Rancho Mesa's Alyssa Burley and Director of Surety Matt Gaynor discuss contractor express bond programs.

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Producer/Director/Host: Alyssa Burley

Guest: Matt Gaynor

Editor: Megan Lockhart

Music: "Home" by JHS Pedals, “News Room News” by Spence

© Copyright 2023. Rancho Mesa Insurance Services, Inc. All rights reserved.

transcript

[Introduction Music]

Alyssa Burley: Hi! This is Alyssa Burley with Rancho Mesa’s Media Communications and Client Services Department. Thank you for listening to today’s top Rancho Mesa news brought to you by our safety and risk management network, StudioOne™. Welcome back, everyone. My guest is Matt Gaynor, director of the Surety Department at Rancho Mesa. Today, we're going to be discussing contractor express bond programs. Matt, welcome to the show.

Matt Gaynor: Good morning, Alyssa. Great to be back in the studio.

AB: Yeah, we're glad to have you. So, several years ago, you put together an article on various credit driven surety bond offerings that required just a one page application to qualify. At the time, the maximum limits offered by various carriers was $350,000 for a single bond. What is an express bond and are the maximum limits about the same as they were a few years ago?

MG: So, express bonds are a quick and easy bond program that are solely based on personal credit scoring. In other words, if the owner of a construction company pays their personal bills, then he or she will most likely have the ability to qualify for a decent sized bond. With loss ratios being rather low in these programs, several of our surety carrier partners have increased their maximum limits.

MG: Just recently, we received an offer in support of our qualified contractor with limits up to 750,000 for a single bond.

AB: Okay, so these types of express bonds, is there a need for the company to actually provide financial statements to qualify for these?

MG: That's a great question. There's no need for company financial statements to qualify for bonding in these programs. Instead, the contract completes a fast application requesting personal financial information about the owners. The bond company will run the credit of the owners. If the personal credit is decent, the bond will be approved.

AB: Okay, so if the contractor is on a time crunch and they need to get this type of bond, how fast can they get these bonds?

MG: If the personal credit is decent, we usually receive an approved response within 24 hours of submission. So, these are very fast turnaround times.

AB: Wow. That's great. So, what types of bonds can contractors get using this streamlined process?

MG: These express bond programs will support requests for big bonds, performance and payment bonds and letters of bond ability. Several carriers also provide a pre-fault qualification feature, so you can determine if you qualify for the bond before you better negotiate a project that will require a bond. This is helpful for owners that are concerned that maybe they have low credit scores.

AB: Okay, so what's the standard premium rate for these types of programs?

MG: The standard premium rate for these programs is 3% of the contract amount, but based on the strength of personal credit type of work, you're looking to bond, we've seen this lowered to 2%. So, therefore, if you're considering a project that requires a bond and not looking forward to collecting a lot of information, consider an express bond.

AB: Okay. So, Matt, if listeners have questions about their bond program, what's the best way to get in touch with you?

MG: I can be reached at 619-937-0165 or mgaynor@ranchomesa.com.

AB: All right, great. So, Matt, do you have time for a couple of rapid fire questions?

MG: Sure. They always are great.

AB: All right. So, spring or fall?

MG: Fall. I was married in the fall, so I look forward to fall.

AB: All right. Do you like comedies or romance movies?

MG: Big time comedies.

AB: All right. Taco or Burrito?

MG: I think taco, burritos can be a little thick. So, I like the quick tacos.

AB: All right. And the most important one. Star Wars or Star Trek?

MG: Oooh, can I say neither.

AB: Yes, you can.

MG: I've been- I have seen some Star Wars movies, so I'll say Star Wars.

AB: All right. So, Matt, thank you so much for joining me in StudioOne™.

[Outro Music]

MG: Okay. Great being back. Thanks again.

AB: This is Alyssa Burley with Rancho Mesa. Thanks for tuning in to our latest episode produced by StudioOne™. For more information, visit us at ranchomesa.com and subscribe to our weekly newsletter.