What are the differences between surety and the common lines of insurance?
With traditional insurance products: • The risk is transferred to the insurance company. • The insurance company takes into consideration that a certain amount of the premium for the policy will be paid out in losses. • The goal is to spread the risk. With surety: • The risk always remains with the principal. The obligee receives the benefit and protection of the bond. • The premiums paid are charged for the use of the surety companys financial backing and guarantee. • Surety professionals view their underwriting as a form of credit so the emphasis is on prequalification and selection.
