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Small & Emerging Contractors


What's New: Government Affairs

Maryland Individual Surety Law Sunsets Today

Tuesday, September 30, 2014  

Enacted and effective since October 1, 2006, the Maryland individual surety law sunsets today. Maryland had a unique law that permitted individual sureties to pledge assets to bond contractors on state public works projects.

This authority for individual sureties has a long history and SFAA worked closely over the years with member companies and other associations to defeat various attempts to expand the law and introduce legitimacy to these individuals under the Maryland Insurance Code. Our work together again this year was successful in defeating legislation that would have extended the individual surety law for five more years and finally putting an end to this law.

For the first time since 2006, there were no proponents in support of the individual surety law in the legislature. Only the bill sponsor testified in favor of her legislation to extend the individual surety law. The one individual surety that was behind the law when it was enacted in 2006 was cited in a Maryland Insurance Administration (MIA) study as the subject of several law enforcement actions and state regulatory sanctions. No agents appeared to support the need for the individual surety market for their clients and no small and emerging contractors surfaced this year either.

The work of SFAA and its members individually to assist small and emerging contractors obtain bonds also helped significantly in this year’s fight against extension of the law. Several members have “rapid response” programs under which small contractors can obtain a bond with a minimal amount of financial information. SFAA members will issue bonds in amounts ranging from $250,000 to $400,000, depending on the surety. The success of bonding education programs based on SFAA’s Model Contractor Development Program also were a key factor in the General Assembly’s lack of interest in extending the individual surety law. The MIA study found that there is a robust corporate surety market in Maryland, and adequate programs are in place to help small and minority contractors obtain bonding.

As a result of this year’s legislative efforts, SFAA is keeping a record of its efforts in Maryland to assist small and emerging contractors obtaining and reporting it to the legislative leadership.

SFAA has written two letters on our activities in Maryland since the General Assembly adjourned in March. SFAA can access them on our website. 

More information and letters available for Members at Government Relations / General Info (Members).

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