Author, Andy Roberts, Account Executive, Surety Group, Rancho Mesa Insurance Services, Inc.
Rarely are the words surety and technology advancement synonymous, and that’s because it’s hard to introduce advancements to an industry where so many obligees still require raised seals and wet signatures on the bonds they are receiving. However, due to some challenges that bond companies, insurance agencies and obligees have faced during the pandemic, the industry is being forced to innovate. E-signatures on bond documents are becoming more commonplace, and electronic powers of attorney and digital seals are being adopted with the eventual goal of creating a surety bond creation process that is wholly digital.
General Indemnity Agreements executed by a contractor/principal when they are establishing a surety program with a bond company, have traditionally needed to be executed in front of a notary and the original document, with the wet signatures, provided back to the bond company. Now, more and more bond companies are moving away from this archaic practice and allowing these documents to be signed digitally. This is an important change as it shows the industry’s willingness to implement changes that are in the best interest of the principal. Another change that is being brought about is the use of electronic powers of attorney (POAs), and digital seals.
A couple of years ago, very few bond companies utilized electronic POAs, opting instead to mail agents hard copies that needed to be dated using a typewriter. While this method is still being used, more and more sureties are opting to provide their agents with e-POAs that they can print as needed. In addition to this change, digital seals are also starting to be more commonplace. These can be affixed to the POAs and the bonds themselves when they are transmitted digitally. The importance of these two changes is worth noting as they are steps towards creating a process which allows for the creation of a surety bond by solely electronic means.
Getting to a point where contract bonds are done only electronically is still a way off, but the technologies that are needed are available, making it necessary that the surety industry continues to embrace technology to improve our processes, and to ensure we are providing bonds in the form, whether electronic or paper, that clients and obligees want.
For questions about technology in surety or your surety needs, contact me at aroberts@ranchomesa.com or call my direct line at (619) 937-0166.