1 / 18

Challenges and Trends in Highway Construction Surety Issues: A Comprehensive Financial Report

This report outlines the current surety issues affecting highway construction as discussed in the AASHTO Subcommittee on Construction. It highlights key financial indicators including a weak recovery, stagnant GDP growth, and concerns about the unemployment rate. The report emphasizes the importance of maintaining financial discipline amid tight budgets and discusses the implications of loss ratios in surety. Furthermore, it addresses significant topics such as alternative procurement methods, bond education, and the regulatory landscape necessary for safeguarding against fraudulent surety companies.

diane
Télécharger la présentation

Challenges and Trends in Highway Construction Surety Issues: A Comprehensive Financial Report

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Current Surety Issues in Highway Construction August 2, 2011 AASHTO Subcommittee on Construction

  2. Agenda • Financial report • Current issues • Questions

  3. Financial Report • Lagging indicator • Recovery – weak and slow • GDP growth – nothing to write home about

  4. GDP Growth

  5. Financial Report • Lagging indicator • Recovery – weak and slow • GDP growth – nothing to write home about • Consumer Confidence Index • Unemployment – jobs, jobs, jobs

  6. Unemployment Rate

  7. Financial Report • Lagging indicator • Recovery – weak and slow • GDP growth – nothing to write home about • Consumer Confidence Index • Unemployment – jobs, jobs, jobs • Tight budgets • Construction spending • Not out of the woods yet

  8. Financial Report - Surety • 2009 loss ratio – 19% • 2010 loss ratio – 13.2%

  9. Financial Report - Surety

  10. Where are all the losses – the wet blanket • By no means a hot recovery • Maintain discipline? • Beware of the ramp up

  11. Surety Issues • Waivers/threshold increases • Mentoring and technical assistance program • DOT/SFAA partnership • Bond Education Program • Workshops • Readiness

  12. Surety Issues • Alternative procurement methods • PPP • Bond requirements • Size of bond • Negotiated delivery

  13. Surety Issues • Mega projects • Capacity to meet need has expanded. • Right project/right contractor • Require largest amount reasonably available

  14. Surety Issues • Long term warranties • > 5 years • Certainty of judgment is reduced. • Reduced certainty = increased risk • Availability affected • Alternatives • Reduce term of warranty • Annual renewable bond • Exclude from performance bond

  15. Surety Issues • Onerous bond forms • Short response time • Terms that limit how a surety responds to a defaults • Automatic increases to the penal sum

  16. Know Your Surety • Surety is insurance. • Oversight and regulation is critical. • Beware of the fraudulent surety. • Sources of information • SFAA • State insurance agency • Best

  17. Contact Information • Robert J. Duke • Director of Underwriting/Assistant Counsel • The Surety & Fidelity Association of America • 202-778-3630 • rduke@surety.org

  18. Questions

More Related