Surety Bond Acceptation: Summary Quick Underwriter Method

International Journal of Research and Innovation in Social Science (IJRISS) | Volume IV, Issue VII, July 2020 | ISSN 2454–6186

Surety Bond Acceptation: Summary Quick Underwriter Method

Debrina Vita Ferezagia¹, Muhamad Kresna Setyadi^2
1,2Vocational Higher Education Program, University of Indonesia

Abstract: This research aims to evaluate the practical acceptance of surety bonds. Also, this research will calculate a score between 0-10 as a reference for the feasibility of financing from insurance companies. The data used are XYZ company primary data consisting of company establishment deed data or company identity, audited company financial statements, and company operational experience in the project area. The company is currently applying for guarantees to insurance companies for ongoing business projects. The variables used in the calculation analysis are the Character, Liquidity Ratio, and Profitability Ratio variables. The method used is Quick Underwriting Summary. Based on the research results the total score for the Character variable is 2, the variable liquidity ratio is 3.2 and the Profitability ratio is 3,936, so the total score is 9.14. These results are included in the category of good with criteria more than 7.6. The recommendation given is that insurance companies should accept XYZ companies to be given surety bond guarantees.

Keywords: Underwriting, Surety Bond, Quick Summary.

I. INTRODUCTION

In a business cooperation contract in the construction and non-construction fields, the project owner and the contractor want the business collaboration to be completed in accordance with the initial agreement before the contract. Every cooperation contract in this case has a risk of loss during the period. This risk includes the reasons for not fulfilling or implementing agreements, rights, and obligations of each party, and others. In the implementation, the project owner wants the contractor to have a guarantee, called a surety bond. A surety bond guarantee is a two-party agreement, namely between an insurance company called a surety and a contractor called a principal, where the first party (surety) provides guarantees to the principal for the benefit of a third party called the Obligee as the project owner.

The Underwriting process aims to determine the number of premium costs to prospective Insured according to the level of risk provided by the Insurer so that there is fairness between the premium and the risk paid by the Insurer when the risk of loss occurs. Issuance of a policy for prospective Insured is determined based on the underwriting process whether accepted or not.

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