Abrupt changes in the surety market can create challenges, particularly for freight brokers. Recent developments have left many freight brokers uncertain about their bond renewals and searching for new bond providers.
Carrier withdrawals from the market can occur for several reasons, including the need for clients to have good credit and the high risk associated with bonds that have a significant number of claims. With little notice given to customers, those with bonds written by this carrier are left uncertain about their next steps as their bond renewals approach. A lapse in bond coverage can be problematic for many reasons, especially with their Motor Carrier Operating Authority (MC Authority) on the line.
The freight broker bond is an MC Authority requirement to ensure brokers adhere to federal regulations and ethical business practices, protecting shippers and carriers from financial loss due to broker misconduct, such as non-payment of freight charges.
The Federal Motor Carrier Safety Administration (FMCSA) mandates that all freight brokers must hold a valid BMC-84 bond to operate legally in the United States. Failure to maintain a valid bond can result in severe penalties, including revocation of operating authority. Keeping a valid bond also establishes trust to maintain healthy business relationships and a good industry reputation.
A carrier may decide to cancel a surety bond for many reasons, including a principal demonstrating financial instability, a history of claims against the bond, changes in underwriting criteria, non-payment of premiums, and fraudulent activity.
However, cancellations may also occur when a surety carrier withdraws from the market altogether. The exit of a large carrier can lead to market fluctuations, potentially affecting bond premiums and availability. Surety bond brokers may encounter higher costs or stricter underwriting criteria when seeking new bonds. As renewal dates approach, brokers need to act quickly to avoid lapses in the principal’s bond coverage, which can result in fines, loss of operating authority, and disruption of business operations.
In this blog, we’re going to focus on steps to take when your insurance carrier stops underwriting BMC-84 Surety Bonds, leaving principals to seek a new, trusted surety bond broker.
When applying for a new bond, evaluating a reliable bond provider is essential. Consider their financial stability, reputation, customer service, and bond issuance process. At BOSS Bonds, we boast over 40 years of experience and a national presence, positioning us as a leading surety-only agency. We have relationships with more than 25 carriers, which means we can shop around for the most competitive rates on your behalf, ensuring you receive the best value.
Don’t wait to apply for your new bond. If you know your bond is going to be cancelled, contact us today so we can help keep you in compliance. When you choose BOSS Bonds as your trusted surety partner, you’ll benefit from our competitive rates, fast and easy application process, and strong customer support. With extensive experience in the freight broker industry and having written thousands of bonds for freight brokers, we leverage our expertise to provide top-tier service and, most importantly, help you secure the bond you need.
Ultimately, it is crucial for freight brokers to take swift action when their BMC-84 Surety Bond is at risk of cancellation due to abrupt market changes. Don't wait—take action now to secure a new bond at competitive rates before the market changes further. Contact BOSS Bonds today for a consultation and bond quote. Our team is here to help you navigate these changes and ensure your business remains compliant and protected.