UCS Team
How Trust in a Surety Partner Impacts Business Growth
In an industry as risk-averse as construction, trust is crucial at every stage. Project owners want to feel confident in their contractors’ quality of work, while surety underwriters need assurance that they’re financially stable and capable of fulfilling their obligations.
Surety bonds can provide project owners with peace of mind. However, contractors, surety agents, and surety underwriters need to cultivate trust with each other in other ways.
So, how can you boost trust and grow your business as a Property and Casualty (P&C) insurance agent? Below, we’ll explain the importance of trust and outline three ways to cultivate it with your contractor clients and surety companies.
What is Trust?
Before we explore the role of trust in surety relationships, let’s take a step back and define our terms. Trust is the belief that someone is reliable, honest, and has integrity. When you trust someone, you have confidence in their ability to fulfill their promises.
Surety bonds enhance trust between contractors and project owners by creating a strong financial incentive for contractors to fulfill their obligations. However, this transactional trust isn’t the only type – relational trust is ultimately much more influential.
Relational trust is built through consistent, positive interactions between parties. It informs the third C of surety bond underwriting: character. A contractor’s capital and capacity may be strong, but their character is often the determining factor in underwriters’ bonding decisions. Thus, contractors who build trust with their surety agents and surety companies are much more likely to increase their bonding capacities.
Why Does Trust Matter in the Construction Industry?
In the construction business, trust can make or break a business’s success. Research shows that high-trust businesses are more productive, profitable, and efficient. They also boast higher levels of employee engagement and innovation.
According to an FMI and Autodesk study of over 2,500 construction professionals, high-trust companies enjoy the following outcomes:
- More repeat business, achieving 2% to 7% higher gross margins than companies with “above average” trust.
- Lower turnover rates, saving them $750,000 each year on new employee recruitment.
- Greater reliability in meeting project deadlines, saving an estimated $4 million each year on delay-related expenses.
To reap similar benefits at your surety agency, focus on embodying the qualities that foster a high-trust work environment. Based on FMI and Autodesk’s research, these key qualities include:
- A collaborative mindset
- Transparent, open communication
- Consistent internal processes
- A safe and secure workplace
- A focus on employee development
How to Cultivate Trust With Contractors and Surety Partners
Along with establishing a high-trust environment within your company, you can build a triangle of trust with your contractor clients and surety partners using the following strategies:
#1 Focus on Areas of Mutual Interest
People who only pursue their personal interests are hard to trust. After all, they’re out for themselves. By focusing on where your business interests collide, you can create more trust between your clients and surety partners.
In practice, this looks like adopting a mindset of “we’re in this together” and “we’re going to get this done.” It also involves regularly checking in and asking questions to ensure all parties are aligned.
For example, let’s say you’re representing a contractor who wants to take on a large project in a new niche. Here’s how you can build trust with both parties and get the deal done:
- Surety Company – After hearing about the project, your surety partner says they want to see stronger financials before underwriting the bond. They’re rightfully concerned that the project’s unfamiliar scope presents more risk.
You ask the surety exactly what they need to see from your client to feel comfortable underwriting the bond. You also do your best to help the surety see the value in the project. - Contractor – You return to your client, update them on your surety partners’ concerns, and provide specific suggestions on ways to strengthen their finances. You also offer an honest estimate of how long these improvements will take.
After your client implements these recommendations, you go back to your surety partner and report their improvements. You also point out how the new project is actually quite similar to others the contractor has successfully completed in the past.
As you can see, this collaborative, can-do approach instills trust in your contractors and shows them that you’ll always go the extra mile to get them bonded. It also maintains trust with your surety partner by honoring their risk tolerance and being upfront about your clients’ capabilities and constraints.
#2 Maintain Open Communication
Bonding experiences that go smoothly are easy to discuss – it’s the challenging ones that often lead to breakdowns in communication. After all, delivering disappointing news to a client is tough.
While frank conversations aren’t fun, they’re essential to supporting your clients’ long-term growth and success. You need to be open about their projects’ challenges, risks, and financial realities. This open communication can enhance trust and help contractors achieve their goals.
Similarly, being transparent with your surety partner about a contractor's potential issues can help them address them effectively, whether that involves adjusting their bond terms or offering advice on improving their financial standing.
Overall, transparent communication can help manage expectations and strengthen your relationships, ensuring that everyone is prepared to navigate bonding challenges together.
#3 Respect Each Party’s Role
Trust is a two-way street, so it’s important to trust that your clients and surety partners know what they’re talking about when it comes to their businesses. Rather than telling your clients how to do their jobs or second-guessing their expertise, simply provide appropriate support and resources to help them achieve their bonding goals. By doing so, you can demonstrate respect while positioning yourself as a trusted partner.
Remember, Trust Takes Time
According to Warren Buffett, "It takes 20 years to build a reputation and five minutes to ruin it." With this in mind, it's important to manage your expectations and recognize that trust isn’t built overnight. Whether you're working with new clients or forging new relationships with surety partners, it will take time to establish a strong foundation of trust.
This sentiment is worth sharing with your contractors. As they complete projects successfully and bolster their reputation in the industry, they can also win over the trust of your surety partners and increase their bonding capacity.
Secure A Trusting Surety Partnership With UCS
By following the four tactics above, you can build a foundation of trust from the start, helping your clients expand their bonding capacity and grow their businesses. As you help them succeed, you can strengthen your relationships, increase your client retention, and support your own business growth.
Ready to put these trust-building tactics to the test? Consider partnering with United Casualty and Surety Insurance Company (USC). With over three decades of experience and an A- (Excellent) rating from AM Best, we’re a trusted surety provider for small-to-mid-sized contractors. Our surety company stands out for its:
- Transparent communication
- Personalized service
- Solutions-based approach
- Flexible bond options and rates
- Instant commercial bond issuances
- Nationwide licensing
- Treasury listing
As creative problem-solvers, we strive to think outside the box and underwrite bonds whenever possible. Just take it from our long-standing client, Mike Regan: “USC is easy to get along with, will listen to you, and will find a way to make it work if they can.”
Want to learn how USC can support your success? Contact our team today.
Sources:
HBR. The Neuroscience of Trust.
https://hbr.org/2017/01/the-neuroscience-of-trust
Autodesk. New Study from FMI and Autodesk Finds Construction Organizations with the Highest Levels of Trust Perform Twice as Well on Crucial Business Metrics.
https://www.autodesk.com/blogs/construction/autodesk-fmi-study/
Forbes. The Three Essential Warren Buffett Quotes to Live By.
Post a comment