Surety Protects: The Economic Value of Surety Bonds

(SPEECH)

[MUSIC PLAYING] 

(DESCRIPTION)

Text, Wednesdays with Woodward (registered trademark) Webinar Series. 

Travelers Institute (registered trademark). Logo, Travelers.

(SPEECH)

JESSICA KEARNEY: Good afternoon and thank you for joining us. Welcome to Wednesdays with Woodward, a webinar series where we convene leading experts for conversations at the intersection of insurance, business and public policy. I'm Jessica Kearney, Assistant Vice President here at the Travelers Institute. And I'm filling in today for our host Joan Woodward.

Before we get started, I'd like to share a disclaimer about today's program.

(DESCRIPTION)

Text, About Travelers Institute (registered trademark) Webinars. The Wednesdays with Woodward (registered trademark) educational webinar series is presented by the Travelers Institute, the public policy division of Travelers. This program is offered for informational and educational purposes only. You should consult with your financial, legal, insurance or other advisors about any practices suggested by this program. Please note that this session is being recorded and may be used as Travelers deems appropriate. Travelers Institute (registered trademark). Logo, Travelers.

(SPEECH)

Also, right off the top, a huge thanks for our program partners today who you see here on screen.

(DESCRIPTION)

Text, Wednesdays with Woodward (registered trademark) Webinar Series. Surety Protects: The Economic Value of Surety Bonds. Logos, American Property Casualty Insurance Association (service mark), Insuring America, a.p.c.i. dot org, Travelers Institute (registered trademark), Travelers, Insurance Association of Connecticut, Gamma Iota Sigma, The Insurance Industry's Premier Collegiate Talent Pipeline, Connecticut Business and Industry Association, MetroHartford Alliance, Master's in Financial Technology (FinTech) Program at the University of Connecticut School of Business.

(SPEECH)

These include the Insurance Association of Connecticut, the UConn School of Business Master's in FinTech Program, the MetroHartford Alliance, the American Property Casualty Insurance Association, Gamma Iota Sigma, and CBIA. Thank you all for your support, and welcome to your members and networks.

Today, we are doing a deep dive into the economic value of surety bonds. As our audience is probably aware, surety bonds provide the most comprehensive risk management tool available to protect construction projects against default and ensure contractual obligations are met. Very important stuff. We all know this, but now we've got the evidence.

(DESCRIPTION)

A booklet appears. Text, The economic value of surety bonds. Prepared for The Surety and Fidelity Association of America. November 2022. Logos, S.F.A.A. The Surety and Fidelity Association of America. E.Y. Building a better working world.

(SPEECH)

A new analysis by Ernst & Young actually quantifies the benefits surety bonding generates throughout the lifecycle of a portfolio of construction projects. Bottom line, surety bonds get it done. They save time, and they save money.

Today, I am thrilled to be joined by the report's author and sponsor who are bringing the receipts, as they say. They're going to tell us all about the analysis and lead us through this discussion.

(DESCRIPTION)

Text, Speakers. Jessica Kearney, Assistant Vice President, Travelers Institute, Travelers. Lee Covington, President and CEO, Surety and Fidelity Association of America. Bob Carroll, Co-Director, U.S. National Tax Quantitative Economics and Statistics Group (QUEST), Ernst and Young. Bob Raney, Senior Vice President, Construction Services, Travelers.

(SPEECH)

Joining me today will be Lee Covington, President and CEO of the Surety and Fidelity Association of America, a nonprofit, nonpartisan trade association representing all segments of the surety and financial fidelity industry.

Lee joined the SFAA in 2018. Under his leadership, it has intensified the association's focus on advocacy as its highest priority. And he's increased relationships with industry, non-industry and coalition partners, resulting in an expanded voice and profile for the association. Lee spearheaded the report that we're going to be talking about today and will bring some fantastic insights.

Next up will be Bob Carroll. He's co-leader of Ernst & Young's Quantitative Economics and Statistics Group, or QUEST, and is the author of the Surety Protects report. At EY, Bob is an advisor for public and private clients on a broad range of policy issues, including federal tax policy, tax reform, macroeconomic impact analysis and revenue impact analyses of policy changes. He co-leads a group of quantitative analysts who assist clients with tax and economic policy studies. Before joining EY, Bob was the Deputy Assistant Secretary for Tax Analysis at the U.S. Treasury Department where he served as the top economist for tax policy issues.

And I'm pleased to introduce Travelers' own Bob Raney, our in-house surety expert. Bob is the head of our Construction Services within Travelers Bond & Specialty Insurance. He has three decades in his career in surety. And he's responsible for the development and implementation of all business strategies here and initiatives for the management, underwriting and sales of construction surety and related products to Travelers' construction clientele. Bob is also the Vice Chair and Executive Committee Member of SFAA.

So welcome to all of our speakers. We're looking forward to getting underway. Before we do, I want to ask our audience, please drop your questions in the Q&A feature at the bottom of the screen, really at any time throughout the presentation, and we'll try to get to as many questions as we can.

So first up, I'm pleased to welcome Lee Covington who will offer an overview of surety bonding. Lee, please take it away. And thank you so much for joining us.

(DESCRIPTION)

Logo, S.F.A.A. The Surety and Fidelity Association of America. Text, Travelers Institute Wednesdays with Woodward. Surety Protects: The Economic Value of Surety. April 26, 2023. Lee Covington. S.F.A.A. President and CEO.

(SPEECH)

LEE COVINGTON: You bet. Thanks so much, Jessica. Good afternoon or good morning to everyone who's participating today, wherever you're located. And a special thank-you to the Travelers Institute and Joan Woodward for hosting us today. I'm a regular attendee of Wednesdays with Woodward, and so it's a real honor for me to be participating in today's webinar.

And before I begin, I'd like to thank my co-panelist Bob Raney and his team at Travelers and Bob Carroll at EY, both of whom were instrumental in the development and execution of this report. And I look forward to our conversation today. So, thank you, Bob and Bob. And at this point, let's dive in.

(DESCRIPTION)

Text, What is a surety bond? A surety bond is a written agreement between three parties. Project Owner. Pays for a construction project. Usually, a government agency or private owner. General Contractor. Purchases the bond and builds the project. Surety Company. Ensures contractor executes work according to contract terms, steps in if contractor defaults.

(SPEECH)

I suspect that most of you on the webinar know what a construction surety bond is. But for those of you who don't, let me take a minute to explain. A construction surety bond is a three-party agreement under which a surety company, our members, insurance companies, like Travelers, guarantee to a government agency or a private owner that the principal, typically a general contractor, will perform a construction project according to the contract terms.

The surety bond protects the government agency or the private owner in the event the contractor does not fulfill its obligation. And the bond also has payment protections for subcontractors, workers, suppliers if the contractor cannot or does not pay what is owed to-- to those-- to subcontractors, workers and suppliers.

(DESCRIPTION)

Text, Why are surety bonds important? Protect projects by guaranteeing performance when contractors don’t fulfill their obligations. Ensure projects are completed as agreed upon in the contract. Save time and dollars on every project, even if a default never occurs.

(SPEECH)

Moving on. So why are surety bonds important? Construction is a risky business. It's complex. We know from the U.S. Census data that 9% of all construction firms fail every year. And that number even goes up when the size of the construction firm falls below five employees, moving up to 14%. And as Jessica indicated, the surety bonds are the most comprehensive risk management tool to ensure that taxpayer dollars are protected, that subcontractors, suppliers and workers are paid and that projects are completed.

Bob Carroll will review some key findings from the report, but one that I want to highlight is that unbonded projects are more likely to default than bonded projects, as we might expect, by as much as 10 times. The reason for this disparity is because sureties vet contractors during a prequalification process to confirm relevant work experience with similar projects, sufficient workforce and expertise to undertake the entire backlog of work that is contemplated, and the financial ability to cash flow the project through completion, paying all workers, subcontractors and suppliers.

So with that background, let's move on.

(DESCRIPTION)

An image of the booklet appears again, titled, The economic value of surety bonds. Text, Why we conducted this research? Hard data is essential to good decision-making, move the conversation from qualitative to quantitative. To help tell our story. Beyond default payment. Quantify benefits throughout the entire lifecycle of a project. Apply findings to both single projects and a portfolio of projects. Prove why bonding is “good public policy.”

(SPEECH)

Surety is a great product. Our member surety companies provide tremendous value to their clients. As an industry, we've always known this and known what we bring to the table. However, externally, we wanted to be able to prove this value. I heard an old executive say one time, in God we trust. All others, bring data. I think-- I love that saying. Data is king.

And I often ask my team, what's the data behind that? We know that hard data is essential in good decision-making. And we wanted to quantify the benefits of surety bondings, both on a portfolio of projects, for example, across an entire state, or, and we'll talk about that here in a little bit, or federal agencies.

But we also wanted to be able to show that the value extends well beyond the protection from default, including reducing taxpayer and owner cost, putting well-qualified contractors on projects, supporting local small businesses, and improving construction completion times. In the end of the day, we wanted to be able to show that surety is just good public policy and also makes a lot of sense for private owners. Next.

(DESCRIPTION)

Text, Campaigns, Public vs. Private. Public. Mandated by law. Theme, Surety Protects. Elevate awareness of the value of surety. Reinforce the requirement is good public policy. Protects taxpayers, workers and suppliers and responsibly delivers essential infrastructure projects. Private. Self-purchased / no mandate. Theme, TBD. Introduce and Convince. Unlock new opportunities. Demonstrate value of product outweighs cost to purchase. Protects owners, investors, reputation and delivers profitable infrastructure development to the private market.

(SPEECH)

We have two major audiences that we want to educate from the findings of this report, public and private. While the economic value is consistent and applies across both audiences, the strategy for communicating this information is very different for each audience. As an industry, we made a decision to build out a campaign, Surety Protects, to focus on the first-- to focus first on the public sector.

And we're in the process of that now having completed our launch of the campaign to the United States Congress and federal agencies and in six states and with four more launching in May. So next.

(DESCRIPTION)

Text, Who is the audience for public projects and why they matter? Policy Makers, Federal and State. Members of Congress and staff. Committees relating to infrastructure development. Relevant federal agencies. State legislators and staff. Raise awareness of surety’s benefits to taxpayers, constituents, and public interest. Leverage E.Y. data to underscore value.

Public Owners, Federal and State. Agencies. D.O.T's, G.S.A's, Corp of Engineers, etc. Roles. Purchasing. Project/supplier Management. Facilities/construction. Insurance risk management. Leverage E.Y. data to promote full scope of benefits. Use E.Y. data to go beyond default “payout.”

Local Audiences. Regional, County, Municipal. Project owners. Transportation, education, health, etc.. Local professional organizations. Legal, financial, architect, general business. Elected. Councils and staff. County executives and staff. Equip S.F.A.A. members with tools and E.Y. data to inform and educate locally.

(SPEECH)

So we'll focus today on the public market of surety bonds and how the report helps us with those audiences: policymakers, public owners and local audiences. As many of you know, bonding has been required at the federal level under the Miller Act and a previous law for over 100 years. And all states have enacted similar requirements known as Little Miller Act.

Legislators and regulators can change these requirements at any time. And we must educate them not only on the economic value of bonds, but how changes to these requirements can impact infrastructure development that is such a focus at the federal level and in the states now. We want to shift the conversation from a qualitative one to a quantitative one and bring hard data to the table when representing the industry. Policymakers and legislators, they expect this, and we need to be able to do it.

Let me give you one example of that. In Illinois this year, we were able to educate-- we were able to educate policymakers that raising the bond threshold-- in other words, the level of project at which the size of project which a bond is required. We were able to educate them that raising that bond threshold would cost the state of Illinois between $85 million and over $300 million. So as you can see, this report is very timely. And with that, I'll turn it over to Bob Carroll to give an overview of the research and share some of the key findings. Bob.

(DESCRIPTION)

Text, Thank you.

The economic value of surety bonds. Bob Carroll, E.Y. Quantitative Economics and Statistics Group (QUEST). April 26, 2023. Logo, E.Y. Building a better working world.

(SPEECH)

BOB CARROLL: Great. Thanks. Thanks so much, Lee. Similar to Lee, I want to give a big thank-you to the Travelers Institute, to Bob Raney who was very helpful throughout the entire project, and also a big thank-you to Lee and Peter Roth over at SFAA who are basically our client for the project.

If you go to the next slide, this is a project that was kind of a long time coming in two ways.

(DESCRIPTION)

Text, Overview. Objective. To quantify the impact surety bonding has on projects. Key finding. Bonded portfolios generally outperform nonbonded portfolios (lower cost). Three primary areas of economic value of surety bonding were identified. Lower cost of completion upon default and necessary completion expertise. Lower rate or likelihood of default (unbonded projects are more likely to default than bonded projects). Improved or lower contractor pricing. Surety bonds also found to benefit construction projects in several other ways. More rigorous prequalification and review. Higher priority on bonded projects/greater project oversight. Greater timeliness of completion. Necessary experience and resources when defaults occur. A data and modeling driven exercise. Two surveys of developers and industry professionals; industry data from the S.F.A.A. and public sources. The survey results and data served as inputs for E.Y.’s Bonded-Unbonded Project Portfolio Model.

(SPEECH)

When the SFAA first approached us, they kind of let us know that they really didn't have any readily available data that showed the economic value in a kind of a holistic way of surety bonding. And our task for the project was to come up with-- and to come up with and quantify the economic value of surety.

We had lots of twists and turns in the project. But we have, I think, a report and an analysis and a quantification that I think is quite compelling. Again, the objective of the analysis was to quantify the value proposition of surety bonding on projects. The key finding-- You can look at all the results in the report. There are many. But the key finding that all the very varied results contribute towards is that bonded portfolios fundamentally generally outperform non-bonded portfolios, meaning they simply have lower cost.

And what we found throughout the analysis is they have lower cost. Surety bonding has three primary areas of economic value: a lower cost of completion upon default. That's one. Two, significantly lower rate of default for bonded projects. And three, improved or lower contractor pricing. When you combine these, even with conservative assumptions, we found that, again, bonded portfolios outperform non-bonded portfolios, again, meaning they simply have lower cost.

In addition, we also found that surety bonds benefit construction projects in a number of different ways. More rigorous prequalification and review. Higher priority was given to bonded projects. Greater project oversight given to bonded projects. Greater timeliness of completion. And necessary experience and resources were brought to bear when defaults occur. And a lot of these results, these last four findings that I mentioned, are kind of from the mouths of owners and developers.

A lot of studies like this, this one in particular was very much a data and modeling-driven exercise. We conducted two surveys. If you go to the next slide, we conducted two surveys. One survey was of owners and developers, which I alluded to.

(DESCRIPTION)

Text, A data and modeling-driven exercise. Analyzed five project types (public highway, public K through 12 school, public underground wastewater pipeline, private hospital, and private apartment building). Two surveys. Survey of owners and developers to understand and estimate the quantitative and qualitative impacts of having surety bonds in place. Survey of industry professionals with extensive experience with defaults. Detailed project data from S.F.A.A.. Project size. Premiums. Frequency of default (averages and distribution). Publicly available financial and other industry data. Developed E.Y. Bonded-Unbonded Project Portfolio Model. Run portfolios consisting of 10,000 projects that captures the contours of projects in the data. Compare performance of portfolio consisting of bonded and unbonded projects.

(SPEECH)

We also conducted a survey, a set of interviews, if you will, of industry professionals with very deep, extensive experience working through projects that have defaulted.

And we analyzed five different project types to give kind of an overall blend of the types of projects that are out there: public highways, public K through 12 schools, public underground wastewater pipelines, private hospital and private apartment buildings. As you can see, three public projects, two private projects.

Then we-- in addition to the data we collected from the surveys, we used a lot of data from-- that was provided to us by the SFAA that allowed us to, in the course of constructing the portfolios, to accurately and precisely portray the distribution of projects by project size, premiums, and frequency of default and a few other parameters. And we also used some publicly available financial data and other industry data and also relied on some of the industry expertise within EY and our real estate practice and our public infrastructure practice.

With all of this data combined, we developed a portfolio model where we were able to simulate a portfolio of bonded projects and arrive at the cost of those, the cost of that portfolio, which is basically the premium, and then compare that to the cost of unbonded projects.

And by comparing the cost of the respective portfolios, we were able to analyze the economic value that bonding brings to projects. Some of the details, our portfolios had-- we ran portfolios with 10,000 projects. We actually ran them with a number of different sizes. And as the number of projects increased, the results kind of solidified-- the law of large numbers.

(DESCRIPTION)

A bar chart appears with the title, Total portfolio cost faced by owner, by default rate ratio. Text, Notes. Total cost is defined as the sum of all cost-saving benefits of bonding (i.e., improved contractor pricing, prequalification, oversight and vetting, and loss prevention), premium cost of bond, and a cost of completion conditional on default. The analysis assumes that the average improved contractor pricing benefit at 1% of total project value and cost of completion for unbonded projects that is 185% of bonded projects. Source: E.Y. analysis.

Portfolios of unbonded projects are more costly. Lower cost of completion. Unbonded projects face 85% additional cost of completion upon default. Lower rate or likelihood of default. At least 2.5 times lower than unbonded projects. Improved or lower contractor pricing. Modeling conservatively assumed improved contractor pricing at 1%, although may be significantly higher. Total portfolio cost faced by an owner is generally significantly higher for an unbonded portfolio, even with conservative assumptions.

(SPEECH)

If you go to the next slide, which kind of focus on some of the key results, again, the three major ways that bonding benefits projects is unbonded projects, we found, face a significantly higher cost of completion upon default. In fact, 85% higher. That came out of our interviews with the industry specialists.

Then we also found that bonded projects have a significantly lower rate of default than unbonded projects, at least 2 1/2 times lower than unbonded projects. We ran three different scenarios generally at 2 1/2 times, five times, and 10 times. There is a study, an analysis of construction projects in Canada that found that the relative rate of default is 10 to 1. So it provides kind of an upper bound. The other metrics 2 1/2 and five were developed using a U.S. Census Bureau business dynamics data.

Then the last key factor that, again, results in a lower cost of bonded portfolios is improved and lower contractor pricing. We found based on the survey of owners and developers that bonded projects tend to have lower contractor pricing, and significantly lower. We used a conservative assumption that is 1% higher-- 1% lower project value. The average results from the survey was 3.2% lower. So that's pretty significant. 

In the chart on the right of the slide, what we're doing is comparing the cost of a bonded portfolio to the cost of three unbonded portfolios that vary based on the default rate. And as you can see for this particular project type, the cost of the bonded portfolio, which is the cost of the premiums, $258 million, is significantly lower than the cost of the unbonded portfolios, the portfolios of unbonded projects.

And significantly so, even with what I would view as a relatively conservative assumption with respect to the default rate and I would say also a relatively conservative assumption with respect to the improved contractor pricing. We use 1% rather than the-- more conservative than the results that we found in the survey of owners and developers.

And so I think at the end of the day, when we-- I think that the report and analysis provides a very, very compelling story around the economic value of surety bonding. And it's very multi-dimensional, and there are a variety of ways that the surety provides value to projects. And even with relatively conservative assumptions, the portfolios that are bonded in our simulations, of which we ran many, really do tell a convincing story. And I enjoyed Lee's line, in God we trust. For all others, bring data. I think this is, again, a pretty compelling depiction of the economic value of surety. I'll stop there.

(DESCRIPTION)

Text, Travelers Institute Webinar Series: Wednesdays with Woodward. Surety Protects: The Economic Value of Surety Bonds. April 26, 2023. Bob Raney. Logo, Travelers.

(SPEECH)

BOB RANEY: Thanks, Bob. Thanks also, Lee and Jessica. Hello, everyone. It's nice to be-- nice to be with you today. I thought I would take a little slightly different angle for my remarks. I suspect that we have a lot of folks on the call who are stakeholders in one way or another in the surety industry: underwriters, agents, brokers, or other constituents and interested parties. And as Lee mentioned, this is a great study that really helps explain the value of bonding and construction, and especially public construction, which is where the initial focus is in terms of education and utilization of the study.

So I thought I would take a look at how important construction, and in particular public construction, are to the surety industry and what that looks like. Because I think as you'll see, it is a meaningful part of the surety industry. So to do this-- and moving on, please. Yes, so to do this, I worked with one of my colleagues in our actuarial group here at Travelers who accessed some information from the SFAA.

(DESCRIPTION)

Text, Surety and Fidelity Association of America. S.F.A.A.. Financial and Statistical Plan Data. Represents majority of surety industry. Designated statistical agent. Data reflects member companies. Class codes by bond/project type.

(SPEECH)

As Lee mentioned, SFAA represents the majority of the writers in the U.S. surety industry. It's the entity that's designated as the statistical information for collecting information. All the members turn in companies and all the bonds are or should be coded with a class code that gives us some insight into what type of project it is and who the project is for. And so I wanted to take a look at that and allow that to quantify for us the importance of the construction sector, and especially the public bonding sector. So next slide, please.

(DESCRIPTION)

Text, Surety Protects: the Economic Value of Surety Bonds. Surety Industry Direct Written Premium. A line graph displays a red line and a dotted red line trailing off the graph. The x-axis are dates ranging from 2012 to 2021, and the y-axis is dollar in billions. Text, Source: Surety and Fidelity Association of America, Top 100 and I.E.E. reports.

(SPEECH)

First of all, just kind of a reminder on the size of our industry. This is a chart showing the direct written premiums for the U.S. surety industry. Premium levels were about $5 billion back in 2012, growing to almost $7 1/2 billion in 2021. We don't yet have the published figures for 2022. We should get those soon. But we do expect pretty strong growth based on what we saw through Q3 and based on some initial analysis we've done on some of the statistical reports.

So my guess is that could come in around 8 1/2 billion for the surety industry driven by a lot of the inflation and in-contract prices. So it's been a significant and steady growth story for surety. I will remind us, as many of you know, we are a small industry. So the Insurance Information Institute cites the U.S. P&C industry as about 715 billion in 2021. So the surety product is just a little over 1% of that piece. But even though we're small, I think it's great that we have a study that shows that we bring some real economic value.

So let's take a look at what makes this up. And we can move on. Here we go.

(DESCRIPTION)

Text, Surety Protects: The Economic Value of Surety Bonds. Surety Industry Direct Written Premium. A pie chart shows three sections in yellow, red and blue colors. Commercial Surety, 34%. Public Construction, 54%. Private Construction, 12%. Text, Source: Surety and Fidelity Association of America statistical plan data, 2017 to 2021.

(SPEECH)

So the data on the next few slides was compiled by taking a five-year average, 2017 to 2021, of class code information as turned in by all the members into the SFAA. So if we look at the industry, so for 2021, that $7.5 billion, it breaks out approximately like this.

Clearly heavy weighted to construction. So about 66% of the surety industry is related to construction. About one-third, 34%, would be related to all other bonding. So many, many different types of bonds needed by other types of construction or other types of customers besides construction. So of the construction piece, public construction is 54% of the industry. That's a little over $4 billion of the 7.5 billion, all in construction. Both public and private is about $5 billion of the 7.5 billion. So clearly a significant amount.

Public construction spending in the U.S. is currently running about 400 million. So again, the public construction surety direct written premiums run about 1% of that. The private sector in terms of construction spending is larger than the public, but clearly bonds are utilized frequently but not on all projects there. And therefore, it represents a smaller amount of the total direct written premium. OK, next slide.

(DESCRIPTION)

Text, Public Construction. Surety Industry Direct Written Premium. A pie chart shows two sections in red and blue colors. Other Public: Including State, County or Municipality, 91%. Federal, 9%. Text, Source: Surety and Fidelity Association of America statistical plan data, 2017 to 2021.

(SPEECH)

So of the public section, public construction, that 54%, here's how that breaks out in terms of who the owner is. So the federal government is the largest single owner in the surety industry or single requirer of bonds in the surety industry, but you can see they're actually a pretty small part. It's a little misleading because federal funds are granted to states and municipalities.

And so federal funds are spent on bonded construction projects through an obligee who is not the federal government. For example, a federal gas tax could be allocated to a local Department of Transportation and the projects awarded there. But nonetheless, federal is a significant client of the surety industry on its own.

The class codes don't tell us specifically where those dollars go, but I did look at some of our data here at Travelers and it's departments of the government, like the Army Corps of Engineers is a big one, Department of Defense, which would be the Army, Navy through NAVFAC would be another big one. We bond embassies for the Department of State, courthouses for the Department of Justice, labs for the National Institutes of Health, medical facilities for the VA, and kind of on and on and on. So the government is a large owner of construction and a significant user of bonding, which is, of course, important. Next slide, please.

(DESCRIPTION)

Text, Public Construction. Surety Industry Direct Written Premium. A new pie chart shows three sections in yellow, red and blue colors. All Other, 16%. Building, 54%. Infrastructure, 30%. Text, Source: Surety and Fidelity Association of America statistical plan data, 2017 to 2021.

(SPEECH)

So in terms of the types of projects that make up public construction, 54% are buildings or vertical construction, 30% would be horizontal or civil infrastructure, and then there's a pretty good size category of all other. And there's no single large group, at least according to the class codes, in the all other. It's things like subdivision bonds, maintenance bonds on constructed projects, transmission lines. There's a couple of codes in there for buildings and construction not otherwise classified that make up that.

I think it's interesting that a lot of people are surprised to see that the horizontal civil infrastructure component is actually quite a bit smaller than the building component. And I think the thing to keep in mind there is that when you hear statistics and thoughts on the impact of things like the Infrastructure Investment and Jobs Act, the IIJA, it is a significant increase in infrastructure spending at around 30%. But that's only on a part of the surety industry. So it doesn't directly translate into the same percentage growth in the surety industry. Moving on.

(DESCRIPTION)

Text, Public Construction. Surety Industry Direct Written Premium. Major Project Types. A table is shown with columns titled, Percent, Public Building, Percent, and Public Infrastructure.

(SPEECH)

So these are just some of the more specific types with the public building on the left, sort of that 54% piece of the public construction pie. On a class code basis, the biggest category there would be sub trades. And again, it's all subtypes, all building types. So it doesn't really give you a whole lot of data there. Although, if you just do the math, the sub trade sector ends up being about the same size as the federal sector. And then I think just below that, it's not surprising that a lot of public construction is spent in the area of education, K through 12 schools, public universities. It's a big segment.

On the right side, I think we see more of what we traditionally expect when we think of civil and horizontal infrastructure. If you combine the highways, the bridges, the tunnel subways, transit, I think we think of that as transportation infrastructure. That's about 44% of that-- the infrastructure component. Likewise, the water-related infrastructure-- utilities, sewer, flood control-- that's sort of that water and wastewater management component. That's about 28% of the horizontal and civil space.

So bottom line, and we can have a look at the next--

(DESCRIPTION)

Text, Contribution of Public Construction to the Surety Industry. Summary. Over 50% of Surety Industry D.W.P.. Numerous types of projects. Bonds at local, County, State & Federal Level. Conclusions of the E.Y. Study help support public construction bonding.

(SPEECH)

here we go. So just in summary, it's clearly meaningful that the public bonding statutes are-- and public construction are very significant. It's over 50% of the surety industry direct written premium. And it's all kinds of projects. And it's bonds at all different levels of government, local, county, state and federal.

And so I think it feels really, really good that we have an excellent study from EY that helps support and demonstrate the value of bonding on these projects. And I think it can help private sector owners kind of reevaluate the value of bonds on their projects as well. So I hope that's helpful. And now, Jessica, I'll flip it back to you.

(DESCRIPTION)

The presentation closes as the speakers appear.

(SPEECH)

JESSICA KEARNEY: Wonderful. Thank you, Bob, Bob and Lee. That was a really fantastic overview of the surety business and some of the one on one-- 101, excuse me, all the way to state of play today. And we're excited to reconvene here for our moderated discussion portion of today's program.

And we've got a bunch of audience questions coming in just in reaction to all three presentations. And I'm going to actually use them to tee up our first polling question or our polling question for the audience today as we typically do on our program. We're getting a few questions in from the audience. They want to dig in a little bit deeper to those privately bonded projects and trying to understand those a little bit more.

So let's pull up our first polling question and just get a pulse on the audience. We want to know do any of your clients use surety for private projects? So we just want to get a sense from the group here as to how that breaks out. And then maybe we can discuss that a little bit and discuss some of the color around when private projects choose to go bonded or non-bonded. OK, great. So it looks like it's about two-thirds say yes, they have clients who use surety for private projects. And about a third say no.

Bob, I see you shaking your head. Bob Carroll, I see you shaking your head. I'm wondering if you want to react to that just based on what you found in the report.

BOB CARROLL: I would just say in the course of us talking to some of the owners and developers, it became clear to us immediately, even though surety is generally only required for public projects, there are lots of context in which private-- that owners and developers do use surety for private projects. Often will depend on a variety of factors, such as the riskiness of a project, the risk profile, their portfolio projects, but they definitely do use them for private projects in some circumstances.

JESSICA KEARNEY: Bob, you look like-- Bob Raney, you look like you wanted to jump in there. Was there something you wanted to say?

BOB RANEY: No. I think that's right. I think that-- I think the use case and some of the considerations are slightly different between public and private, but I think especially in the environment that we're in now where there is some disruption in the industry with respect to inflation and supply chain and credit tightening and things like that, I think it's-- I think we do expect more private owners to be thinking about a bond on a construction project.

JESSICA KEARNEY: Great. Thank you. And Bob Carroll, let's keep going with you. So obviously you talked about the report, the scope and the findings. You and your group produce a lot of analytic reports. Was there anything that surprised you from what you found from this study? And just stepping back, overall, like how compelling at the end of the day do you think are the results?

BOB CARROLL: That's a great question. We do produce a lot of studies like this for a broad range of clients. And I always think of like the three-handed economist. We always say it depends. And often doing studies like this, we have some results on one side of the issue and some on the other side.

In this study, we really did find that all the results kind of lined up on one side, that the value proposition, one, was fairly strong. And two, it remained strong even when we started making what I would call conservative assumptions along a couple of key dimensions. I mentioned the default rate a few minutes ago.

Even when you use a 2 1/2% default rate ratio for unbonded to bonded projects, and we use improved contractor pricing, a third of what-- less than a third of what came from our survey, we still got fairly robust, strong results where the cost of a bonded portfolio is, let's say, a third of the cost of an unbonded portfolio. And that seemed like a pretty strong result.

JESSICA KEARNEY: Terrific. And then just going back to you, Bob Raney, so you talked about your role here at Travelers and kind of gave an outline of some of the work that goes on here. Can you talk about the impact of a study like this on our business, on the business that you do?

BOB RANEY: I think it's-- I think it just gives us a tremendous amount of confidence. I know personally I've been in the industry for over 30 years. I've always felt very good that surety does bring real value to the marketplace. I've always felt that it's a very secure product.

But I think having data that backs it up and very good data and data that works, even as Bob Carroll just mentioned, and under some conservative assumptions, I think makes us feel very comfortable continuing to invest further in the business. I think it makes-- I think it makes a better case for individuals to join the surety industry and commit their careers to surety.

So I also think it gives us some ammunition in talking to both public and private owners about the value of bonding and being able to actually have some data as opposed to just sort of feeling confident that it's an economically valuable product but not being able to really articulate why. And so I think it just should make all the folks that are associated with the surety industry feel really good that our product does have economic value and feel really confident that it has a very secure place here in the U.S. marketplace.

JESSICA KEARNEY: And Lee, I'll jump over to you here. So SFAA has a large campaign around this report. There's a really fantastic landing page for the report and all the related assets. And I was really struck by how well it's broken down into-- for various stakeholders to use. Can you talk about it a little bit from how you're using this to communicate with stakeholders and what do you really hope-- what are some of the goals of that campaign and that outreach.

LEE COVINGTON: Let me start with that-- the goals of the campaign first. As I indicated in my introductory remarks, the goals of the campaign are pretty straightforward, to have an ongoing campaign to educate and reinforce to policymakers and public construction leaders what surety is, how it works and the value of public bonding delivers for them and their constituents.

It really helps us in a few ways. It provides a baseline of education so that when we're going in to talk about legislation, we're not spending a lot of time explaining what surety is. That's number one. Number two, there's a lot of turnover. It's a big topic at the federal level and the state level, turnover of public policy leaders. And so it's important to have that ongoing education campaign to make sure they're aware of the benefits of surety and why it's such an important requirement for the success of responsible infrastructure development.

And finally, most importantly, it provides decision-makers with hard data to better understand how decisions will impact budgets, successful project completion and protection of subcontractors, small business owners. I mean, we looked at an example recently where 40 subcontractors at a local level were paid on average $45,000 a year. Excuse me, $45,000 unpaid. My father-in-law is a general contractor, probably middle class, upper middle class. And I can tell you, $45,000 in his business is very meaningful. So it's really important to us. And we're so thankful to have this information that we can use with public policymakers.

JESSICA KEARNEY: And I'll just add, we have a link to the report in the chat for anyone who wants to go and take a peek at it. And as I mentioned, there are specific callouts and one-pagers if you're working on a program for a school building or a highway project and the numbers that could be associated with each one of those things. So definitely take a look.

And then just zooming out a little bit, Bob Raney, going back to you, have studies like this been done in other countries? I know certainly today and across all of our Travelers Institute webinars, we have a number of folks in particular from Canada. And so we'd love to hear just kind of the broader perspective outside the United States.

BOB RANEY: Yeah, thanks. So that was actually-- the first study of this kind that I became aware of was performed in Canada. And I believe it was instituted by the Canadian Surety Association there. But they turned to a group called CanSIA and looked at the economic value of bonding in their marketplace.

What I like about the study they did, or what I like that they also did a study, was they used some different methodologies than what we did with our study but arrived at the same conclusion, that there is a real value in bonding. In fact, I think the study itself was somewhat instrumental or at least contributed to the inclusion of bonding requirements in the Ontario Lien Act. So really helpful in making the case with data for the value of bonding.

So I think if folks want to see it, I think it's suretycanada.com is the website for that one. And there's a nice one-pager there on their study. And so I think it just helps the case that there are different studies with different methodologies reaching the same conclusion. And I believe there’s some studies that are in their infancy in some other countries as well, but they haven't been published on the results yet. But I'm actually pretty confident they're going to reach a similar finding.

JESSICA KEARNEY: Terrific. Thank you. Let's change gears a little bit. I want to talk about the economy. And I know this was mentioned in several of your opening presentations, but obviously contractors are recovering from the pandemic. They've had a number of things thrown at them, including inflation, supply chain bottlenecks, labor issues and shortages. I'm thinking about the context in today's economic landscape. And maybe Lee, we can start with you. How does this impact the need for surety bonding today and moving forward in the near future?

LEE COVINGTON: I'm actually going to let Bob address that first. So Bob Raney, why don't you address that first?

BOB RANEY: I think it's a question that actually we get a lot because I think there's been more-- I don't know if disruption is the right word or unusual things happening over the last three years between COVID, supply chain, inflation, changes in labor markets and so forth. I think it's a great example actually of surety adding value.

We work very closely with our clients on helping make sure that they are mitigating risk in their day-to-day practices, they're managing those risks, they're maintaining certain levels of financial strength and liquidity to be able to handle sudden changes in the marketplace. And so I think if we do our jobs well on the surety side, we help the construction industry be more resilient, at least in a small part. And I think we have seen the industry be pretty resilient through some of this.

But I think in terms of the need for bonding, we are seeing and entertaining a lot of bond requests on large projects, many of them in the private sector. And so I do think, as I mentioned before, in an environment where there's lots of inflation and lots of headlines around labor shortages, concerns about credit and credit tightening, I think any tool that helps risk mitigate a big construction project, which is a big spend for any owner, is going to be looked at a little harder. And I think surety bonds definitely fall in that category.

JESSICA KEARNEY: And just tagging onto that, obviously we mentioned the infrastructure bill. There's things like the CHIPS Act and other legislation that have been coming through the pipeline. What does this mean in terms of public spending on infrastructure projects and the surety business over the next five to 10 years?

LEE COVINGTON: Yeah, I'll let Bob answer from the perspective of Travelers and industry opportunity, but let me put it into perspective the amount of federal funding that will be rolling out over the next five to 10 years. I think as many people on the-- participating today know, the Bipartisan Infrastructure Bill, or the IIJA bill, provides over $1.2 trillion in additional funding, including for traditional infrastructure, like roads and bridges and public transportation that Bob was talking about earlier, but also additional money for broadband, water systems and clean energy.

You mentioned the CHIPS Act. CHIPS Act provides over $52 billion for incentives to produce semiconductors in America, 39 billion to encourage construction of new fabrication facilities, and $13 billion in a new national center of development for the next generation semiconductor technologies. And even the Inflation Reduction Act provides $18 billion to help retool and replace energy infrastructure.

And I would point out that just put this in perspective: Over 30 states have passed a gas tax to increase spending on infrastructure. And three-fourths of the money spent on infrastructure is done so from state and local funding. So the federal government funding is only about a quarter of that. So you've got to amplify the amount of infrastructure-- the amount of investment that's being made by what also is being contributed at the federal level. So I think this is a huge opportunity for our industry. Bob, what's your perspective?

BOB RANEY: Yeah, I would agree, Lee. I mean, I think the IIJA is the headline of the different acts that are out there, sort of the marquee event. It's direct funding of construction, all of which is pretty much bonded because it's coming direct through public agencies. We know that some of those funds are starting to flow, but it's quite a bit of funding. And I think it's going to take a number of years to actually get the approved funds into construction projects in the marketplace. I see that as a good thing in terms of the country and investment in surety bonds and so forth.

The Inflation Reduction Act and the CHIPS Act have been a bit of a pleasant surprise because a lot of those monies are allocated as subsidies to corporations who then build. So those projects are more in the private sector. But we have actually entertained a fair number of projects on CHIPS plants, EV plants, battery plants, and just a lot of this activity, some of it very large. And so it's been a pleasant surprise to see that there's quite a pretty hefty demand for surety that's actually coming out of those acts as well.

JESSICA KEARNEY: Wonderful. Bob Carroll, thinking about all of that context with some of the new legislation that has passed and thinking about the foundational findings of the report, how do you see those two things working together in the future?

BOB CARROLL: When I heard Lee and Bob say there's going to be a lot of increased volume of throughput on the infrastructure side associated with the increased spending, that's just the way it works. With a value proposition of surety kind of being real, at least based on the analysis that surety allows owners and developers to deliver at lower cost, I think the surety, the value proposition should really work very well with the increased spending.

JESSICA KEARNEY: Great. And I want to get to audience questions. Bob Raney, one final one for you here about surety agents. So with all the additional spending on federal projects, what advice would you have to agents working with contractors wanting to be considered for these projects? And we've already gotten a number of audience questions asking something similar, so that's clearly on the mind of the folks on the line here today.

BOB RANEY: Yeah. So I guess you could go in some different ways there. I think two things really jump out to me. There would be more than two, but one is that there's just been a lot of inflation in construction pricing. So a lot of contractors are bidding the biggest job they've ever bid. They're sitting on the biggest backlogs they've ever done. So I think giving them good counsel, making sure the communication lines are open with their surety providers I think is more important now than ever because of that dynamic that we're seeing in the marketplace.

And then another thing I think we might see is just there are some private sectors that are weaker than they historically are, like commercial office, things like that, due to some changes in the way we work and demographics and where we live and those kind of things. So I think we can expect that some contractors who typically participated in one segment of the market might look at more public sectors or even federal sectors.

And some of those sectors have some very different contracting rules and-- especially federal. There's a lot of rules that govern federal contracting. There are implications to being a federal contractor. So for agents and brokers that have some clients that might be thinking about or talking about those types of moves, I think it's an excellent opportunity to help educate those contractors on just what they would have to do to make-- to transition from one market to another.

JESSICA KEARNEY: That's great. I'm going to take a moment here to tee up a video and then we'll come back and take some more audience questions. But we've got a really fantastic video that we think really demonstrates some of this value that we're talking about. So let's go ahead and tee that up.

[VIDEO PLAYBACK]

(DESCRIPTION)

The video plays with a series of shots of hurricane damage, flooding streets, palm trees blowing in fierce winds, and a collapsed road bridge and roadways.

(SPEECH)

- On September 28, 2022, Hurricane Ian struck the west coast of Florida, causing significant and widespread damage, including the destruction of the Sanibel Causeway. Access to the Florida mainland had been cut off, leaving over 6,000 residents of Sanibel and Captiva islands stranded.

Within days, the Florida Department of Transportation awarded an emergency repair contract to a joint venture of two contractors. These contractors were tasked with overwater repairs to the three-mile-long structure and had to post a guarantee in the form of a performance and payment bond that they would complete the job and pay the hundreds of subcontractors, vendors and suppliers that would work around the clock to complete this monumental task.

(DESCRIPTION)

An aerial view shows construction trucks working on a sandbar roadway.

(SPEECH)

Travelers wrote that surety bond. Service, expertise, relationships. Travelers’ underwriting and service expertise, as well as our long-standing relationships with the contractors, allowed us to bond the project quickly.

(DESCRIPTION)

An N.B.C. News headline reads, Sanibel Island Causeway Reopens. More headlines read similar, from News 6, Fox Weather, and Today.

(SPEECH)

- As of today, the Sanibel Causeway is open to--

- Work on the Sanibel Causeway was completed two weeks ahead of schedule, allowing a convoy of more than 350 utility vehicles to safely cross over the bridge and deliver emergency repairs to help restore, rebuild and bring families back home. When the most difficult of challenges arise, contractors can trust Travelers to respond.

(DESCRIPTION)

Logo, Travelers.

(SPEECH)

[END PLAYBACK]

(DESCRIPTION)

The video closes and speakers appear.

(SPEECH)

Bob, we'd love for you to react to that video.

BOB RANEY: Oh, I love it, of course. And the real heroes obviously are the construction companies, the laborers, the subcontractors, suppliers that worked on that project. We were just really happy that we were in a position to support two good clients who had an opportunity to do that work. I think it shows just the amazing things that the U.S. construction industry does. I think it ought to make us all feel good that we have a-- we live in a country where that kind of thing can even happen. So I almost get a little emotional, teary-eyed just thinking about it.

But we were happy to be able to support it. We had a lot of confidence in those contractors. A very difficult, very quick project, but we knew they could do it. And so, yeah, it was a great video to put together for some events that we had this spring. And I'm very proud of it.

JESSICA KEARNEY: Yeah, the public clearly benefited from that project in obviously a very big way. And I will say from where I sit here at the Travelers Institute, that's what our team is all about. We're at the intersection of business and public policy and the public good. So to be able to see those projects and shine a light on projects like that, I think is our bread and butter. And we're really happy to be hosting this conversation around topics like this one.

OK, I'm going to turn rapid fire to audience questions here because we've got a lot of them coming in. Lee, I'm going to tee you up for this one first on regulations and policy. Stephen Brown from McDaniel Whitley in Tennessee wants to know, have you seen any significant changes to the Miller Act, which you mentioned earlier, or do you anticipate any?

LEE COVINGTON: Yeah, we've seen a few this year. It's been a little bit quiet since I've been here over the past three years, but we've had bills in Rhode Island, Connecticut and Illinois. We're still working on the Illinois one, but we've been able to make significant headway. But this report has been instrumental, as I've indicated previously, in providing hard data to show that a bonded portfolio of projects outperforms an unbonded portfolio, and it's just good public policy.

JESSICA KEARNEY: Wonderful. Bob Carroll, here's one for you related to the study. Does the default rate change as the size of a project or the contractor, size of the contractor changes? And this is from John Dorsey coming in from Graham and Co. in Pennsylvania.

BOB CARROLL: Yeah. So what we generally found is the default rates are higher for smaller firms. That's based on the U.S. Census business dynamics data. We looked at different cuts based on firm size. And for the smaller firms, it's significantly higher, let's say, than for larger firms.

JESSICA KEARNEY: Great. Bob Raney, I have quite a few questions coming in around subcontractor default insurance. We've got one from Daniella Misetic from Gilbane. Did the study take into account subcontractor default insurance? And then another from John Lunderberg from Brown and Brown, when would you recommend subcontract default insurance and why?

BOB RANEY: So the study did not take into account subcontractor default insurance. I think as both Bob and I mentioned, the SFAA does collect a lot of data. We did use a lot of data or EY used a lot of data in the study with respect to premium levels, loss levels, loss frequency, loss severity. Those are the kind of-- I think that's the type of data that the SFAA really does a great job of compiling and making available.

So we really don't have any sort of data to measure the economic value of subcontractor default insurance or even to compare maybe on use, like subcontractor bonding versus subcontractor default insurance. A little bit anecdotally, we're a large surety company. We have a lot of large builders. Those builders use both subcontractor bonds and subcontractor default insurance. Some of them use one of those products much more than the other.

So I'd say there's probably some degree of economic value to both products. And it really just depends on the contractor, the situation, the kind of work they do, how much they've invested like in things like prequalification, how much influence they have over which subcontractors are used on projects. I mean, I think those are the kind of things that a good CM/GC would look at in trying to figure out whether to use default insurance or a subcontractor bond. But the study here that we've discussed today is really more aimed at the owner level and the owner level’s use of bonds on the public and private side.

JESSICA KEARNEY: Great. I've got a question from Colby Mabry, USI Insurance Services. For a new producer in the construction field, what do you think is the most important thing to note about construction surety bonds? And hopefully, Bob Raney, you want to take that.

BOB RANEY: I'll go. I think he's looking at me, so I'll go on that one. I think the most important thing for a newer producer is just to understand that surety is a much more relationship-oriented business than some of the other products that agents and brokers sell. And so I think if you want to-- I would encourage you to get into the surety side of the business. It's a wonderful part of the U.S. P&C industry.

But I think the way to start is really to take some time and build relationships with construction companies and their owners, networking industry events, trade associations and so forth because the relationship piece really is an important part of doing business, especially in the construction surety segment.

LEE COVINGTON: One thing I would add, Jessica, is there's going to be a lot of opportunity for new construction firms that haven't been in the public space to be in the public space. Take for example just the DBEs, disadvantaged business enterprises, 10% of the 100-- excuse me, of the $1.2 trillion infrastructure package is designated for disadvantaged business enterprises. So that's $120 billion. So there's a market that's kind of untapped out there. There will be new entrants I think because of the size of the spend that we're going to be seeing.

JESSICA KEARNEY: Wonderful. Bob, Bob, Lee, thank you so much. It's hard to believe we're at the top of the hour already. This has been a wide-ranging and very useful discussion. Thank you to all of our audience members who joined us. We appreciate your time this week. And thank you again to our speakers. We really appreciate it. And we will definitely have to have you back for another discussion next year. But thank you very much everybody.

BOB CARROLL: Thanks so much.

JESSICA KEARNEY: I'm going to turn now just to preview a few of the events that we have coming up here at the Travelers Institute that we hope you can join us for. You see them here on screen.

(DESCRIPTION)

Text, Wednesdays with Woodward (registered trademark) Webinar Series. Upcoming Programs: Webinars. May 3. A Small Business Playbook for Leading Through Uncertainty. May 17. Previewing the 2023 Travelers Championship. We're Taking It to the Next Level. May 24. The Rapid Rise of Litigation Costs. In-Person Programs. May 3. RiskWorld 2023: Be Risk Ready, What's Trending in Total Worker Health (registered trademark) (Atlanta). May 23. Cyber: Prepare, Prevent, Mitigate, Restore (Charlotte). Register: travelers institute dot org.

(SPEECH)

And everyone tuning in, thank you so much again. There's a survey in our chat. We look at all the results. So please, if you can, take a minute and send us your feedback on today's program. We do look through each and every suggestion.

And here's our great lineup coming up. We have on May 3, we're going to celebrate National Small Business Week with an expert panel to discuss how small businesses can manage through the risk that we're facing today and economic uncertainty and some of the trends that we talked about today on this program. So don't miss that one.

Then on May 17, we're going to have another webinar previewing our very own 2023 Travelers Championship, the premier PGA golf tournament here in Connecticut where we sit and get an exclusive preview of what and who we can expect during that epic golf week coming up. And then on May 24, we're going to take a look at the rapidly rising cost of litigation. And we know this is a very popular topic in our industry. And certainly put that under a don't miss category.

Then on June 7, we'll sit down with Travelers Chief Diversity and Inclusion Officer Lauren Young to talk about all things D&I. So please don't miss that. In addition, we've got two in-person events. So if you're local to any one of these areas, please come out and join us and meet us in person.

Also on May 3, Joan Woodward, our host of this program, will be at RISKWORLD 2023 in Atlanta, the conference. For any agents, brokers or risk managers attending that conference, we hope you'll join us and the CDC's Dr. L. Casey Chosewood for a breakfast program discussing how companies can be risk-ready when it comes to total worker health. And this is a follow-on from a webinar that we had a few weeks ago with Dr. Chosewood. So if you are in the Atlanta area, please join us on May 3.

And then finally, on May 23, if you're in Charlotte, North Carolina, we hope you can join us for an in-person cybersecurity forum. We'll be joined by industry leaders from the public and private sectors to share insights into the current threat landscape for cyber, which is obviously ever-changing and rapidly evolving, as well as strategies that organizations can importantly take to prepare for and respond to cyber incidents.

All this and more is going to be released today in the Travelers Institute newsletter, so check your email inboxes this afternoon for that, for links to register, as well as in our chat.

(DESCRIPTION)

Text, Wednesdays with Woodward (registered trademark) Webinar Series. Watch Replays: travelers institute dot org. LinkedIn logo, Connect: Joan Kois Woodward. Take Our Survey: Link in chat. #WednesdayswithWoodward.

(SPEECH)

Thank you all again for joining us today. We really appreciate seeing you every week and have a great afternoon. Thank you so much.

[MUSIC PLAYING]

(DESCRIPTION)

Text, Travelers Institute (registered trademark). Logo, Travelers. Travelers institute dot org.