When it comes to purchasing a surety bond, businesses rely on insurance agents to help them cover all their bases. But who do insurance agents rely on?
Surety bond aggregators and wholesalers are the middleman that insurance agents need in order to provide surety bonds to their clients. And, while there are similarities between what the end customer (bond purchaser) needs to watch out for and what insurance agents should be aware of, there are some things only agents need to consider.
The end customer doesn’t care how much commission their insurance agent gets paid or who is actually processing their payment. But those should be key factors for agents.
With that in mind and to help insurance agents decide which aggregator or wholesaler to partner with for surety bonds, here are seven factors they should be aware of.
- Commission Amount
Surety bonds can provide significant income for insurance agents, but to ensure you’re making the most money you can be, you need to find an aggregator that offers higher commissions. Throughout the industry, commissions can range from as low as 5% to upwards of 40%.
Whether you’re just starting out or shopping around for a new aggregator, make sure to ask about the averagecommission they pay out. At minimum, you want to work with a company paying an average of 20% or higher.
- Bond Library
The larger your customer base, the more income you can make. But to expand your customer base you need a diverse range of products. Having access to just a handful of types of surety bonds severely limits that customer base.
When choosing a surety bond aggregator, you want a company with a large library of surety bonds. Yes, contract bonds tend to be in-demand types of surety bonds, but if you’re not also offering commercial and fidelity bonds, you’re leaving money on the table … and may be forcing your clients to seek out an insurance agent that can cover all their needs.
Don’t settle for a surety bond aggregator with a limited library of bonds. Browse through their catalog of bonds available to ensure they offer a wide variety across all 50 states.
- Direct Billing & Zero-Fee Credit Checks
Want to make your life easier? Eliminating (or, at the least, reducing) the billing process between your insurance agency and the end-customer can make life so much better. Not only does it remove the burden of chasing down payments. The hassle of potential refunds (and any associated fees) is also eliminated.
Additionally, many surety aggregators and wholesalers charge the end-customer a credit check or credit card fee, which can be off-putting to your client.
As you research different surety bond aggregators and wholesalers, look for companies that offer $0 credit check and credit card fees.
- Automation/Auto Renewals
Look for a surety aggregator or wholesaler with a fully automated, easy-to-use system, including auto renewals. With so many types of surety bonds, each with different requirements, a fully-digitized system makes the application, approval and issuing process faster for everyone.
- Backing Carriers
It’s critical that you as an insurance agent partner with an aggregator or wholesaler that only works with the most highly-rated carriers. Doing otherwise can land you and your clients in a lot of hot water.
There are two criteria to look for when judging the legitimacy of the surety bond backer.
First is their A-Rating. A.M. Best Company, Inc. is the industry leader in rating surety companies, providing ratings that range from A++ down to F (in liquidation) to S (rating suspended). These ratings are important, not only because they provide peace of mind about who is backing the surety bond, but also because some obligee’s will only accept bonds from A-Rated backers.
You want to work with an aggregator that offers only surety bonds backed by carriers with an A-rating or above.
The second criterion is whether the bond is T-Listed. Only surety bond carriers that are on the Treasury’s approved list can issue contract bonds for federal government projects. If you’re only planning on offering commercial bonds, this won’t be a problem. But if you have any plans on marketing and selling contract bonds, this can be an issue.
- Education
There’s a lot to know about surety bonds, more than most insurance agents – especially those just getting into selling surety – can ever know. That’s why working with people who are experts in the field is important. But more than simply partnering with an expert, you want to work with a company committed to helping you expand your knowledge base.
Does the aggregator or wholesaler you’re considering offer education? Do they have online training resources? Will they take the time to stay with you on the phone and walk you through the types of surety bonds? Or take you step-by-step through the application processes?
You want to partner with a company that’s not stingy with their time, because the more you know, the more you can sell!
- Customer Service/Support Team
There’s little more important than customer service. A company – of any kind – can have the most diverse range of products and best prices or commissions – but be a nightmare to work with.
Look for a surety aggregator known for its great customer service. Read reviews. Ask what type of support they offer. Is it only automated or can you talk to an actual person? Is it 24 hours or can you only get help during business hours?
Interested in a commitment-free demo? Call (332) 240-5595 or e-mail danny@propellerbonds.com to see just how easy it is to add surety to your agency’s line of business offering!
