SuretyScience - Blog #Technology

AI will transform the future of risk faster than insurers can adapt

Mon, 30 Mar 2026 13:17:23 -0400

Futurist Amy Webb

As artificial intelligence reshapes the global economy, insurers face a fundamental shift in how risk is created, measured, and transferred. Speaking at an event hosted by MS Re during Miami Reinsurance Week, futurist Amy Webb outlined why the next decade will demand a new approach to risk.

The session, hosted by MS Re and attended by almost 200 insurance professionals, reflected growing industry focus on how emerging technologies could reshape risk over the coming decade.

Robots with human skin that can feel pain and pleasure, and computers made from human brain cells may sound like something out of a sci-fi movie. But they are already being developed and illustrate how artificial intelligence (AI) could profoundly reshape the insurance industry, according to futurist and founder of FTSG Amy Webb at Miami Reinsurance Week at a talk hosted by MS Re.

The session, hosted by MS Re and attended by almost 200 insurance professionals, reflected growing industry focus on how emerging technologies could reshape risk over the coming decade.

Webb argued that these convergences could have far-reaching implications for the insurance and reinsurance sector.

The prospect of effectively unlimited labour driven by AI, for example, could undermine demand in labour‑dependent products such as workers’ compensation and employment liability, while accelerating disruption across global reinsurance markets. Insurers must begin to develop products that account for the risks associated with AI and machine-driven labor, transitioning away from models that rely on human workforces.

She also warned of increasing demand for computational power, particularly from AI systems, which creates a strain on resources. Insurers need to start factoring in energy reliability and access to power as key variables in their underwriting models. As locations become critical for AI data centres, understanding the implications for re/insurers is vital for future readiness.

Meanwhile, the emergence of what Webb described as “living intelligence”—systems that blend artificial intelligence with advances in biology—could give rise to entirely new categories of loss, forcing insurers to rethink how responsibility and accountability are defined and to develop frameworks to assess and underwrite these unconventional risks.

Steps to future proof business

Webb urged insurers to take a harder look at their reliance on computing power and factor energy and infrastructure constraints more explicitly into underwriting. She also encouraged reinsurers to start modelling the risks associated with living intelligence, while thinking more broadly about how emerging technologies could reshape their future role in the value chain.

“There are three no-regrets moves you could make right away,” Webb said. “First, partner with reinsurers to begin modelling risk in more experimental ways. You could start codesigning guardrails for emerging technologies. Second, pilot frameworks that evaluate how systems sense, decide, learn, and fail. Third, map the future of your value network.”

https://www.intelligentinsurer.com/ai-will-transform-the-future-of-risk-faster-than-insurers-can-adapt-futurist-amy-webb

CBP Issues Proposed Rule for Electronic Bond Filing

Mon, 16 Feb 2026 14:26:38 -0500

In a Federal Register Notice (FRN) published on February 13,2026, U.S. Customs and Border Protection (CBP) announced a proposed rule to require the submission of bonds to be done electronically in the Automated Commercial Environment (ACE).

This proposed rule aims to improve the bond process by “reducing paper processing, expediting cargo release, expanding bond transmission capabilities beyond regular CBP business hours, and enhancing traceability for audit purposes.”

CBP is accepting comments on this proposed rule until April 14, 2026. Comments must be submitted through the Federal eRulemaking Portal at http://www.regulations.gov.

https://www.federalregister.gov/documents/2026/02/13/2026-02961/electronic-bond-transmission

https://info.expeditors.com/newsflash/cbp-issues-proposed-rule-for-electronic-bond-filing

Why real insurance innovation happens in the unsexy layers of Operations

Sun, 15 Feb 2026 08:48:00 -0500

The insurance industry is often described as slow to innovate. The diagnosis is familiar, and so is the prescription: better portals, better dashboards, better user experiences. Every year brings a new wave of front-end solutions promising to "modernize" an industry that has existed for centuries.

https://www.dig-in.com/opinion/why-real-insurance-innovation-happens-in-operations

J.D. Power on Insurance Buying — More Purchasing Digitally

Thu, 12 Feb 2026 17:42:00 -0500

J.D. Power says the number of people purchasing insurance digitally is on the rise. The The Digital Insurance Predictions 2026 survey finds 44% of insurance policy buyers are now getting their insurance via those channels.

On the 1,000 point scale, digital customers are ranking their experience at 801 or even higher, and 92% say they will continue to use digital channels in the future.

The survey had a number of different respondents from various sides of insurance.

33% of responses were agencies and brokerages
18% were P&C carriers
15% were multi-line carriers
12% of respondents were health insurance carriers
7% were life insurers

The Digital Insurance Predictions 2026 survey also asked respondents about how technology is changing their approach to insurance. Many had worries with 53% concerned about cyber security and intelligence tools and 52% expressed concern about Gen AI.

Looking at consumers, the number doing auto shopping rose to 57% in 2025. That’s up from 49% in 2024. The report says higher premium costs has consumers wanting more from insurance companies.

As a counter, 17% of auto insurers now offer usage-based insurance. That’s up from 15% in 2024 but down from 2023 when 22% of auto insurance companies had usage-based insurance as a policy option.

The report noted artificial intelligence is creeping into consumer insurance shopping. J.D. Power’s report suggests insurance companies need pay more attention to how they communicate with consumers and offer them personalized information on their policies and premiums.

https://www.piawest.com/news-releases-and-bulletins/j-d-power-on-insurance-buying-more-purchasing-digitally/

Insurance Broker Stocks Sink as AI App Sparks Disruption Fears

Wed, 11 Feb 2026 20:35:17 -0500

US insurance broker stocks were pummeled Monday as the launch of an artificial intelligence tool from privately held online insurance shopping platform Insurify sparked fears about the industry facing disruption.

The S&P 500 Insurance index closed down 3.9%, in its biggest drop since October. Insurance broker Willis Towers Watson PLC was the worst performer in the group, closing 12% lower and suffering its worst trading session since November 2008. Arthur J Gallagher & Co. followed with a 9.9% decline and Aon PLC fell 9.3%.

“The insurance broker stocks are getting hammered,” Bloomberg Intelligence’s insurance analyst Matthew Palazola said, noting “there could be concerns about the new Insurify tool and Anthropic’s new AI tools.”

The applications “may be a threat to some consulting businesses of insurance brokers though we view them as force multiplier rather than an existential threat,” he added.

Insurify’s app uses ChatGPT to compare auto insurance rates using details about the vehicle, the client’s credit history, driving record and other inputs. The company said the app launched on Feb. 3.

The applications “may be a threat to some consulting businesses of insurance brokers though we view them as force multiplier rather than an existential threat,” he added.

https://www.insurancejournal.com/news/national/2026/02/10/857525.htm

The Institutes RiskStream Collaborative Honors Surety Industry Leaders With 2025 Collaborator Award for Their Work on Surety X

Thu, 29 Jan 2026 11:30:00 -0500

MALVERN, Pa--(BUSINESS WIRE)--Jan 28, 2026--

The Institutes RiskStream Collaborative ® proudly announces the 2025 recipients of its Collaborator Award, which recognizes organizations that have demonstrated leadership and commitment in advancing the surety bond process through their contributions to Surety X, RiskStream’s blockchain-powered platform designed to modernize the surety bond workflow.

The 2025 winners played a key role in defining functional requirements and guiding the development of Surety X, a digital platform that manages the surety bond workflow from request to issuance and delivery, featuring electronic document exchange and built-in status tracking.

Participants partnered with RiskStream by providing feedback through testing and early validation activities, helping identify pilot cohorts, and engaging in early real-world use cases, including executing the Surety X workflow with a cohort in which an actual bond was successfully exchanged on the platform. These efforts validated core capabilities such as electronic document exchange, permissioned real-time access and status updates, and built-in audit trail and version control. Such capabilities ensure that Surety X was built with practical, market-ready functionality informed directly by the needs of the surety ecosystem, and they establish a foundational framework for a fully digital, paperless surety experience.

Winners of the 2025 Collaborator Award are:

American Global

Arch Insurance

Berkley

Chubb

Intact

IMA Financial Group

Liberty Mutual

Markel

Marsh

Merchants Bonding Company

National Association of Surety Bond Producers (NASBP)

Nationwide

Scott Insurance

The Cincinnati Insurance Companies

The Hartford

The Surety & Fidelity Association of America (SFAA)

Travelers

“We’re honored to receive the Collaborator Award from RiskStream. And, we’re proud to be a part of a group helping to shape the future of the surety marketplace,” said Scott Boden, vice president – Surety, The Cincinnati Insurance Companies.

Lindey Jennings, chief underwriting officer, core surety at Markel, said, “We are honored to receive this award and very excited to be part of a technology initiative that has the potential to transform the surety industry and the delivery of our product.”

Krystal Stravato, head of surety operations at American Global, added, “This award is a tribute to the dedication of our team and our commitment to work together, not only within our firm but across organizations to help move the surety industry forward. We appreciate RiskStream’s partnership, and we value the opportunity to contribute to initiatives that support positive change.”

Surety X, built in collaboration with sureties representing nearly 70% of market share, provides a secure, permissioned environment for data sharing and document exchange among principals, brokers, obligees and sureties. By replacing paper-based workflows with standardized digital processes, Surety X aims to reduce costs, shorten bond turnaround times and improve transparency throughout the surety bond life cycle.

The 2025 Collaborator Award honors the organizations and individuals who have helped establish the foundation for a more connected and efficient surety ecosystem that embraces digitization while preserving the trust that defines the industry. RiskStream looks forward to expanding the pilot in 2026, building on this momentum to further advance the digital surety-bond workflow.

https://www.rutlandherald.com/news/business/the-institutes-riskstream-collaborative-honors-surety-industry-leaders-with-2025-collaborator-award-for-their-work/article_85eab18d-6ffc-5967-8d83-ceb4f7395fa6.html

Expense Ratio Analysis: AI, Remote Work Drive Better P/C Insurer Results

Mon, 12 Jan 2026 12:33:00 -0500

In separate reports last week, AM Best and Morgan Stanley analyzed P/C insurance industry expense ratios, with one reporting a 2.4-point drop over the past decade and the other projecting another potential 2.0-point decline by 2030.

While both reports highlight the impact of AI and automation in driving down expenses, the AM Best report, which gives the historical take, also flags drops in rent expenses related to increased remote work as a factor.

Analyzing underwriting ratios of the 2014-2024 timeframe, AM Best noted that while the loss ratio declines, including a 5.4-point drop in the U.S. property/casualty insurance industry loss from 2023 to 2024, drove improved results in recent years, looking over the entire 11-year period, the expense ratio fell to 25.3 in 2024, compared to 27.7 in 2014.

The overall 2.4 percentage point decrease in the U.S. P/C insurance segment’s long-term underwriting expense ratio was primarily driven by a 1.9-point decrease in the other acquisition expenses ratio and a smaller, 0.5-point decrease in the general expense ratio, AM Best said in a Jan. 6, 2026, special report, “Lower P/C Insurer Expenses Boost Underwriting Results.”

(Editor’s Note: Neither the commission expense component nor the tax expense component of the expense ratio changed much over the study period. The AM Best report does not include 2025 results.)

The overall improvement is “reflective of the progress the P/C industry has made via increased digitalization, and the use of automation and advanced technologies,” the AM Best report states.

Addressing the biggest part of the drop—the 1.9-point decrease in other acquisition expenses—the report notes that the “shift from a five-day-a-week office commitment to hybrid or fully remote work policies has lowered the proportion of other acquisition expenses attributable to rent expense.”

he Morgan Stanley report is solely focused on go-forward impacts of AI on expense ratios and operating margins. Titled “AI (01000001 01001001): How the New Industrial Revolution Is Reinventing Insurance,” the Morgan Stanley report includes separate analyses of potential earnings growth driven mainly by the back-office implementation of artificial intelligence for the insurance broker, P/C insurance carrier and life insurer segments.

The Morgan Stanley analysis starts with a higher P/C insurance expense ratio than the AM Best report ends with—30.4 for 2026 vs. AM Best’s 25.3 for 2024—likely resulting from a different universe of carriers regularly followed by Morgan Stanley (mostly commercial, specialty and reinsurance companies). For the Morgan Stanley cohort, the Wall Street analysts project an expense ratio of 30.5 for 2030 if the carriers do not use AI, and 28.5 after using AI—2 points or 200 basis points lower.

There’s a similar impact on operating margins, the analysis shows.

For the year 2030, the Morgan Stanley report reveals a post-AI operating margin of 17.4 percent, compared to 15.6 percent, absent AI, across P/C insurance carriers—an improvement of nearly 180 basis points.

What About Commissions?

The AM Best report also includes information on commission ratios for six lines of business and advertising expenses for private passenger auto over the 2014-2024 period.

Ratios of commission and brokerage fees to net premiums written have been relatively consistent for the past 10 years for all lines combined.

There is a noticeable difference in ratios between lines, however, with commercial multiple peril, covering small and middle market business, coming in highest (at over 16 ) and private passenger and workers compensation showing the lowest ratios (between 6 and 8), according to graphs included in the report.

(Editor’s Note: More precisely, the analysts calculate 176 basis points of operating margin improvement from AI. Operating margins in the report are expressed as returns on total revenue rather than premiums or operating earnings per share.)

In dollars, the report shows a $9.3 billion jolt from AI use in 2030, with projected operating income rising from $82.7 billion without AI to $92.1 billion after AI. Morgan Stanley refers to the 11 percent jump as “operating income uplift.”

The uplifts in operating income dollars and operating margin basis points are comparisons of post-AI and pre-AI results for the year 2030. Morgan Stanley analysts calculated similar results for each year from 2026 through 2030. Looking across the years, things get worse initially for P/C insurers until they get better.

In 2026, post-AI margin for insurers covered by Morgan Stanley research is 14.7 percent, compared to a pre-AI margin of 15.2 percent. The post-AI margin lifts slowly to 15.4 percent in 2027, 15.6 percent in 2028, 16.2 percent in 2029 and finally up to 17.4 percent in 2030.

Assumptions about high AI implementation costs early on and delayed ramp-up of efficiency benefits weigh heavily on the 2026 projections. For that year, Morgan Stanley estimates over $6.0 billion in cost savings across the carriers analyzed, but with only 10 percent flowing through to operating earnings ($600 million) and $3.0 billion of implementation costs, the result is a $2.4 billion drop in operating income.

For 2030, Morgan Stanley assumes implementation costs are largely behind the carriers and that 100 percent of $9.3 billion in potential cost savings hit the books five years into the future.

Improved Carrier Operating Margins

Analyzing carriers in the Morgan Stanley coverage universe individually, the report flags Assurant, AIG, The Hartford and Chubb among the carriers that analysts believe stand to gain the most points of operating margin from increased AI use over time.

Supporting the report narrative, charts and graphs in the report set forth summary information about each carrier’s workforce underlying the carrier projections.

Included is the “average agentic AI automation rate” across each carrier’s workforce, ranging from a low of 20-21 percent for standard carriers like Travelers, Allstate and Progressive to highs of 25-27 percent for specialty providers like Arch Capital Group, Hamilton and Everest.

A methodology section of the report explains that the starting point of the analysis involves gathering task-level agentic AI automation rates and determining the tasks involved in various carrier jobs and the distribution of jobs across individual carrier workforces. (See “How Morgan Stanley Developed AI Impact Projections” section of this article for more information on sources of data used.)

Below, we have excerpted the average automation rates and financial projections for the five P/C carriers that have the highest 2030 operating margin income uplift measured in basis points.

In dollars, these five carriers account for nearly 60 percent of the $9 billion-plus projected industry boost in operating earnings from AI use in 2030, according to the Morgan Stanley projections. Potential AI benefits for Progressive and Travelers account for much of the remainder.

Where carriers wind up individually in terms of the percentage of operating margin uplift depends not only on starting assumptions about salaries, head count and estimated percentages of tasks that can be automated through agentic AI but also on relative levels of pre-AI operating earnings and revenues. Note, for example, that a relatively high level of pre-AI operating earnings for Chubb translates to a lower percentage jump in operating earnings from using AI than the percentage change that the Morgan Stanley analysts estimate for specialty carrier Assurant (9 percent for Chubb vs. 27 percent for Assurant).

Below, we have indicated the relative rankings of all 16 carriers in the report for each of the input assumptions, as well as for the final projected AI impacts on 2030 operating earnings (basis point change, dollar change and percentage change).

Carrier Management Ranking of Results in Jan. 5, 2026 Morgan Stanley research report, “AI (01000001 01001001): How the New Industrial Revolution Is Reinventing Insurance.”

Focusing on personal lines insurers, Progressive has a relatively low assumed automation rate (20.7 percent), the lowest average salary (rank 16 of 16 carriers), the largest workforce and the highest level of pre-AI earnings (rank 1), all combining to pull its percentage uplift in 2030 earnings below the overall industry figure (8 percent for Progressive vs. 11 percent for the industry).

Among diversified insurers and reinsurers, Arch Capital Group has the highest average salary and the second-highest assumed agentic AI automation rate (25.7 percent). But with mid-range operating earnings and workforce counts, Morgan Stanley calculates a 2030 operating earnings uplift from AI for Arch at 6 percent.

What About the Brokers?

According to the Morgan Stanley report, the analysts expect two key stages of AI adoption for carriers and brokers: an initial stage of “back-office AI implementation aimed at boosting operational efficiency, primarily impacting expense ratios,” and a later stage to enhance underwriting capabilities, improving loss ratios, impacting pricing and driving sales growth. It is the first stage that is the focus of much of the research report.

The report includes assessments of AI impact for major P/C brokers like Aon, Marsh, WTW, Brown & Brown and Ryan Specialty. The analysts note that brokers, like carriers, will see notable benefits from AI adoption over time. Broker benefits will derive from the “human capital-intensive nature of the business model,” the report says. While Morgan Stanley analysts perceive brokers currently lagging P/C carriers in AI adoption, the predicted 2030 operating margin uplift from AI adoption for brokers is almost twice that of carriers—350 basis points for brokers vs. 180 basis points for carriers.

How Morgan Stanley Developed AI Impact Projections

Several pages of the report provide a step-by-step walkthrough of the methodology and sources of workforce information and assumptions that Morgan Stanley used for its analysis. For example, Morgan Stanley tapped into Anthropic’s Economic Index data to determine estimated percentages of specific insurance professionals’ tasks that can be automated through agentic AI.

Other sources of information were the Department of Labor’s O*NET database, which was used to map potentially automated tasks to specific insurance jobs, and LinkUp job posting data, used to develop a distribution of jobs across each carrier or broker workforce.

Putting all that together with annual salary data, Morgan Stanley researchers were able to estimate total potential annual cost savings from agentic AI implementation across each of the workforces they analyzed.

Offering some details of the calculations for Aon for illustrative purposes, the report notes that “the automation rate of insurance sales agents who sell insurance policies and may refer clients to independent brokers is 21 percent,” and the average salary of an insurance sales agent in the U.S. is roughly $82,000, suggesting a potential annual cost savings of $17,000 for each insurance sales agent. (Across Aon, the average annual salary for all types of professionals analyzed is over $105,000.)

For the brokers as a group, charts in the Morgan Stanley report reveal potential automation rates averaging 25.1 percent across their workforces. Carrier automation rates average out to 21.6 percent.

The analysts assumed that the first stage of AI adoption is a multiyear journey for both carriers and brokers, but that expense savings flow through carrier financials quicker than brokers.

For Aon, for example, Morgan Stanley assumes it will take five years to achieve 50 percent of AI-driven cost savings. Carrier projections assume 100 percent of AI-driven savings achieved in five years.

Morgan Stanley expects both groups to focus on building and experimenting with AI tools during the next two years, resulting in returns on AI investments that will be negative and then marginal before they can achieve meaningful cost savings and improved bottom lines.

Beyond the carrier and broker expense saving projections, the report includes sections describing the durability of profit gains insurers have historically achieved as a result of adopting new technologies, changes in the incidence of insurance executive discussions of AI use cases on earnings conference calls, historical timeframes for technology development and adoption across industries, along with other related research topics.

https://www.carriermanagement.com/news/2026/01/12/283239.htm

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Chubb to cut up to 20% of workforce in ‘radical’ AI drive

Fri, 12 Dec 2025 15:59:00 -0500

Company plans to digitize most core functions and redesign workflows as it targets material expense savings

Chubb plans to trim its workforce by as much as 20% over the next three to four years as part of a groupwide digital transformation aimed at automating key insurance functions.

The initiative, outlined in an investor presentation, will roll through roughly 70% of the organization in the next three years as Chubb digitizes business units along with their underlying functions and processes from end to end.

Chubb currently employs about 43,000 people globally, according to its third-quarter company profile.

The company said the program will encompass sales and marketing, underwriting administration and support, claims, finance and other operational areas as it redesigns workflows and systems.

Chubb is targeting run-rate expense savings equivalent to about 1.5 points off its combined ratio once the transformation is in place.

The company’s plans come against a broader backdrop of automation pressure across the sector, with MIT’s Project Iceberg estimating that existing AI tools are technically capable of performing tasks worth 11.7% of total US wage value, or about $1.2 trillion annually.

The research identifies insurance as “squarely in the zone of highest exposure” because many core activities are document-heavy and rule-driven, including underwriting support, policy administration and claims work that can be broken into discrete, automatable tasks.

As part of what it described in the presentation as “radical automation goals,” Chubb aims to automate 85% of its major underwriting and claims processes. The company also expects that 85% of its global gross written premium will be generated by business that is either fully digital or “significantly digitally enabled.”

Other large carriers are pursuing similar strategies, with Allianz planning to cut between 1,500 and 1,800 positions within its travel insurance operations over the next 12 to 18 months as AI reshapes customer and claims processes, a reduction equal to about 6.6%–8% of Allianz Partners’ total workforce.

Taken together, these moves indicate that major insurers are using automation programs not only to change systems but also to reset workforce models in lines of business where digital channels and AI tools can handle higher volumes of routine work.

Data, artificial intelligence and process automation “will be the driving force to achieve growth at low marginal cost,” Chubb said in the presentation.

The company indicated it is positioning these tools at the core of its operating model to scale its insurance business while seeking to keep cost growth in check.

https://www.insurancebusinessmag.com/us/news/breaking-news/chubb-to-cut-up-to-20-of-workforce-in-radical-ai-drive-559950.aspx

Streamlining WIPs with Digital Technology

Fri, 10 Oct 2025 14:38:45 -0400

EARLY IN HIS surety career, when 2025-2026 NASBP President Robert Coon worked as an underwriter, he sometimes had to spend long hours taking information from contractors’ Work-in-Progress (WIP) reports and keying them into a format that could be used by the surety’s software programs. "We had a very large multinational account, and it wouldn’t be unusual for them to have 500 or 600 jobs, so it would take two or three days to do it. About half the time was keying it in, and the other half was finding where I made mistakes. It was painfully tedious and time-consuming and really not a good use of time," said Coon, now Vice President of Surety Services for Scott Insurance in Greensboro, NC.

Many surety bond producers and surety companies are still using that manual method for inputting contractor clients’ WIP data into a digital format. In the not-toodistant future, however, that process could become the exception rather than the rule. For the past several years, NASBP has been working with partners in the technology and construction industries to develop a better approach, using XBRL (eXtensible Business Reporting Language) to standardize WIP reporting and to enable digital transmission of this information.

A Widely Accepted Standard The XBRL standard, introduced in 2003, enables companies, banks, government entities, and others to report their financial data in a structured way. "XBRL is a way of defining business information. It’s both a structure and a standard. It’s a way of taking data that might be in a PDF file or an Excel spreadsheet or a Word document, putting structure around it and making it digitally transportable," explains Michelle Savage, Vice President at XBRL US, which is the not-for-profit organization that supports the development of the free, open XBRL digital reporting standard.

XBRL can be adapted for any commercial or proprietary data systems, such as enterprise resource planning systems. The standard has gained widespread acceptance; for example, since 2009, it has been the format required by the Securities and Exchange Commission for public companies’ financial reports.

The second important aspect of XBRL is that data transmitted using the standard can be read by a machine without the need for human intervention. That’s what brought it to the attention of the NASBP Automation and Technology Committee a decade ago. "We got focused on financial analysis and data transmission and were looking for partners for tech solutions to help automate that. In that process, we came across XBRL," said Coon.

In 2016, XBRL US began working with key stakeholders in the surety industry, including NASBP and the Surety & Fidelity Association of America (through surety companies like Liberty Mutual, Zurich, and Travelers), to determine how XBRL could be used to streamline contractors’ financial reporting, specifically WIPs, to sureties.

"The sureties saw this as a way to improve the way they were processing information, which is expensive, and also give them more time to focus on conducting analyses of contractors’ financials so they could respond back to the contractors more quickly," said Savage. "They could also potentially review more data, so they could get more frequently reported WIPs and get a better picture of the financial health of that contractor."

Developing a Taxonomy

XBRL US already had a widely used established financial reporting taxonomy, the digital definitions for business concepts that make digital reporting possible. "So, we focused on the language and the terms for WIP, which is very specific to the construction industry," said Coon. The taxonomy represents all of the things normally found in a WIP, like contract number, cost to complete, the contract price, etc.

XBRL US led these efforts, which also included the Construction Financial Management Association (CFMA) and the Construction Progress Coalition (CPC), an organization that represents a broad coalition of architects, engineers, contractors, owners, and technology partners who work to advance digital transformation in the construction industry. "Our wheelhouse is trying to piece together a bunch of disparate organizations that have a common need for sharing data across the construction supply chain," said Nathan Wood, CPC Executive Director. Although they approach a construction project from different perspectives, these groups have similar pain points in the way that duplicate data entry, data loss, and bad data can impact their projects and their profitability.

Defining the WIP terms and developing the taxonomy was more work than originally expected, however, because various sections of the country had different names for this information. A WIP in one area might be called a backlog report, in another, a job schedule or billings report. So, the group had to select a common name that everyone could use. "Computers don’t work well with synonyms," Coon observed.

One of the first implementations of the newly completed WIP taxonomy came in 2019, when the U.S. Small Business Administration (SBA), working with XBRL US, developed a way for surety bond agents to submit information in the XBRL format to the Surety Bond Guarantee Program (SBG).

"If you’re a bond agent and you’re working with a contractor that has an SBA program, you typically go to the SBA website and key in all the contractor’s WIP data once a year or whenever you have new data. It’s a very labor intensive process, and there could be rows and rows of WIP data that you have to type before submitting it," said Savage.

"So, we created a very, very basic tool that is an Excel spreadsheet. A bond agent can go into the spreadsheet and cut and paste the data for the report into that spreadsheet. They can then upload the spreadsheet to the XBRL website, which will transform it to XBRL. The agents can then send the WIP report directly to the SBA through the platform that we’ve created," she said. Agents can also save the spreadsheet so it can be easily updated as the contractor adds information.

"We do have a number of agents using this free tool that we created. We don’t really want to be in the business of creating software applications, but this is something that the SBA has been using for a few years now," Savage added.

Altova, a software development company, and Crowe LLP, a public accounting and consulting firm, have also developed tools that can convert spreadsheets and other formats of WIP reports into XBRL.

XBRL for Construction Software

While this SBA work was going on, XBRL US had also been partnering with Zurich, Travelers, and Merchants Bonding to ensure that sureties would be able to accept the WIP data in XBRL format. "Then we started contacting software companies that work with contractors to help them prepare their WIP reports and their financial statements. We wanted the software to be able to produce WIP data that would be structured in XBRL format when it reached the surety," said Savage.

It was also essential to get contractors’ input. In 2022, CFMA, CPC, and XBRL US jointly conducted a survey of CFMA’s contractor members to determine how they develop their WIP reports. They found that many contractors prepare their data in an Excel spreadsheet, which can be converted to the digital XBRL format. Others rely on software to prepare part of the WIP, then export it into Excel or print it out to do further work with it before sending it out as a PDF file.

The goal of XBRL US and its partners was to find a way to eliminate the extra steps in this process.

"The challenge was finding software tools that could generate the entire WIP within their application, because then we could work with those software companies to help them be able to convert the data to XBRL," said Savage. Sage, a construction management software provider, agreed to work with XBRL US; in 2024, the company announced it had completed a new WIP feature as part of its cloud-based Sage Intacct Construction software. The software is now able to produce a WIP report in fully machine readable, XBRL format.

"Sage is currently identifying contractors who are willing to be part of a pilot so that we can take their WIP and produce an XBRL-formatted report, have it go to the bond agent and then from the bond agent to the surety carrier, so that we can test the whole process," said Savage.

Another company, Plexxis Software Inc., began rolling out its new Plexxis Cloud platform in early August and will test its new financial forecasting platform sometime in 2026. "This platform has a game planning element to it that allows subcontractors to adjust their WIP as needed during their financial planning meetings. This is the tool that will have the export to surety function. For subcontractors, the game-planning portion was critical for the surety export to be effective," said Chad Pearson, a Senior Start Team Leader at Plexxis.

Encouraging Contractor Buy In

It’s easy to understand why sureties and surety bond producers are interested in receiving WIP reports in XBRL format. They enjoy an immediate benefit; there are fewer data errors, and staff members who aren’t tied up with manual data entry are freed up to perform other higher-value work.

But it is the contractors who will ultimately determine how quickly the XBRL standard will be adopted. "The problem is why should a contractor care to give their WIP, their financial data, to someone in a digital format, as opposed to what they’ve traditionally done in PDF or on paper? The incentives are clear for a surety and for surety bond producers, but it’s a little less clear for contractors," said Wood.

There are several benefits that contractors will enjoy with the adoption of the XBRL standard. The prerequisite of migrating their internal WIP reporting process from Excel to a cloud-based accounting software will itself save time and avoid errors. So, instead of simply looking at the ROI on adopting this kind of software, contractors should consider the RLP, or revenue loss potential, said Wood. "What is the potential revenue that you could be losing by not fixing this error in inefficiency?"

In addition, the CPC has been looking at other ways that sureties could reciprocate contractors that invest in XBRL submission. "One thread we’ve been pulling on recently is the topic of revenue recognition, specifically when does a change order become part of a WIP. That’s very much a gray area right now," said Wood. With the XBRL taxonomy, contractors might be able to better define the line between something being a revenue projection versus being an actual increase in the contract value.

Contractors could also gain an advantage because they’d be able to provide WIP information in a more timely manner. "Sureties can’t tell contractors, ‘if you get this information to us this way, your bond rates are going to drop.’ We can’t tie it to a cost," Coon added. But a contractor who realizes in the morning that the construction company needs a bid bond that afternoon would be able to transmit any updated WIP data immediately for the surety to use in deciding on the contractor’s bond request.

Although some contractors might be intimidated by the mention of XBRL and its taxonomy, Coon noted that this shouldn’t be a problem as Sage, Plexxis, and other vendors begin to incorporate XBRL into their software packages. There will be less emphasis on what is happening behind the scenes—XBRL as the backbone of these systems—and more emphasis on the capabilities the software changes will provide to users. "For example, contractors would be able to quickly and securely share an updated WIP report with their surety with the click of a button," said Wood.

It’s these software vendors that are now in the best position to encourage contractors to make the move to submitting WIPs in XBRL, said Coon. "It’s a value add to their service, an enhancement and improvement of their systems. They can tell contractors that this functionality will make contractors’ lives easier and more efficient."

https://www.suretybondquarterly-digital.com/sbpq/0325_fall_2025/MobilePagedArticle.action?articleId=2085273#articleId2085273

SuretyDIGIT Coalition Launches to Propel Digitization Efforts in the Surety Bond Industry

Fri, 10 May 2024 20:22:20 -0400

MALVERN, Pa., May 09, 2024--(BUSINESS WIRE)--The SuretyDIGIT Coalition announced their launch today. The goal of the coalition is to bring stakeholders together to modernize and digitize surety bond operations. Due to the innate multi-party nature of the surety bond industry and the bonding process, insurance carriers (sureties), brokers, agents, solution providers, government agencies, obligees, (and others) need to work together to reinvent processes with a digital focus.

The coalition is committed to paving the path toward digital adoption and bringing together thought leaders and solution providers to impact the industry through digital transformation. SuretyDIGIT’s mission is to bring the industry together to demonstrate the support for saving the industry time and money by wide-spread digital adoption of the entire surety bond process.

"By joining the SuretyDIGIT coalition, NASBP and its members can stay at the forefront of surety bonding digital transformation and innovation with other interested parties. This critical, collective endeavor offers the promise of unlocking a digital future for surety bond processing and bringing needed efficiencies and added security to surety transactions," said Mark McCallum, CEO of National Association of Surety Bond Producers (NASBP).

"At its core, the journey toward digitizing the surety bond industry is uniting all stakeholders and gaining alignment and uniformity. As the Surety Digit Coalition expands, so does the knowledge, expertise, and perspectives. Together, we are able to unite all stakeholders on a common path toward digital adoption," said Peter Miller, President and CEO of The Institutes.

The coalition aims to bring all parties together to strategically align on a digitally focused future for the surety bond process, with an initial focus on:

Digital signatures, seals and power of attorneys
Digital signatures, seals and surety bonds
Electronic delivery and authentication

The SuretyDIGIT Coalition welcomes prospective members and encourages organizations, individuals, solution providers, insurance organizations, and associations to join. The list of 20+ initial business members is available on the coalition’s website.

For more information about the coalition or to join, please visit https://www.suretydigit.org/ or contact information@suretydigit.org.

About SuretyDIGIT Coalition

The Surety Digitization, Innovation, and Transformation Coalition (SuretyDIGIT) is a group of aligned stakeholders – welcoming to government, surety industry partners, associations, and others – fostering a belief in the value of sharing conversations about driving the digital bond process. The coalition’s objective is to digitize key components of the surety bond process such as digital signatures, seals, POAs, bonds and their electronic delivery and authentication. For more information, please visit https://www.suretydigit.org/.