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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: [email protected]
•or visit our www.suretycanada.com
