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04 March 2013 0
SURETY BONDS- Why you need them!
Fort McMurrayFuture Projects SummitMarch 1, 2013
04 March 2013 2
Inscription found in the Temple of Apollo in Delphi Greece
04 March 2013 3
I – THE SURETY INDUSTRYSurety Companies•SAC members write 95% + of all bonds in Canada
– There are hundreds of sureties listed on OSFI’s website roster – fewer than 20 are SAC members and they write almost all the bonds
Surety Brokers• Look for SAC member brokers – they are
dedicated to providing superior service
04 March 2013 4
Who speaks for the Industry?Surety Association of Canada (SAC)
• SAC is your resource for bonding information
– Advocacy– Training & Education– Product innovation– Owner relationships
Construction Pyramid
04 March 2013 5
Owner
General Contractor
Subcontractor
Second-tier Subs
Second-tier Subs
Subcontractor
Second-tier Subs
Surety is not
Insurance
04 March 2013 6
Non cancelable!
04 March 2013 7
It’s a “relationship
business”
04 March 2013 8
Did someone mention “paperless” ??!!!
04 March 2013 9
Prequalification…
04 March 2013 10
I had no idea you looked at things
that way…
04 March 2013 11
Site visit
04 March 2013 12
Indemnity?
04 March 2013 13
You’re kidding –right??
04 March 2013 14
Other issues
•Bonding subs is not double bonding
•Broad form L and M
•Bond premium
04 March 2013 15
Construction Pyramid
OWNER
Sub Contractor-Sub-subs…
GENERAL CONTRACTOR
Sub Contractor-Sub-subs…
04 March 2013 16
Bid bond
04 March 2013 17
Performance bond
04 March 2013 18
Labour & Material Payment Bond
04 March 2013 19
We have a newbond
wording
04 March 2013 20
Bonds are not
expensive
04 March 2013 21
50% is normally enough
04 March 2013 22
Don’t waive the L and M Bond!
04 March 2013 23
Are yourbonds
properly executed?
04 March 2013 24
Now wheredid I
put that bond?
04 March 2013 25
E Bonding is on the way
04 March 2013 26
Keep the Surety informed!
04 March 2013 27
04 March 2013 28
V – Subcontractor Default Insurance Isn’t the Answer(nor are Letters of Credit)
SDI Protects Contractors not Owners• Designed to protect large G.C.’s against subcontractor
default
• NOT designed to protect owners from the default of General Contractor
• No payment protection for the subs and suppliers
• Insured General Contractor prequalifies subs – then is ‘judge and jury’ on performance: no independent third party
• Does not “save the owner money”
04 March 2013 29
V – WHAT’S NEW IN SURETY BONDS?
The industry, working through SAC, is constantly analyzing trends and meeting with owners to improve the surety product
04 March 2013 30
SURETY ONLINE LEARNING CENTRE• The Surety Online Learning Centre accessible from SAC website;
www.suretycanada.com.
• Five learning modules that introduce the basics of surety bonds and the suretyship process
• Learn at your own pace.
• Ideal for review or for colleagues who can’t attend a “live” information session.
• It’s FREE
04 March 2013 31
CONTACT US
•Phone: 403-612-4070
•email: [email protected]
•or visit our www.suretycanada.com