Letters (July 01, 2001)

Dear Editor,

Many years ago I wrote a letter to the editor asking “where is the voice of surety in Canada, I cannot hear it?”. Not too long thereafter The Surety Association of Canada was formed primarily by the bonding companies in Canada but with associate memberships to include all practitioners of the surety industry. To this day SAC uses “The Voice of Surety” in Canada in all its publications. Unfortunately, most Canadians still think SAC is an acronym for the Strategic Air Command, a primary deterrent of the U.S. military until the cessation of the Cold War.

By any examination of the members, bonding has not kept pace with the growth of construction throughout Canada. The Canadian Construction Association repeatedly offers statistics to illustrate construction is the largest industry and the largest employer in Canada, ergo the largest taxpayer. And yet, only a small percentage, less than 20%, of the construction work in this country is bonded. Why?

While the bonding industry faces many difficulties, they have two primary fundamental problems to overcome if the business is to grow and prosper:

1. Bonding people spend much too much of their promotional time talking to contractors. Contractors are indeed their clients but, in fact, the issuance of a bond is for the benefit of the obligee. Obligee means the owner, but the industry persists in perpetuating the archaic terminology such as “Principal – Obligee – Know All Men by these presents”, and the like. It is time to come into the 21st century.

2. They do not deliver the product the buyers of construction seek to purchase. As suggested heretofore, bonding people do not listen to owners, they speak continually to contractors. Whenever a buyer attempts to request an altered service, the primary underwriters of the business as “voiced” by the SAC band together to thwart any new initiatives. “We have always done it this way. It has always worked. Do not rock the boat.” Wake up. It’s no longer working. Study the numbers. It’s a different world we now live in.

What do buyers of construction want? They want to know their selected contractor(s) are qualified and capable of doing the work contracted for at the price quoted. In general, and again on a percentage basis, the pre-qualification service provided by bonding companies has worked well.

But when the pre-qualification service fails and the contractor cannot complete, what does the buyer want? He wants to be made whole and he wants to be made whole NOW and without additional costs. For this “guaranteed” service the bonding companies have repeatedly failed and failed substantially. The result is that the majority of construction buyers do not believe the product delivers the services guaranteed and the costs exceed the benefits advertised.

To prosper in the 21st century, the bonding industry needs to fundamentally alter the way it does business, and to do so requires changes in the language of the product offered (the bond) to provide the assurances the owners seek.

Yours truly,

D.A. Findlay

Dear Editor,

I was surprised to read in the May issue of CU that “adoption rates [for automobile anti-theft systems] have been slow and their effectiveness remains questionable.” The facts, irrefutably, say otherwise.

Today on Canada’s roads there are more than 1.5 million cars and light trucks equipped with Vehicle Information Centre of Canada (VICC)-approved theft deterrent systems, which rely on effective immobilization. Insured theft loss costs for these vehicles are about 57% lower on average than for other segments of Canada’s fleet. VICC would, of course, be pleased to provide CU with substantiating research, model by model, year by year.

The private- and public-sector member insurance companies of VICC, who comprise more than 99% of the Canadian market, are convinced that the first objective in curbing car theft must be to cut the incidence of car theft in the first place. Vehicle tracking systems (VTS) can certainly provide a second line of defence. However, given the current state of offerings from tracking system suppliers in Canada, they cannot prevent the car from being stolen in the first place, and as a result vehicle tracking systems cannot be relied upon as the primary means of preventing auto theft. Nevertheless, VICC believes that vehicle tracking systems may usefully complement immobilization in two specific instances: when the vehicle is stolen with keys, or when the vehicle is towed.

VICC recently invited four VTS suppliers (Boomerang, LoJack, Centraxx and OnStar) to comment on criteria for evaluating tracking systems. The VTS market in Canada is highly fluid, technical information is often hard to come by and different technologies are utilized. Despite these difficulties, VICC has prepared an 18-part guide for consumers and insurers who are investigating vehicle tracking systems.

Yours truly,

Henning Norup, AIIC, President and COO

Vehicle Information Center of Canada