Pandemic pressures produced positive surety changes
Digital processes that were once unheard of in surety underwriting or bond processing are becoming more commonplace.
Surety companies made moves to digital systems and processes out of necessity during the early stages of the COVID-19 pandemic and resulting lockdown. Digital transformation in the industry is being touted as the way forward, although it may take some time to reach long-term transformation goals.
Whether or not sureties and bond producers prefer digital surety transactions is beside the point. The point is that contractors and principals do, if they’re like most professionals in business.
Here’s proof: Business-to-business (B2B) buyers in a cross-section of industries now prefer digital and remote interactions with sellers and vendors. McKinsey confirms that the majority of B2B sales interactions have moved to remote or digital channels, and that between 70% and 80% of business decision-makers now prefer remote service or digital self-service.
“Far from a local phenomenon, the shift to digital and remote engagement has been embraced by decision-makers in all countries surveyed worldwide,” McKinsey reports.
From a surety standpoint, critical developments include widespread moves to electronic bonding solutions such as the use of e-signatures. While the lockdown and rapid shift to remote work made adopting digital signature requirements a necessity, some stakeholders are wavering on its continuation. Yet the trend toward remote work seems widespread, and digital workflows could better accommodate the work preferences of sureties, bond producers, contractors and principals alike.
The National Association of Surety Bond Producers (NASBP) recently weighed in on the topic of paperless construction bonds, enabled through digital workflows. Mark McCallum, NASBP CEO, says that the pandemic has “propelled exploration of electronic bonding environments.”
He adds: “What seemed to some like the stuff of science fiction five or 10 years ago no longer seems like just a distant and remote possibility… There are, however, a tremendous number of steps to take and many obstacles to overcome on that path — chief among them is the hesitation or reticence of some bond obligees, procurement officials and their legal counsels to accept bonds in other than paper formats.”
What will it take for sustained progress in digital transformation to take hold in the surety industry? Positive developments have emerged in recent months. Like every digital transformation effort, they involve both people and processes. Some have the potential to bring lasting transformation to the industry. Below is a look at some of the the benefits of digitialization.
Building trust in the processes
The rush to get people to work remotely after the lockdown is starting to solidify into more permanent solutions and standard operating procedures. Carriers and agents alike have had nearly two years to become comfortable with new digital processes and solutions. As their comfort level has increased, many professionals now have a new sense of trust in the updated methods. What was once unheard of in surety underwriting or bond processing is becoming more commonplace.
While surety often tends to be a carrier-centric process, digital solutions are starting to focus on the agents and brokers who make up many of the day-to-day users of e-surety systems. On both the carrier and agent sides, users of new, digital, cloud-based solutions are seeing the benefits of flexible and versatile systems that are easy to access from anywhere, at any time.
Other possibilities for more flexible digital solutions include consumer-facing solutions that deliver enhanced experiences to customers. In surety, this might look like a construction executive being able to access bonding information from a mobile device.
Building new possibilities
The hybrid remote work model has gained ground in numerous industries and looks to become permanent. Organizations are learning that remote work brings new possibilities for recruiting and retaining employees. For example, it opens the opportunity to hire staff who are not tied to a company’s geographical location. The right individual can be anywhere. As PwC notes in a report on post-COVID talent strategies, “Once you’ve decided to turn remote work into a core strength, you can compete for talent in any market in the country. If you’re based in New England, you can now make a credible appeal to people with the skills you want, even if they are committed to staying on the West Coast.”
Remote work and virtual collaboration can also allow organizations to expand their footprints and provide services in additional locations or even expand services to international markets.
Building connections and collaborations
Sustained remote work over the last 18-plus months has resulted in new layers of cross-industry collaboration at the insurance carrier level in areas of technology and processes. Remote work has created new opportunities for users, stakeholders and influencers to come together in ways that haven’t been achieved before. This ease in connection and communication has fostered an uptick in conversations and collaborations. And it’s providing more visibility for various groups in the industry.
While a return to in-person events has begun, virtual events will continue, and organizations should take advantage of both. “In today’s business world, hybrid events and virtual office spaces are becoming the future of successful business and networking,” says online business expert, Mike Swigunski, writing for Forbes. “Much of this has to do with the fact that industry experts are, in droves, starting to handle their services remotely.”
Digital transformation is a business decision. Moving to advanced digital solutions must involve collaboration among disparate departments of an organization, including technology and business teams. In the surety business, digital transformation offers significant potential, much of it yet untapped. The way sureties, bond producers and other professionals carve out this transformation in the coming months will shape how the business serves and grows for years, even decades to come.
This article is published with permission from the author and cannot be reproduced. These opinions are the author’s own.
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