Q: Is the licensee going to notify their surety bond producer or surety company of the need to convert an existing bond in NMLS?
A: It will be a joint effort among the surety entities and the licensees in regards to starting the conversion process. To support this initiative, NMLS is delivering communication and training sessions to both licensees and surety entities regarding the new ESB functionality. This includes the State Adoption Map and Table and a license item placement informing licensees of their need to convert their bond using the electronic method. Also, the state regulators participating in the ESB functionality may be sending communication to their licensees impacted to alert them to the expectations regarding deadlines and requirements.
Q: Are electronic surety bonds available for branch and individual bonds at this time?
A: No, the electronic surety bond functionality is not available for branch and individual bonds. At this time, only the company bonds listed on the State Adoption Map and Table are impacted.
Q: The terminology on NMLS is different from what I am used to, is there a reference guide?
A: The Electronic Surety Bond Glossary provides terminology definitions and synonyms to assist users.
Q: Is it the responsibility of the surety entity to request access to the licensees’ NMLS account in order to begin the bond creation process?
A: No, the NMLS licensee is responsible for granting authority (access) to the surety entities (producer or company) through their NMLS account. The ESB functionality enables the existing NMLS licensee to search for the surety entities by NAIC/NPN identifiers or company name in NMLS and then select the company to grant authority.
Q: Will the electronic surety bond process change the way we assign bond numbers?
A: Surety bond producers will continue to use the bond numbering process currently used outside the System, prescribed by the underwriting company.
NOTE: This is a freeform field, therefore it will be very important that data is entered using the appropriate format. As a best practice, it is recommended that you confirm if any special characters (such as #, -, and _) are used by your underwriting company.
Q: Can a surety entity create multiple bond riders for the same bond at one time?
A: Only one rider per bond can be created at a time and the rider must be signed by the licensee (principal) before another rider for the same bond can be created. However, you are able to have multiple pending riders at the same time for different bonds.
Q: What are the available processes that can be completed in the NMLS for surety entities?
A: To better understand the purpose and available processes in NMLS, please reference the diagrams provided below.
Q: With the new bond form version functionality, will surety companies be able to first “approve” the new bond form version before the Surety Bond Producer (SBP)/agent is eligible to complete the bond upgrade/revision process?
A: No. At this time the functionality will allow an SBP/agent to complete the bond upgrade/form revision process without prior system-facilitated approval. Both the surety company and agent impacted by the bond upgrade/form revision requirement and should communicate outside of NMLS to ensure approval prior to completing the process. Future ESB enhancements will include system-facilitated approval with bond form versioning.
Q: With the new update, will the surety company be able to change a license type on a new/converted bond before it has been accepted by the regulator?
A: The NMLS 2017.1 Release enables a surety company identified by an SBP/agent during bond creation to edit the bond when it is in “Pending Representative Signature” status. Once the bond has been signed by a surety/agent representative, the bond can no longer be edited to reflect a change from new to converted or vice versa unless the principle (licensee) returns the bond to the surety as a result of the error.
Q: When a surety company is connected to a bond producer, what level of authority do they have to issue bonds?
A: SBPs/Agents are granted full execution authority via the association process. Surety companies may utilize their Manage Bonds list and the Surety Company Transaction Report to track bonds created and managed by associated agents.
Q: Who can issue a surety bond in the U.S. territory of Guam?
A: The Guam SAFE Act (30 GAR, Div 3, Chap 20, Section 20123 (c)) states:
“An applicant for company mortgage loan originator shall procure the surety bond described above from an insurance company that is currently admitted or licensed to transact insurance business in Guam; and such insurance company that is accredited or listed with the United States Treasury”
Therefore, only insurance companies that obtain a valid license to conduct business in Guam will be permitted to issue a surety bond within the U.S. territory.
Q: Does Guam require a verified general resident agent to sign a surety bond?
A: No. If the surety bond is issued by an insurance company authorized to conduct business within the U.S. territory, Guam will accept the surety bond, if signed, as valid.
Q: How will a Surety Entity know a regulator returned a bond?
A: The System will automatically notify Surety entities when a regulator returns a bond.
Q: How will a Surety Entity know why a regulator returned a bond?
A: A reason code and explanation are listed in the notification.
Q: What happens to riders on returned bonds?
A: All delivered riders associated with the returned bond are automatically voided by the system and captured in the returned bond snapshot. Pending riders are voided and not captured.
Q: Can a bond be reused?
A: Yes. If a company with a terminated license re-applies for the same license type, the bond will automatically sync with the new license request.
Q: What is the difference between Cancelled, Returned, and Voided bonds?
A: Cancelled bonds are bonds that were in effect but cancelled by the surety without regulatory action, returned bonds are bonds that were returned to the surety by the regulator, and voided bonds were returned by the surety and subsequently voided by the surety.
Q: When can a bond number be reused?
A: A bond number can be reused when the associated bond is in “Pending” status and deleted or is returned by the regulator and voided by the surety.
Q: What kind of bonds can be voided?
A: First-time delivered bonds. Those are bonds associated with only a single license instance. Bonds associated with multiple license instances of the same type cannot be returned.
Q: Who can void a returned bond?
A: Only the Surety Company identified on the bond can void the bond. Voiding a bond allows for the bond number to be reused (see below). Voided bonds are captured in the system as a snapshot. Surety Bond Producers who wish a bond to be voided must contact the Surety Company.
Q: When can a Surety Company void a bond?
A: A Surety Company can only void a bond after a regulator returns it.
For a full list of commonly asked questions, please see the FAQs .