One of the many painful lessons that COVID-19 has reinforced is that ‘anything can change, life is fragile, and we must be ready to adapt’.
Every disaster has its positive outcomes and lessons to learn when we take time to see them. In the case of COVID-19 the entire world is in learning mode, and we share the opportunity globally to speed up our digital journeys. Focusing specifically on Surety and its digital state of affairs, industry experts have a variety of interesting opinions and observations.
Thomas Frossard, Product Owner Surety and Bonding at Tinubu Square observes that
“There is a debate over which party should initiate innovation because surety requires, at its minimum, a three party-relationship between the customer, the carrier and the obligee. Add in commercial and risk distribution partners, and we could be in danger of each party expecting action to be taken by another, leading to no progress at all”
Bryant Vernon, Chief Claims Officer, Aviva offers
“I think the interesting thing about COVID-19 that we have seen – not just in the insurance industry but in the broader context – is that more people in demographics who typically did not use digital solutions are now using digital solutions,”
Source: Canadian Underwriters
Mike Bond points out that
“it’s hard to change an industry in which some obligees still want to see raised seals and wet signatures on bonds”
So maybe it’s this last aspect of resistance we need to address by clearly articulating the measurable benefits that are available to all participants – Obligees, Principals, Sureties and their Agents alike.
19 of the benefits of e-bonding include:
Improved risk management and increased Obligee, Surety, Principal confidence
1. Automated compliance with legal enforceability requirements.
2. Ability to meet and exceed ever-changing legislative requirements.
3. Automated and robust verification of signatures, seals and document content integrity both during and after the signing/sealing process by all participants.
4. Reduced opportunity for fraud.
Tangible cost reduction
5. Cost reduction of paper use and handling in the range of $30 to $120 per document.
6. Reduced physical paper storage.
7. Reduced courier, runner and bid delivery travel costs.
8. Increased number of bids driving project costs down.
Improved response time in the bidding and tendering process
9. Bidder convenience and ease of unlimited access for signing & sealing bond documents at anytime from anywhere.
10. Faster completion of executed documents.
11. Time savings for legal, audit and other professional services related to fewer incidents of fraud and better audit trails.
12. Streamlined administrative processes by eliminating exchange of physical paper, physical geography limitations and manual validation of signatures and seals.
13. Streamlined coordination of document execution by enabling simultaneous electronic participation.
14. Supportive of electronic document management and associated elimination of misplaced files, cross- reference errors and unnecessary duplication of effort and paper.
Lowered total cost of ownership
15. Pay-as-you-go business model with a SaaS/Cloud implementation.
16. Easy to implement and integrate with other digital platforms (like e-procurement solutions).
17. Surety bonds reduce financial stress on bidders, e-bonds opens the door for additional bids.
Positive environmental impact
18. Reduction in corporate carbon footprint with eliminated couriers, runners and bidder travel.
19. Reduction in tree consumption.
With so many compelling reasons to use e-bonds, it will be interesting to see who shows the most determination to lead the charge or at least influence the charge – will it be the Obligees? The Principals?
The Surety Carriers and their agents?
To date in Canada, the major influence has come from federal government agencies, followed closely by municipalities. None of these digital surety player pioneers are looking back having reaped most if not all the 19 benefits outlined above. For many other Obligees, COVID-19 has made the decision to test the waters of digital bonding easy. Based on early positive experience e-bonding advocates feel that adoption will continue to accelerate even without the brute force of a pandemic.
While necessity may be the mother of invention, world-wide disaster is the most certainly the father of change.