This post is part of a series sponsored by IAT Insurance Group.
Whether you’re just starting out or contemplating a mid-career pivot, there’s a lot to be said for a career in insurance — but the guaranteed opportunities are often less popular.
What is the guarantee?
While a collateral is a mechanism for insurance, it is not an insurance. Guarantees generally act as unsecured creditors who assess the creditworthiness of the company and/or individual in deciding whether to provide collateral support in the form of a surety bond. The underwriting process often includes an in-depth financial analysis of the financial statements of the entity or individual requiring the bond, and an examination of their collective business experience/business acumen and credit history among other areas in the underwriting process.
Surety bonds are almost always offered by insurance companies that have a dedicated group of underwriting and managing professionals. Guarantees generally operate their business focusing on two areas – contract and commercial. Contract underwriters focus on the construction industry while commercial underwriters focus on all non-construction work and individual warranty needs.
A key aspect of a contract escrow agent’s job is working with construction companies seeking bonded labor, building anything from large utilities to roads, bridges, and other major infrastructure.
For example, when a construction project is filed, contractors are required to submit performance bonds and payment is usually in the amount of the construction contract. The bond guarantees that the contractor will meet its requirements in the construction contract and that all subcontractors and material suppliers who provided labor or materials for the project will be paid. If the contractor fails to do these things then the project owner can file a claim under a performance bond and if there are subcontractors or material suppliers who have not been paid they can file a claim under a payment bond. If the guarantee suffers a loss, the contractor in this example is liable to fully compensate the escrow company for its loss and expenses.
How can an underwriter prove that its contractor is capable and back it up with a related project that could cost millions of dollars? They review the bond application and contract, and follow up by asking questions to get a better understanding of the project and contractor. Underwriters will also review the construction schedule, contract start date and how that date will be handled with already ongoing contracts, escrow, payment terms – and more – all to better understand project risks. At this point, the underwriter also has a strong view of the contractor’s financial, regulatory, and experiential capabilities.
Besides construction, underwriters evaluate a wide variety of industries that require surety bonds, including auto companies, the long-distance transportation industry, retailers, hospitality, residential and commercial developers, healthcare, financial institutions, and a host of others.[1]
Warranty specialists do it all
Essentially, an insurance underwriter must be part accountant, part attorney, part contractor or business owner, part salesperson, and part business advisor to their clients.
With a surety bond, the entities that require the bond, also known as liabilities, can reduce their risk. A surety bond acts as a prequalification because the company or individual who needs the bond has the financial resources, experience, and other attributes to fulfill the encumbered obligation.
The path to a guaranteed career
When it comes to professional capabilities, the guarantee has a lot to offer, including traditional insurance functions such as underwriting, claims, and distribution (agency/brokerage). There are also management and operational roles such as account managers, strategic initiatives, and leadership positions.
For entry-level underwriting and claims roles, a bachelor’s degree in finance, accounting, risk management, construction management, or law is preferred. However, if a mid-career professional does not have the preferred educational background but has years of transferable experience from other industries such as banking, areas of credit and financial analysis, or construction management, he may also be a great fit.
Here are some skills common to assurance professionals:
- Excellent relationship building and interpersonal skills
- A high level of intellectual curiosity, with an interest in a wide range of industries
- The desire to constantly develop and grow
- Analytical skills
- Business oriented
- Problem-solving mindset
Now is the time to think about a guaranteed career
For anyone making career plans, now is the time to consider Daman as more talent is needed.
A large number of professionals will be retiring over the next several years, so the industry is doing what it must to recruit and train the next generation of warranty agents and agents.
To meet their talent needs, a number of companies, including the Institute of Applied Technology (IAT), offer summer internships to college students and also have internship programs designed for entry-level roles—both in assurance and other insurance jobs.
The industry is also doing more to promote diversity. For example, the Institute of Applied Technology’s (IAT) Warranty Business Unit sponsors a scholarship for the American Fidelity and Assurance Association (SFAA), which works to increase diversity in the warranty and fidelity industry.
For more information on what a guaranteed job at IAT can offer, please visit our website.
[1] Surety Bonds Direct “4 of the Largest Industries Demanding Surety Bonds,” February 5, 2021.
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