The Three C's of Surety Agent E&O
Presented by:
Edward M. (Butch) Weed
Martin Weed, LLC
100 Union Hill Drive, Suite 150
Birmingham, Alabama 35209
(205)443-6661 (direct)
[email protected]
August 28, 2012
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Three C's of
Surety Agent E&O
How to use Character and Capacity to avoid
spending Cash on attorneys
(Like the one talking to you now).
August 28, 2012
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Speaker@NASBPConvention
KIAWAH
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Edward M. (“Butch”) Weed
• Surety Bond Underwriter, USF&G, Birmingham, AL 1984-85
• Licensed Producer/Agent, The Wend Agency n/k/a International
Assurance, Mobile, AL 1985-88
• NASBP Conventions, Kiawah Island, SC
• NASBP Agent School, Houston, TX
• USF&G Agent School, Baltimore, MD
• CPCU Designation (completed in two years, 1985-1987)
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Edward M. (“Butch”) Weed:
NASBP Member turned Attorney
• Defense Litigation Attorney since 1991
(Insurance, Surety, Professional Malpractice,
Construction, E&O, Environmental)
• University of Alabama, BS in Corporate
Finance and Investment Management 1984, JD
1991
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Three C's of Surety Agent E&O
Why are we here?
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Three C's of Surety Agent E&O
“What actually happened?”
versus
“What someone (usually a non-agent)
suggests should have happened?”
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Three C's of Surety Agent E&O
I.
Cash
II.
Character
III. Capacity
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Three C's of Surety Agent E&O
III.
Capacity of NASBP members:
A.
Knowledge
B.
With Ability to Apply Knowledge to Get
Results (Wisdom/Savvy/Experience)
C.
Ability to Recognize When Results May Not
Be Possible
D.
Skills and Technology
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Three C's of Surety Agent E&O
III.
Capacity of Professionals in Surety Bonding:
A.
Knowledge (Things Agents Know):
1.
Properly Trained, Experienced Surety Agents, such as those
with NASBP membership, are the smartest people in the
industry-as the NASBP logo reads, you are “Professionals in
Surety Bonding.” Understand that with that membership,
comes responsibility.
2
Agents Don’t Underwrite.
3.
Agents Don’t Handle Claims.
4.
Good Relationships Are the Key to Success.
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Three C's of Surety Agent E&O
III. Capacity: Knowledge and Applying Knowledge
NASBP = smartest people in the industry: The Surety is counting on you to get asked
for information. The Contractor is counting on you to get the bond.
When things go bad, as the smartest person around, you could be blamed! Document
and Document, as you do already... Emails can save you-Assume every one is
evidence.
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Three C's of Surety Agent E&O
Emails, Emails, Emails!
•Found everywhere
•What Attorneys use to reconstruct events
•What Courts will rely upon as Evidence
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Emails=Documentation=Evidence
1. Be polite.
2. Identify the important stuff (contractor,
project and what is being sent).
3. Specify the next step.
4. Be short-no narratives or irrelevant stuff.
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Good Email
To: Nancy Uw
From: Mary Mayeye
Date: August 28, 2012
RE: Your file number 012345AB XYZ Contracting - State Highway Project Number 123cba (09/15/12 letting)
Dear Nancy:
Attached is the information you requested on July 6, 2012, including:
1. 06/30/12 in-house interim statement;
2. 12/31/11 CPA Review;
3. 06/15/12 Bank Reference; and
4. Explanation of the change in ownership from the CPA.
5. Resumes of new owners.
I trust you will find it in good order, and let me know if you have any questions, or require anything else.
Assuming there is nothing else you may require, please let me know when you might be available to discuss bonding
for the project we discussed. In the interim, I may try to call you later today to confirm you got this email and the
attached information, and to facilitate issuance. Because, XYZ is a ten year insurance customer of our agency (and
your company) we would like to make sure we have done everything to be in a position to offer the most competitive
surety option possible.
Thanks
August 28, 2012
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Bad Email
To: Nancy
From: Larry S. Lost, XVII, DVM, CPCU, RIMS, CPA, M,D., DDS, M,P.
Date: August 28, 2012
Re; Information
Here it is. Nancy, you are making this contractor get a bunch of stuff that no underwriter has ever asked for. It has
taken some time. Sureas Surety has already offered to write his book of business (including bonds AND insurance).
Sureas Surety also issued bonds for other contractors on the same job and didn’t require any of this. This is a good
guy, and we would hate to lose or have to move his commercial insurance if you don’t work with us. I need to hear
from you by 5PM today that you agree to write the bond now that we have gone to all this trouble to get you all this
additional stuff you asked for. Mark, Jr. does these kind of jobs all the time, and grew up on a backhoe. The fact that
he has now bought the business from his father who has retired and made enough money to move to Australia should
tell you something about how good a contractor this is, so not sure why that matters here.
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Three C's of Surety Agent E&O
III. Capacity: Knowledge and Applying Knowledge
2.
Agents Don’t Underwrite.
•Provide the asked for Information.
•Don’t Analyze Information Yourself.
•Allow Surety Underwriter to do job.
•Deal With Voiced Concerns.
•Let Surety Make Decision.
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Three C's of Surety Agent E&O
III. Capacity: Knowledge and Applying Knowledge
3. Agents Don’t Handle Claims.
Agents Should Never Handle Claims: Why?
•Surety Bonds Unlike Insurance
•Theoretically No Claims
•So you should have NO experience
•If Actual Claim, Don’t Act Like NBD
•Pass Information on to surety and get out
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Good Email
To: Nancy Uw
From: Mary Mayeye
Date: April 3, 2013
RE: Lien Filed; Your file number 012345AB XYZ Contracting - State Highway Project Number 123cba
Dear Nancy:
A supplier has filed a lien on the project and the owner has demanded action on our part. Attached please find:
a. A copy of the lien filed April 1, 2013 in Yoknapatawpha County by Osay Can UC Curtains ;
b. The original $2000 March 1, 2013 invoice for curtains (in the jobsite trailer);
c. A copy of XYZ’s check #9876 for $2000 for advance payment of the curtains (February 1, 2013).
d. Owner’s letter of April 2, 2013 to us and XYZ demanding action.
As additional background, XYZ’s new project manager ordered curtains for the trailer (prescribed by his doctor for
stress relief reasons), and Osay Can UC demanded to be paid in advance for the specialty silk moray (sp?) Taffata
fabric he wanted, which was done. XYZ is meeting with the owner of Osay Can UC tomorrow (4/4) to show them
the invoice and check and to try and get the lien withdrawn.
I will let you know if I hear anything else, and please let me know if you require anything else on my part. Also,
Tom Terrific, XYZ’s new project manager’ s mobile number is (xxx) xxxx and his email address is
TomT@expectanoutaofficeautoreply if you feel the need to speak with him directly.
August 28, 2012
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Bad Email
To: Nancy
From: Larry S. Lost, XVII, D VM, CPCU, RIM S, CPA , M ,D., DDS, M,P .
Date: November 24, 2013
Re: Poss ible Claim
Nancy, I know your offices are probably closed for Thanksgiving today but I am in the office today trying to get
caught up. Been meaning to let you know what I have done so far (at no charge, I might add). The Owner has
stopped payment to XYZ for no reason at all. The state highway department bureaucrats are claiming that there is a
lien on the project from about six months ago. Everyone knows that you cannot lien a highway, so they are being
completely ridiculous. They are us ing this bogus $2,000 claim on some materials to avoid paying XYZ around $4.5
mil that is owed. I told X YZ I would work with this claimant but they are foreign (French I think), haven’t respond
to my letter demanding they return my calls , and don’t seem to want to remove this lien that is holding everything up.
A lso, there may be some other subs that may also try to claim on the payment bond if the highway department
violates the law anymore and refuses to pay XYZ the money owed them. I have already got our lawyer involved and
he says we have a good case for suing the supplier and the highway department. I have been through this kind of
thing before (many times ) and will handle it, but just thought I should let you know. A lso, while the state has sent a
bunch of letters where they threatened to declare us in default for not paying subs, etc., etc., we all know from
experience that this is just a bluff to make us think they are going to file a claim on the performance bond and should
not be taken serious ly. I will let you know when we file suit against the highway bureaucrats (probably this
M onday), you will get a kick out of the Complaint.
August 28, 2012
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Three C's of Surety Agent E&O
III. Capacity: Knowledge and Applying
Knowledge:
4. Good Relationships Are the Key to
Success;
Surety Relationship > One Bond
Contractor Relationship > One Bond (hopefully)
One Bond < all the relationships put together
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Three C's of Surety Agent E&O
III.
Capacity
C. Ability to Recognize When Results May Not Be Possible
Recognize that you are not:
•a contractor
•a surety
•a state insurance department
•a banker
•an accountant
•a lawyer
•an owner, state highway department, or other such entity
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Three C's of Surety Agent E&O
III.
Capacity
C. Ability to Recognize When Results May Not Be Possible
Recognize that you are not:
•a contractor
They bid and build, and risk assets and jobs, you don’t
•a surety
They have guidelines to reject bonds, you don’t
•a state insurance dept.
They make judgment calls on sureties, you don’t
•a banker
They can lend working capital, you can’t (shouldn’t)
•an accountant
They prepare financial statements, you don’t
•a lawyer
They draft the contracts and fight the battles, you don’t
•an owner
They have work to award, you don’t
In short, do not try to be something you are not: Your role is important, and so is theirs.
August 28, 2012
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Three C's of Surety Agent E&O
III.
Capacity
A.
Knowledge
B.
Ability to Apply Knowledge to Get Results
C.
Ability to Recognize When Results May Not
Be Possible
D.
Skills and Technology
August 28, 2012
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Three C's of Surety Agent E&O
III.
Capacity
D. Skills and Technology.
Use the skills you make your living with to see if concerns can be
addressed before the lawyers get involved:
•Listen
•Identify the Concern
•Suggest Possible Means of Resolution/Prevention of the Problem
Going Forward
August 28, 2012
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Good Email
To: Nancy Uw
From: Mary Mayeye
Date: December 15, 2013
RE: Possible Meeting or Conference Call (at your convenience)
Dear Nancy:
I tried to reach you on the phone, but understand you may be gone for the Holidays. I will be in your area after the
first of the year and would like to sit down with you if you can find the time (lunch or dinner, if that is an option). If
not, could you give me a call soon?
Happy Holidays and I look forward to hearing from you soon.
Thanks,
August 28, 2012
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Bad Email
To: Nancy
From: Larry S. Lost, XVII, DVM, CPCU, RIMS, CPA, M,D., DDS, M,P.
Date: December 31, 2013
Re; Our Agency
Our agency is considering moving all of its surety business to Sureas Surety immediately. As you know, we have
been with you for 68 years, and have written over thousands in bond premium. I do not appreciate your recent email
insinuating that my not reporting a bogus claim over some curtains sooner had something to do with the highway
department kicking XYZ off the job. You have no idea what I did (at no charge, I might add) to try and help that
situation, and apparently don’t know anything about the business if you think the two things are related.
I have copied your boss and CEO on this email, and am considering sending a copy to the insurance department if
your attitude is not straightened out shortly.
August 28, 2012
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Three C's of Surety Agent E&O
III. Capacity
D. Skills and Technology
•Technology exists, make it your bff (best friend
forever).
•Like many good friends, it already does everything
you want, you probably just never noticed.
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Three C's of Surety Agent E&O
Required Computer Skills and Technology:
1. The ability to locate ANY document or data from
your system.
2. And send it anywhere.
3. And recognize how data is stored, and what it
means if data doesn’t exist.
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Three C's of Surety Agent E&O
To make technology= bff : )
• Identify types of file on your desktop.
• Find out how backup is handled.
• Do system searches.
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Three C's of Surety Agent E&O
CHARACTER
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Three C's of Surety Agent E&O
(Kipling’s Lessons)
IF
IF you can keep your head when all about you
Are losing theirs and blaming it on you,
If you can trust yourself when all men doubt you,
But make allowance for their doubting too;
If you can wait and not be tired by waiting,
Or being lied about, don't deal in lies,
Or being hated, don't give way to hating,
And yet don't look too good, nor talk too wise:
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August 28, 2012
Three C's of Surety Agent E&O
If you can dream - and not make dreams your master;
If you can think - and not make thoughts your aim;
If you can meet with Triumph and Disaster
And treat those two impostors just the same;
If you can bear to hear the truth you've spoken
Twisted by knaves to make a trap for fools,
Or watch the things you gave your life to, broken,
And stoop and build 'em up with worn-out tools:
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Three C's of Surety Agent E&O
If you can make one heap of all your winnings
And risk it on one turn of pitch-and-toss,
And lose, and start again at your beginnings
And never breathe a word about your loss;
If you can force your heart and nerve and sinew
To serve your turn long after they are gone,
And so hold on when there is nothing in you
Except the Will which says to them: 'Hold on!'
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Three C's of Surety Agent E&O
If you can talk with crowds and keep your virtue,
' Or walk with Kings - nor lose the common touch,
if neither foes nor loving friends can hurt you,
If all men count with you, but none too much;
If you can fill the unforgiving minute
With sixty seconds' worth of distance run,
Yours is the Earth and everything that's in it,
___________________________
And - which is more - you' ll be a Man, my son! may not have a claim, not one!
-Rudyard Kipling
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Three C's of Surety Agent E&O
• Character is a yes/no question in underwriting, and
should be in your business.
• There is no in-between and partial credit is not given.
• While lessons on character are far beyond the scope of
a one hour webinar, what Kipling said about character
are the same things you should look for in:
-yourself;
-employees and
-everyone you are associated with.
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Three C's of Surety Agent E&O
Thanks for your time!
Edward M. (Butch) Weed
Martin Weed, LLC
August 28, 2012
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YOUR QUESTIONS?
If you do not have the opportunity to have your question
addressed during the Seminar, you may contact the presenter
directly:
Edward M. (Butch) Weed
Martin Weed, LLC
100 Union Hill Drive, Suite 150
Birmingham, Alabama 35209
(205)443-6661 (direct)
[email protected]
August 28, 2012
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