Electronic Filing of Surety Bonds
The surety industry has recently made strides in the area of electronic bond filing. Electronic bonding replicates the bond execution and procurement process that exists today, specifically signing of the bond form by both the principal and the surety and the physical delivery of the bond to the obligee electronically via the Internet or other electronic medium, or within a Web-based environment without paper or delay.
The electronic filing of bonds greatly reduces processing costs and frictional costs associated with the traditional method involving paper and in many cases, overnighting bonds to clients, thus offering reduced costs and providing increased efficiencies for all parties involved in the process.
The implementation and usage of electronic bond filing has been made a reality at the federal level by the passage of the Electronic Signatures in Global and National Commercial Act (E-Sign), which states that electronic documents and signatures are legally enforceable if the contracting parties consent to the electronic process. At the state level, the Uniform Electronic Transactions Act (UETA), which was developed by the National Conference of Commissioners and Uniform State Laws, gives legal standing to electronic documents and signatures.
While the methodology in engaging this enhanced execution and delivery system is still developing with some public entities, there are many public bodies (such as state departments of transportation) who have embraced this technology and have endorsed its usage as the preferred delivery method, especially at the bid/tender closing stage of letting and awarding public works contracts.