Surety providers review the contractor’s financial statements to identify risks and determine eligibility for surety bonds. Financial statements include a Work in Process (WIP) report that describes the financial performance and status of a contractor’s construction projects. Today’s surety underwriting process is highly manual and therefore, labor-intensive, time-consuming and costly.
Using Data Standards to Streamline the Process and Reduce Costs
The XBRL data standard renders paper-based information computer-readable, reducing costs and delays. Bringing XBRL into the surety underwriting process will make the WIP report and supporting financials computer-readable with data that can be extracted automatically into the sureties financial system without rekeying. The XBRL data standard will not change the underwriting process or what data is used, it will simply change how the data needed for underwriting is conveyed.
Listen to a podcast about the SBA’s modernization of WIP submissions:
The first version of the XBRL Surety Work in Process Taxonomy was published in September, 2016. Details for the current published version are on the right-side of this page.
For more on the business case, read the white paper Data Standards in Surety Underwriting, published in May, 2016. Read the NASBP article “XBRL Exec Explains How Uniform Data Standards Will Impact Bond Producers and their Interactions with Clients and Sureties“, published April 30, 2018.
How It Will Work
Contractors can create XBRL-formatted financials and WIP reports by extracting information from their own internal financial systems or by using pre-formatted Excel spreadsheets that are mapped to the WIP Taxonomy. The surety receiving the XBRL-formatted financials can ingest the data automatically into their financial management systems after they’ve performed a one-time mapping that allows them to read the concepts reported. View an infographic.
- View this PowerPoint: Detailed How It Works – Sureties Consume XBRL WIP Data
- Learn about two different tools that can be used to create an XBRL formatted WIP:
XBRL US and sponsoring organizations have developed an initial taxonomy which is now available as a Proposed Recommendation. Bonding agents, sureties, contractors, accounting firms and tool providers that serve the surety market should review the taxonomy, white paper and related materials by clicking on the taxonomy link to the right.
This program is sponsored by XBRL US members AIG, Crowe LLP, The Hartford, Liberty Mutual, Marcum LLP, the National Association of Surety Bond Producers (NASBP), Travelers and Zurich Insurance. A Working Group has been established that also includes representatives from the Construction Financial Management Association (CFMA), The Surety & Fidelity Association of America (SFAA) and the Financial Accounting Standards Board (FASB).
Other participants from the software community that have adapted their tools to work with the WIP Taxonomy and joined the Working Group include XBRL US members Altova, DataTracks, Oracle Corporation, and SuretyWave.
Click on a logo for one of these XBRL US Members to learn more about they are advancing the standard.
Share your contact info on the form at right to join our Surety mailing list.
Read the Surety FAQ.