Digital transformation in surety: Enhancing risk management through tech
Surety, commonly characterized by its analog practices, is aggressively moving to leverage technological advancement to reshape how it conducts business. Industries reliant on surety bonds, such as construction, freight, and automotive, are experiencing robust growth, even in the face of economic uncertainties.
To remain competitive, businesses are shedding outdated practices that involve paper contracts and repetitive data entry. Cloud-based solutions have emerged as the catalysts for operational efficiency, resulting in increased sales performance, heightened customer engagement, streamlined operations, and improved employee productivity. The trajectory is clear: embracing digital transformation is pivotal for the surety industry’s success.
According to the latest National Association of Surety Bond Producers State of the Surety Industry Survey, the industry is performing very well. The general sentiment among respondents underscores that 2022 marked yet another year of remarkable performance, ranging from “good” to “very good,” and even described as “outstanding” by some.
The prevailing trend reported by most companies points towards simultaneous gains in both premium expansion and profitability. A substantial 88.5% of those surveyed said their companies outperformed their projected budgets for 2022, while 7.5% indicated a par performance, and only 4% reported results falling short of expectations.
Notably, a key highlight was the prominence of “profitable growth” listed among the primary achievements of the year. Several participants noted that their revenue surge was notably bolstered by the impact of inflation, which played a significant role in driving top-line growth.
At the heart of this transformation is the automation of outdated and redundant processes that have hindered progress. The cycle of redundant data entry, where information is entered multiple times by brokers and carriers, is time-consuming, error-prone, and typically requires a full-time data-entry staff. The solution lies in the industry-wide adoption of digital solutions that promote trust and efficiency. By digitizing workflows and bond data, stakeholders can redirect their energy towards value-added activities, thereby enhancing overall efficiency and effectiveness.
The processing of claims, while infrequent, will also benefit from the transformation to digital automation. Recent insights from the NASBP State of the Surety Industry Survey, surety leaders believe that the industry is effectively managing surety claims, garnering an average rating of 7.08 out of 10 for their performance. However, 76% of respondents indicated that enhancing the surety claims process could be achieved through more regular and interactive communication with claimants. This finding underlines the significance of leveraging digital platforms as a strategic solution to address this need for increased engagement and streamlined communication.
Real-time connectivity is capable of not only saving time and resources but simplifying the entire process. In the digital world, business operations occur at an accelerated pace. Carriers and brokers are capitalizing on this by utilizing analytics to gain deeper insights into customer behavior, enabling them to refine their strategies. As manual processes are automated, firms are able to focus on strategic initiatives such as marketing, forecasting, and portfolio management.
With automation taking center stage, the journey from bond initiation to underwriting and sales has been streamlined to an unprecedented degree. Freed from the constraints of manual processes, firms can allocate resources towards innovation, boosting profitability and risk management capabilities even during uncertain economic times.
The surety industry’s digital transformation is ushering in a new era of risk management. By embracing cloud-based solutions, streamlining processes, and integrating automation, the industry is rewriting the rules of engagement. This transformation is not a fleeting trend but a strategic necessity that empowers the industry to navigate the dynamic risk landscape with resilience and innovation. As the digital revolution continues to unfold, the surety industry’s core foundation of trust remains unwavering, ensuring continued success across sectors and into the future.
