Data standards in surety underwriting will improve efficiencies, accuracy and timeliness
The Surety Working Group formed under XBRL US announced today the completion of the Proposed Recommendation of the Work-in-Process Taxonomy, a digital dictionary of terms to describe reported values for costs, revenues and gross profit used to identify risks and determine eligibility for surety bonds. The working group includes sponsoring organizations: AIG, GALLINA LLP, Liberty Mutual, NASBP (National Association of Surety Bond Producers), Travelers and Zurich Insurance. In addition, several participating organizations are involved as observers and advisors on the project including CFMA (Construction Financial Management Association of America), SFAA (The Surety & Fidelity Association of America) and the FASB (Financial Accounting Standards Board).
The taxonomy was made available for a 60-day public review and comment period during which additional stakeholders to the process provided further input. With the issuing of the Proposed Recommendation release, XBRL US will conduct a final Call for Review and if there are no further changes, the taxonomy will be published as a first release. The working group has also published a business case Data Standards in the Surety Underwriting Process, which lays out alternatives to bring standards into the surety underwriting process and recommends the use of XBRL to improve efficiency and timeliness.
The business case notes the following issues with today’s surety underwriting process:
- High costs. Entering data by hand into the surety’s analysis system requires significant staff resources.
- Delays. Time spent re-keying delays the completion of the underwriting process.
- Negative impact on contractor access to credit. Receiving more timely WIP data can have a positive impact on the contractor’s ability to obtain credit.
Using the XBRL data standard to support the current data collection process will effectively enable straight-through-processing and automation with the associated benefits of reducing time delays and costs. These efficiency improvements will in turn improve contractors’ access to credit.
“The current financial data collection process is labor-intensive and time-consuming. XBRL US’ proposal doesn’t recommend changing what data is conveyed or how contractors or sureties do business. It merely seeks to improve the formatting of financial data used to improve timeliness and accuracy. Data standards that are widely used today in other reporting domains can also benefit contractors, sureties and bond producers alike,” said David Olson, CPCU, AFSB, Account Executive, Zurich Surety.
View the XBRL US WIP Taxonomy and white paper.