Bond Creation and Execution for Surety Companies

Surety companies create and execute Electronic Surety Bonds (ESBs) in NMLS to satisfy regulator bonding requirements for licensees. This topic provides an overview of the bond creation and execution process from the surety company perspective.

In NMLS, surety companies are responsible for creating new Electronic Surety Bonds (ESBs) when a licensee requires coverage to meet state regulatory requirements. Bond creation and execution represent the first stages in the ESB lifecycle and define the electronic record that links the licensee, surety bond producer, and regulator.

Overview of bond creation

A surety company user with the appropriate role permissions can initiate a new bond from the Tasks tab. During bond creation, the company identifies the licensee, selects the appropriate underwriting company, and establishes key details such as the bond amount, effective date, and state authorization. After saving the bond, it appears as a draft that can be edited or assigned to a representative for execution.

Bond execution

Once bond information is complete, the surety company executes the bond by electronically signing it in NMLS. The execution step represents the company’s formal authorization that the bond has been underwritten and issued to the licensee under the company’s authority. Only users with the Manage and Sign Bonds role and active representative designation can execute ESBs on behalf of the company.

Note: Each ESB is associated with a unique bond number and remains in “Pending Execution” status until all required signatures are completed.

Collaboration with the surety bond producer

The surety company and surety bond producer work jointly to complete the bond. A bond producer may prepare a draft bond that the company reviews and executes, or the company may create the bond directly in NMLS if it manages the producer’s data entry internally. In either case, both entities must have an active association in NMLS before a bond can be created or executed.

Delivery to the regulator

After execution, the ESB is automatically transmitted to the regulator for review and acceptance. The regulator’s acknowledgment or return determines the next step in the bond lifecycle. Returned bonds can be corrected and resubmitted directly from NMLS without requiring a new record.

Bond lifecycle summary

The following stages represent the typical bond progression from creation through regulator acknowledgment:

  1. Create new ESB record in NMLS
  2. Complete bond details and assign representative(s)
  3. Execute and electronically sign the bond
  4. Deliver the bond to the regulator for review
  5. Monitor regulator acknowledgment or returned status
Note: Procedures for executing a bond, managing returned bonds, and delivering executed bonds to the regulator are described in the child topics under this section.

Roles and permissions involved in bond creation

  • Account Administrator: Can assign roles and create organization users who perform bond management tasks.
  • Manage Bonds: Allows users to create and view bond drafts.
  • Manage and Sign Bonds: Allows users to execute and sign bonds as a designated representative.
  • Manage Reports: Allows users to track submitted bonds, pending actions, and regulator returns.
Note: Ensure that each user performing bond execution is listed as a representative within the company’s active association record. Only authorized representatives can sign and submit ESBs.