the bank. Having a mix of bank and surety providers allows your business to grow.

And yet another reason to work with an insurance company to obtain your guarantees is that insurance companies can provide value that businesses don’t get from a bank. Insurance companies employ a robust underwriting process and will look to provide feedback and advice regarding risk mitigation, whereas banks are primarily only examining credit. This provides another layer of risk protection for a business.

When looking for a surety partner don’t underestimate the value of the relationship. You and your client want a company committed to the surety market—a company that will be with you in good times and bad and will stand with your client for the long term. Make sure the company your client is doing business with has strong financial ratings and the capacity to provide large bond programs as your client’s company grows.

Featured insights

This website is general in nature, and is provided as a courtesy to you. Information is accurate to the best of Liberty Mutual’s knowledge, but companies and individuals should not rely on it to prevent and mitigate all risks as an explanation of coverage or benefits under an insurance policy. Consult your professional advisor regarding your particular facts and circumstance. By citing external authorities or linking to other websites, Liberty Mutual is not endorsing them.

Liberty Mutual Surety is a trading name of the Liberty Mutual Insurance Group.

Getting a business off the ground can be tough but launching a construction company can be especially challenging. There are so many factors owners need to take into consideration. From technology to cash flow, below are some common pitfalls some contractors face when they start out, and suggestions to avoid them.

1. Not creating a business plan

New contractors should create a business plan that includes their vision and company mission. The business plan can serve as a secure foundation to keep the company fully functioning in both good times and bad. It can help shape what tools and resources are required to succeed. Every business, no matter the size, can face challenges and it is better to have a strategic plan that provides direction during these rough spots. Revise and modify your business plan frequently.

2. Not having robust policies and procedures in place

Establishing and documenting best practices, policies, and procedures is key. From internal day-to-day operations, to expectations around project site management, these processes should encompass all components that churn the business. It isn’t enough to just create the processes. Make sure you clearly communicate them to all employees as well.

3. Not establishing surety credit

You might not need it now but consider getting prequalified to establish surety credit for future projects and growth. Identify key partners that can facilitate adequate support to obtain and maintain this surety credit such as a surety bond producer, a surety company, and a CPA firm that specializes in construction. Make sure you choose a surety company that is financially stable, knowledgeable in construction, and can grow with you. You should also establish a bank relationship to secure a working capital line of credit as a safety net to use for additional cash flow purposes.

4. Hiring and keeping the wrong people

Your brother-in-law may be a good guy, but he may be lousy at estimating. You should avoid hiring the wrong people for key responsibilities such as estimating, accounting, and project management. Employing the wrong people in these key areas can wreak havoc early on for the new contractor. New and smaller contractors typically don’t have the liquidity to refinance themselves due to costly errors made internally. Key roles should come with the knowledge and experience that will contribute to the company’s long-term success. And if you do hire the wrong person, it is OK to replace them.

5. Not investing in the right technology and software

As a contractor it is vital for you to keep track of income, expenses, and cash flow. If possible, spend money on state-of-the-art accounting software that will track accounts receivable and payable, pay suppliers on time, keep corporate and personal credit clean, enable you to download banking transactions, and reconcile accounts monthly. Equally important, invest in the right estimating software. Most contractors can’t bounce back from jobs that were estimated poorly. Similarly, make sure you have internal controls in place to manage costs and profits.

6. Financing unnecessary equipment

Make sure you exercise due diligence by exploring equipment options and comparing costs. Look at what goes into owning equipment, like maintenance and repair, versus the monthly payments you need to make when leasing.  

7. Not taking the time to read and understand contracts

It is imperative that you read and understand all contracts. If you don’t have the appropriate legal knowledge, you should partner with a professional that does. Take the time to understand who the parties are, the scope of work to be performed, the duration of the project, the payment terms, and the terms and conditions of what will happen if and when conflicts arise.

Consider whether the contracts offer opportunities for dispute resolution instead of costly litigation. Litigation could be avoided by clearly understanding and defining the rights and responsibilities of the parties to the agreement.

Understand the default and termination clauses in the contract. A contract that outlines what happens in the event of a default, or if one or both parties terminate the contract, will aid in that understanding.

Try to revise or steer clear of contracts that have aggressive deadlines and extended pay application dates. Know that multiyear service contracts that extend over long durations and have longer-than-usual warranty periods may present complications over time.

8. Taking on too much work

The inclination of any start-up is to do as much business as possible, but contractors should continuously monitor capacity. Capacity is always going to be important to generate the revenue needed to break even, cover general and administrative expenses, and retain profits to grow the company. Remember to grow steadily, with quality, not quantity, at the forefront. Avoid taking on too much work if you don’t have the additional labor and crews to complete the projects. You should also stay away from projects with less-than-average gross profit margins because earning profits is key to strengthening the company financially in the long term.

9. Accepting jobs that aren’t in your wheelhouse

Secure projects that are within normal scope of work, size, and territory. You should avoid venturing into work that your company does not generally perform and take extra precautionary measures to check and prequalify subcontractors on work that is not self-performed.

10. Not buying the right insurance coverage and bonds

Secure business and construction insurance to cover exposure and liability, as well as any license and permit bonds needed for the company or projects. From a surety perspective, you should research what is required for the company and the industry from federal, state, county, and city levels so that you are not subject to fines.

11. Lack of communication

Make sure teams are meeting frequently to review budgets, goals, key projects, and challenges that could limit profitability. The larger the contractor gets, the less time owners and managers seem to have. Owners should make communication a priority.

12. Not marketing the company

Don’t forget to spread the word and promote the company. Create a brand for yourself and launch a website and social media presence. Ask for customer testimonials and remember that customer referrals can be your number-one source of new business.

The foregoing is not professional advice nor legal advice, is provided for information only, and is not a substitute for consulting with a professional.

Featured insights

This website is general in nature, and is provided as a courtesy to you. Information is accurate to the best of Liberty Mutual’s knowledge, but companies and individuals should not rely on it to prevent and mitigate all risks as an explanation of coverage or benefits under an insurance policy. Consult your professional advisor regarding your particular facts and circumstance. By citing external authorities or linking to other websites, Liberty Mutual is not endorsing them.

COVID-19 hat den technologischen Fortschritt schneller vorangetrieben, als das irgendjemand hätte vorhersagen können. In kürzester Zeit stellten sich viele Mitarbeiter vom täglichen stundenlangen Pendeln zwischen Arbeitsplatz und Zuhause auf das Anmelden am Computer im provisorischen Büro in den eigenen vier Wänden um. Folglich waren wir noch nie so abhängig von unseren Computern, dem Internet und digitalen Plattformen wie heute.

Auch wenn die Zahl der COVID-19-Fälle vermutlich abgenommen hat, hat man doch den Eindruck, als würde das Tempo technologischer Innovationen immer noch Rekorde brechen. Versicherungsgesellschaften hegen nicht unbedingt den Ruf, auf technologischem Gebiet oder in Bezug auf Innovationen eine Vorreiterrolle einzunehmen, aber der Markt für die deutschen Kautionsversicherungen ist sehr darum bemüht, diesen Eindruck zu ändern. Deutsche Kautionsversicherer müssen heute mit Banken Schritt halten, deren Hauptaugenmerk schon immer ihren Kunden galt. So nutzen Banken beispielsweise schon heute digitalgesteuerte Plattformen mit Hilfe von SWIFT-Codes zur Interbanken-Kommunikation und entwickeln teilweise Blockchain-Lösungen

Vorteile für die Kunden

Die Kundenzufriedenheit ist der eigentliche Anreiz für diese Arbeit an Online-Plattformen. Kunden wünschen sich ein einfacheres Verfahren zur Beantragung von Avalen, eine sofortige Genehmigung dieser Anträge und einfachere und schnellere Methoden zur Ausstellung der selbigen. Es überrascht nicht, dass Kunden ihre Dokumente elektronisch unterschreiben und per E-Mail erhalten und absenden möchten, ohne sich mit Druckern, der Post und Briefmarken abgeben zu müssen. Und mehr noch – sie wollen nach Möglichkeit alles telefonisch und digital erledigen.

Natürlich setzt der Kautionsversicherungsmarkt alles daran, diese Wünsche zu erfüllen. Dazu Nils Hoppenworth, Surety Country Manager bei Liberty Mutual Surety: „Die Kundenzufriedenheit ist das A und O unserer Arbeit. Wir hören darauf, was die Leiter der Finanzabteilungen von Unternehmen brauchen, und wir investieren in die nötigen Ressourcen. Um mit Banken und anderen Versicherungsgesellschaften konkurrieren zu können, müssen wir eine technologische Führungsrolle übernehmen. Glücklicherweise können wir dank unserer Größe auf die nötigen Ressourcen zurückgreifen.

Herausforderungen

Diese Fortschritte gehen aber auch mit bestimmten Herausforderungen einher. Weil die Erbringung von Sicherheitsleistungen eine Vereinbarung zwischen drei Parteien voraussetzt, müssen sich alle drei über den Prozess verständigen und abklären, was für sie akzeptabel ist. Es darf auch nicht vergessen werden, dass zahlreiche Avale gegenüber der öffentlichen Hand ausgestellt werden müssen und der Staat der Annahme elektronischer Garantien nicht immer die nötige zeitgemäße Akzeptanz entgegenbringt.

Hinzu kommt, dass sich Vorschriften und Gesetze von Land zu Land unterscheiden. In vielen Ländern gelten häufig strenge Regelungen dazu, ob, wann und wie Technologien wie elektronische Unterschriften verwendet werden können bzw. dürfen.

Um schnellere Fortschritte zu erzielen, muss sich die europäische Garantiebranche Schulter an Schulter gemeinsam mit einer übergreifenden Organisation, wie z.B. ICISA, beim Gesetzgeber für den Fortschritt der Digitalisierung einsetzen. Die gute Nachricht lautet, dass bereits Arbeitsgruppen gebildet wurden, um diese Initiativen voranzubringen.

Die Landschaft der Garantiebranche

Länder wie die Vereinigten Staaten, aber auch die lateinamerikanische Region sind Deutschland hinsichtlich der Entwicklung ihrer Online-Versicherungsplattformen weit voraus, sodass kleinere deutsche Versicherungsgesellschaften nur mit viel Mühe auf diesem Gebiet konkurrieren können. Größere, globale Unternehmen sind hier im Vorteil, weil sie die in den USA und anderenorts geleistete Arbeit nutzen und für Deutschland replizieren können. So hat Lateinamerika beispielsweise rasche Fortschritte erzielt, weil die Begünstigten im Vorfeld bereits für die Akzeptanz kodiert wurden.

Ein weiterer wichtiger und relevanter Aspekt ist die Sicherheit. Kleinere und mittelgroße Gesellschaften sind gewöhnlich auf externe Unternehmen angewiesen, die ihre Plattformen und Kundendaten hosten, während größere, global tätige Unternehmen die Technologie betriebsintern sicher hosten können, wodurch das Cybersicherheitsrisiko ihrer Kunden gesenkt werden kann.

Darüber hinaus sind größere Gesellschaften mit mehreren Versicherungsprogrammen häufig in der Lage, eine einzige Plattform für alle Geschäfte ihrer Kunden zu nutzen. Es gibt also keine separate Plattform und keine verschiedenen Passwörter für den Zugang zu Garantie- und Versicherungsprodukten.

Statt ihre eigenen Plattformen zu entwickeln, nutzen manche Versicherungsgesellschaften lieber diverse Banking-Plattformen. Für kleinere und mittelgroße Unternehmen mag das funktionieren, aber größere Gesellschaften sind hingegen an längerfristigen, ganzheitlicheren und globalen Lösungen zur Erfüllung der Anforderungen ihrer Kunden interessiert.

Schlussbemerkung

Die Arbeits- und Betriebsweisen von Unternehmen sind in einem schnellen Wandel begriffen. Ihre Erwartungen bezüglich einer sofortigen Befriedigung ihrer Anforderungen sind exponentiell gestiegen. Versicherungsgesellschaften, die Avale anbieten, müssen in Technologien investieren, um dieser, sich verändernden Dynamik gerecht zu werden. Die gute Nachricht lautet aber auch hier, dass insgesamt klare Fortschritte zu verzeichnen sind. Die Leiter der Finanzabteilungen von Unternehmen sollten mit dieser Landschaft vertraut sein, um fundierte Entscheidungen treffen zu können, wenn ihre Gesellschaft die Herauslage von Avalen sichern muss.

This website is general in nature, and is provided as a courtesy to you. Information is accurate to the best of Liberty Mutual’s knowledge, but companies and individuals should not rely on it to prevent and mitigate all risks as an explanation of coverage or benefits under an insurance policy. Consult your professional advisor regarding your particular facts and circumstance. By citing external authorities or linking to other websites, Liberty Mutual is not endorsing them.