Author, Andy Roberts, Account Executive, Rancho Mesa Insurance Services, Inc.
In my previous article and podcast, “Surety Industry Forced to Innovate,” I discussed a few technological advancements within the surety industry and how the ultimate goal would be issuing bonds to obligees digitally. While that is still some ways off, the technology is here and there are companies and organizations already exploring how blockchain technology may be the answer when it comes to fully digitalizing the surety industry.
Simply put, a blockchain is a shared digital ledger that records transactions between parties and is permanent and verifiable. Applying this method to the surety industry, an electronic record (i.e., bond) would be created and shared with all parties to the bond, and any changes to that bond would be automatically added to the record so that every party who has access to it can see the history of the changes. This type of technology and the fact that it’s an immutable record, would alleviate the need for wet signatures, raised seals, and notary acknowledgements, which would increase the speed at which bonds can be issued, while also cutting some costs that are associated with issuing hard copy bonds. As mentioned, these systems are still being developed, but there are companies and surety organizations that are actively working to make this technology commonplace within the industry.
The Institutes launched the Institutes RiskStream Collaborative, which has spearheaded the effort to introduce blockchain technology to the surety industry.
“The power of attorney use case was the logical starting point and we’re excited to advance it forward. We are also excited that it will lead to many more downstream use cases, including Bond Signature and Verification,” said Patrick Schmid, vice president of the RiskStream Collaborative.
Institutes RiskStream Collaborative started by piloting a program digitalizing the power of attorneys and this is now moving into its second phase. This initiative has garnered support from major surety associations like The International Credit Insurance & Surety Association, the Surety & Fidelity Association of America, the National Association of Surety Bond Producers.
Rancho Mesa is committed to utilizing technology and strives to always be at the forefront when it comes to advancements and changes in order to help our clients stay ahead of the curve. And, while issuing bonds digitally using blockchain technology won’t be happening tomorrow, there are bond companies in Europe along with the Institutes Riskstream Collaborative that are testing the process. And, its participants view this as the future of issuing bonds, which makes it an important topic for us to address and monitor.
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.