COVID-19 Impact on Commercial Surety
May 6, 2020
By Jim Holter, Vice President of Commercial Surety
There are many challenges that come with COVID-19, but we have yet to find an agency that's unopen for business or unable to fulfill bond needs. We're proud to support you during these unusual times and to help make bonding simple and convenient. Time will tell us more on the impacts of this worldwide pandemic, however these are some of the early trends being observed or anticipated.
We have seen added demand for some surety bonds.
Interstate Commission Commerce (ICC)/BMC-84/Transportation Broker Bonds
Nursing Homes and Care Facilities/Patients Trust Fund Bonds
May experience increased bond requirements due to residents receiving the COVID-19 Federal stimulus bill stipend.
Patient trust fund bonds $100,000 or under can be issued instantly on the Hub.
There are some industries that may see negative impact.
Retail Establishments and Restaurants
Liquor bonds guaranteeing liquor taxes could be hard hit. Not too many are thinking of opening restaurants in this climate.
For restaurants and establishments already in business, cash flows have slowed potentially threatening their ability to pay tax.
Probate bonds request volume will be unaffected; however, a decrease in premium revenue is anticipated. These bonds are based on the value of personal property of the estate in most states. With deflated financial markets personal estates will be worth less and the corresponding premiums will decrease.
Currently, the largest inhibitor to issuing bonds is the economy's shut down, which has prevented permits, titles or other functions surrounding bonds from proceeding forward. As states move to the next phase of reopen plans, this issue should begin to resolve.
Let us know how Merchants can be of service to you. We're enacting procedures daily to improve the agent experience and your feedback helps us do that more quickly. Thank you for choosing Merchants.
Jim Holter joined Merchants Bonding Company in 2004 to lead the Commercial Surety department as Assistant Vice President. In 2014, he was promoted to Vice President of Commercial Surety.