The surety industry stands at a critical juncture. While other sectors have rapidly embraced digital transformation, surety carriers continue to grapple with fundamental barriers that prevent them from modernizing their operations effectively. Understanding these challenges is the first step toward building a more efficient, responsive surety ecosystem.
The Current State: Paper Processes in a Digital World
Despite living in an increasingly connected economy, many surety operations still rely on outdated workflows. Brokers download forms manually from state and county websites, manage transactions through spreadsheets, and navigate fragmented processes that require multiple departmental touchpoints. While the pandemic forced some modernization—reducing requirements for physical seals and certified mail in most states—the core infrastructure remains inadequate for today’s business demands.
The Five Critical Barriers to Digital Success
1. Digital Infrastructure: Beyond Hardware to Process Innovation
The primary barrier isn’t about having better computers or faster internet—it’s about fundamentally reimagining how surety business gets done. Current carrier digital infrastructure simply isn’t “fit for purpose,” leading to inefficiencies, errors, and bond rejections due to outdated forms or missing fields.
What carriers need:
- Modern platforms with real-time data access
- Comprehensive process automation
- API integration capabilities with agency management systems
- Consolidate bond issuance across all lines of business.
- Robust tracking and reporting for bond status, litigation, fees, and payment schedules
2. Compliance Complexity: Higher Standards for Digital Processes
Digital transformation in surety faces a unique challenge: automated processes are held to stricter regulatory standards than manual ones. While human errors on incorrect forms might be overlooked, automated systems won’t receive the same tolerance. This creates a higher bar for digital compliance that many carriers struggle to meet.
The solution requires:
- Automated compliance checks with real-time verification
- Strategic partnerships with third-party compliance service providers through API-based integrations
- System alerts for regulatory changes
- Customizable templates that allow brokers to maintain their preferred documentation formats
3. Customer Experience: Addressing the Real Customer—Brokers
In surety, the primary customer isn’t the end bond recipient—it’s the broker. Current pain points include significant bond issuance delays, particularly for complex construction bonds, inefficient workflows requiring multiple touchpoints, and the frustration of having to contact different functions, such as underwriting, accounting, legal for individual transactions.
Success here means creating seamless, broker-centric experiences that eliminate friction rather than adding complexity.
4. Integration Challenges: Working with Existing Broker Systems
Brokers have invested heavily in their own systems. They resist duplicate data entry and information silos, preferring integrated solutions that work with their existing technology stack.
Since broker systems are limited in variety, carriers should focus on building comprehensive API libraries for the most common platforms, creating a more connected ecosystem rather than forcing brokers to adapt to isolated carrier platforms. In our recent distribution survey: The Battle for P/C Distribution, carrier integration with broker systems was “extremely important” for over 60% of specialty lines producers.
5. Training and Support: Beyond “Figure It Out” Implementation
Perhaps the most overlooked barrier is the gap in training and support. Too many carriers implement digital platforms and expect brokers to “figure it out” on their own. This approach leads to poor adoption rates and broker churn—the opposite of the intended outcome.
Successful digital transformation requires comprehensive training programs, ongoing support, and change management strategies that help brokers transition confidently to new systems.
Industry Leaders Show the Path Forward
Several carriers have successfully navigated these challenges, providing blueprints for others:
- Liberty Mutual created a comprehensive surety agents portal handling both domestic and international bonds through fronting partners
- Travelers Click portal achieves remarkable 4-minute bond issuance times in digitization-friendly states
- CNA’s Bond Online platform automates BMC 84 regulatory filings to FMCSA, streamlining a previously complex process
- Chubb’s surety marketplace ensures compliance with regulatory standards by state venue
- Old Republic’s Bond Star enables instant issue/print bonds with digital workflows for renewals and support
The Future: Ecosystem-Wide Coordination
The path forward isn’t just about individual carrier improvements—it requires ecosystem-wide coordination. The SureDigital coalition is standardizing building blocks like digital signatures, seals, powers of attorney, and bond forms that could integrate with emerging technologies, including agentic AI, for seamless end-to-end processes.
Key Takeaway: Success Requires Partnership
The most critical insight for carriers embarking on digital transformation is this: success requires improvements on both sides of the equation. It’s not enough to build better carrier platforms while ignoring broker platform capabilities. True transformation happens when the entire surety ecosystem—carriers, brokers, and technology providers—works together toward seamless integration. Reach out to me, [email protected] to discuss further and how Datos can help you with your surety processing challenges.
