Zurich introduced the “Surety Bond Validator,” a new system for commercial and construction surety bond customers in the U.S. to confirm that a Zurich surety bond is valid.
“Millions of dollars in fraudulent surety bonds have been purchased during the last few years and the problem is growing,” said William E. Cheatham, president of Zurich’s Surety business unit.
Cheatham said that with Zurich’s Surety Bond Validator system, an agent, customer or obligee can check the status of a bond and confirm its accuracy by entering the bond number with one additional piece of coverage information, such as principal, bond penalty amount, effective date, or the obligee or owner. If the bond is valid, a confirmation appears within seconds.
Cheatham said that the rise in the number of fraudulent bonds the surety industry has experienced in the last few years is due to a variety of reasons, including:
— The relationship between surety providers and licensed agents gives agents the authority to issue the surety bond document. This makes it easier for criminals to create false documents and issue fraudulent bonds.
— Recently, fewer providers participated in the surety industry, which reduced capacity in the market and made it more difficult for unqualified contractors and commercial customers to obtain surety bonds.
— Because surety rates have risen, the higher dollar amounts available entice fraudulent activities. These higher rates may cause some contractors to enter into a risky and potentially fraudulent surety relationship.
“Fraudulent surety bonds have been a concern in the construction and surety industries for some time, and Zurich is responding,” said Cheatham.
Source: Zurich Financial Services
Was this article valuable?
Here are more articles you may enjoy.