Electronic Surety Bonds (ESB) in NMLS
Electronic Surety Bonds are managed in NMLS so that surety bond requirements and records can be tracked and maintained by authorized surety companies and surety bond producers as part of the System of Record for state licensing.
NMLS supports Electronic Surety Bond (ESB) tracking so state regulators, surety companies, and surety bond producers can work from the same authoritative data set for company surety bonds. ESB functionality enables licensees to grant authority to their selected surety entities, and enables those surety entities to create, execute, deliver, and maintain bond records within NMLS.
Scope: ESB currently applies to company bonds that states have adopted for electronic processing in NMLS. Branch and individual bonds are not in scope at this time.
Participants and responsibilities
- Licensee (company): Grants authority in NMLS to the surety company and/or surety bond producer so they can act on the company’s behalf for ESB activities.
- Surety Bond Producer (SBP)/Agent: Creates and manages bond records for the licensee once authority is granted; has full execution authority when associated to a surety company.
- Surety Company (SC): Underwrites and executes bonds; can review and edit certain details prior to representative signature; manages bond lifecycle actions and reporting.
- State Regulator: Reviews delivered bonds and may accept them or return them for correction; regulator actions drive certain lifecycle outcomes in NMLS.
High-level ESB process in NMLS
- Authority granted: The licensee searches for and selects the surety company and/or SBP in NMLS and grants authority so the surety entity can act on the licensee’s behalf.
- Bond record created: The SBP or SC creates a bond record in NMLS (for a new bond or to convert an eligible paper bond listed on the state adoption table).
- Execution by surety entity: The responsible surety representative executes/signs the bond. (Bond numbers continue to follow the underwriting company’s numbering practices.)
- Delivery to regulator: The executed bond is delivered in NMLS to the appropriate state regulator for review.
- Regulator review: The regulator accepts the bond or returns it. If returned, NMLS notifies surety entities with a reason code and explanation.
- Lifecycle maintenance: Authorized surety entities manage updates over time, which can include riders/endorsements (one rider at a time per bond), renewals/updates, cancellations, or other corrections per regulator guidance.
- Tracking and reporting: Surety entities monitor activity using their bond management views and available transaction reports.
Key operating notes
- Bond numbering: Bond numbers are assigned per underwriting company practices. Because this is a free-form field, enter values consistently and follow any company-specific rules for special characters.
- Returned bonds and notifications: If a regulator returns a bond, NMLS notifies the surety entities and includes a reason code and explanation.
- Impact on riders: Delivered riders tied to a returned bond are automatically voided and captured in the returned-bond snapshot; pending riders are voided and not captured.
- Cancel vs. return vs. void: A cancelled bond was in effect and then cancelled by the surety; a returned bond is sent back by the regulator; a voided bond is returned by and then voided by the surety.
- Reusing bond numbers: A bond number can be reused if a pending bond is deleted or if a regulator-returned bond is subsequently voided by the surety company.
- Voiding returned bonds: Only the surety company identified on the bond can void a returned bond (which also enables bond number reuse).
- Form version changes: When bond form upgrades/revisions are required, SBPs/agents can complete the upgrade in NMLS; the surety company and agent should coordinate approvals outside NMLS as needed.