Construction Industry

Tech Challenges for Surety

As technology becomes more integrated into construction, surety underwriters need more comfort and clarity.
By: | May 23, 2017 • 2 min read

Technology’s integration into every aspect of our lives makes organizations increasingly vulnerable to some sort of cyber flaw.

This is true for the construction industry, and it has led to surety bonding working to incorporate technology as both a source of information and a factor in underwriting.

“We are seeing a blurring of the lines between commercial and contract in the surety world. Contract surety used to be just sticks and bricks,” said Joseph Perschy, director of strategic operations, Argo Surety. “Commercial surety covered everything else.

Joseph Perschy, director of strategic operations, Argo Surety

“But as tech has become more integrated into construction, underwriters can’t just do one or the other anymore. With smart buildings, the underwriters need clarity through the general contractor to the subcontractors installing the systems.”

Argo Surety, part of the Argo Group, provides contract and commercial surety bonds to a variety of businesses and industries in all 50 states. Argo Surety also offers U.S. Customs bonds through a partnership with C.A. Shea & Co.

“Clearly the buck stops with the underwriter,” said Perschy, “but the brokers and the contractors have roles as well. Contractors need to be clear with underwriters on their comfort level with technology, their capabilities and the expertise of their subcontractors.”

If things do not go well, “the contractor is going to be responsible for reimbursing the surety,” noted Perschy.

“Now that is not necessarily crippling; that actually is what the bond is for. The surety steps in, then goes back to the contractor. But that makes it harder and costs more money and time.”

To enable insurance companies and sureties to incorporate work-in-progress statements from contractors and subcontractors in their underwriting, a broad coalition is working to develop a format with XBRL US, the standards organization for financial data.

According to XBRL, developers are assessing input from the first public-comment period that closed recently, and will consider a second such period over the summer or into autumn.

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Separately, XBRL is also developing a new data standard for solar energy in a project with the U.S. Department of Energy. First fruits are not expected until 2018.

The U.S. chapter of XBRL, an international organization, is one of about two dozen national standards groups. The acronym stands for “eXtensible Business Reporting Language” and was originally developed as a financial data standard. It is used by public companies in reporting to the Securities & Exchange Commission, as well as by banks filing with the Federal Deposit Insurance Corp.

The effort to establish standards for contractors and sureties started in 2015. XBRL reported that a proof-of-concept project was completed with The Hartford, and that Liberty Mutual is also participating.

“We are now trying to engage other underwriters and contractors,” added Michelle Savage, vice president of communications for the group.

Gregory DL Morris is an independent business journalist based in New York with 25 years’ experience in industry, energy, finance and transportation. He can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

Risk Management

The Profession

Maila Aganon is the personification of the American dream. The vice president of treasury and risk for Caesars Entertainment Corp. immigrated from the Philippines and worked her way to the top.
By: | October 12, 2017 • 4 min read


R&I: What was your first job?

I actually had three first jobs at the same time at the age of 16. I worked as a cashier in a fast-food restaurant, a bank teller and a debt collector for an immigration law firm.

R&I: Who is your mentor and why?

I have a few. The first one would be the first risk manager I reported to. He taught me the technical part of the job, risk financing, captives and insurance. I am also privileged to be mentored by Lori Goltermann (CEO of U.S. Retail for Aon Risk Solutions).  From her I learned to be resilient and optimize life/work balance. Then of course I also have a circle of ladies at work who I lean in to!

R&I: How did you come to work in this industry?

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I was once a bank teller and had a client who was an insurance agent. He would come in every day to make deposits. One day, he offered me a job. He said, “How would you like to have your own desk, your own phone and your own computer?” And I said, “When do I start?” I worked for this personal lines insurance company for six years.

R&I: Did you take to it immediately?

Yes, I did sales, claims and insurance accounting. I left for a couple years and that is when AAA came calling, which was my first introduction to risk management. I didn’t know there was such a thing as commercial insurance. They called me and the pitch was “how would you like to run a captive insurance company?”

R&I: What have you accomplished that you are proudest of?

It is not so much the job but I say that I am the true product of the American Dream. I came to the U.S. when I was 16. I worked three jobs because I didn’t want to go to high school (She’d already graduated high school in the Philippines.) I spoke very little English, and due to hard work, grit and a great smile I’m now here working with all of you!

R&I: What is your favorite book or movie?

In movies, it is a toss-up between Gone with the Wind and Big Daddy.

R&I: What is your favorite drink?

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I like anything sweet. If you liquify a dessert that’s my perfect drink.

R&I: What is the most unusual/interesting place you have ever visited?

This is easy because I just got back from Barcelona on a side trip. I visited the Montserrat Monastery, which is a thousand-year old monastery. It was raining and foggy. I hiked for three hours and I didn’t see a single soul. It was a very peaceful place.

R&I: What is the riskiest activity you ever engaged in?

This is going back to working at a fast food chain when I was young. I worked in a very undesirable location in San Francisco. At 16 I used to negotiate with gang members so they wouldn’t rob me during my shift. I had to give them chicken so they wouldn’t rob me.

Maila Aganon, VP, Treasury and Risk, Caesars Entertainment Corp.

R&I: If the world has a modern hero, who is it and why? 

I can’t say me. They have to be my kids Kyle and Hailey. They can make me laugh and cry within a half-minute of each other. Kyle is 10, a perfect Mama’s boy. Hailey is seven going on 18.

R&I: What about this work do you find the most fulfilling or rewarding?

I think the most fulfilling part is how you build relationships with people and then after a while they become your friends.

R&I: What is the risk management community doing right?

Risk managers do a great job of networking. They are number one. Which is not a surprise because the pillar of our work is building a relationship with underwriters, clients and brokers.

R&I: What could the risk management community be doing a better job of? 

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I am experiencing that right now; talent.  We need to a better job in attracting and retaining talent. Nobody knows about what we do. You tell someone ‘I’m as risk manager’ and they give you a blank look. What does that mean?

We’re great marketers and we should use this skill set in attracting talent. We should engage our universities, our communities, even our yoga groups and talk to them about the exciting world of risk. It is an exciting career because there is nothing like it.

R&I: What emerging commercial risk most concerns you? 

It would have to be the increasing cyber risk and the interdependency of systems.

R&I: What does your family think you do? 

I took my seven year old daughter once to an insurance event that had live music, dancing and drinks. She thinks that whenever I go to an insurance meeting, I’m heading to a party.




Katie Siegel is an associate editor at Risk & Insurance®. She can be reached at [email protected]