Customer success Story: Jet surety
Jet Surety is powering accurate bond vetting and reduced fraud with data from Mastercard Open Banking
Getting bonded doesn’t have to be an expensive and time-consuming hassle for small businesses. Jet Surety, a leading surety and fidelity bond provider in the U.S., is advancing the bond industry into the 21st century, integrating Mastercard Open Banking Solutions to combat fraud and deliver superior, real-time service.
Getting the full picture of a business’s financial health
To help protect consumers, suppliers and subcontractors, many types of small businesses are required to get a surety bond, an agreement that guarantees reimbursement to the business’s clients if work or payment is not completed and protects the general public from unethical actions committed by the business such as fraud or misrepresentation.
Similar to cosigning a loan, a surety company — often a wing of a larger insurance provider — pledges to pay the value of a small business’s debt or unfulfilled obligation should the business fail to hold up its end of a contract or otherwise comply with the bond’s provisions. Many industries require businesses to obtain a bond as a prerequisite to receiving a business license or to begin work on a construction project. Examples include surety bonds for participants in the trucking, construction, automotive and mortgage industries. There are over 10,000 different types of surety bonds, each with its own unique purpose and provisions.
Before signing a bond, the surety company vets the business like a lender would underwrite a mortgage. Most of the time, the primary consideration is the business owner’s personal credit rating. Larger bonds require a more in-depth review — including confirming cash assets — that has traditionally involved a time consuming, back-and-forth process of gathering documents and scrutinizing bank balances. In addition to these inefficiencies, the process often fails to present the full picture of the applicant’s financial health. Accepting outdated documents or focusing on limited criteria can allow risky applicants to be approved.
Insufficient vetting can mislead a surety company into bonding a cash-strapped startup. In extreme cases, it can even mask fraud, a problem currently plaguing the trucking industry.
This mix of fraud and insufficient underwriting practices has caused many bond providers to raise rates on Freight Broker Bonds or, in some cases, exit the market altogether.
Thankfully, with the help of Mastercard Open Banking, Jet has been able to find a better path forward.
With a few clicks on Mastercard’s easy-to-navigate interface, businesses can share information from their bank accounts with Jet, making the application process faster so that Jet can deliver quotes in minutes instead of days. Mastercard’s reputation for trust means customers feel confident that their data will be kept safe, and because Mastercard Open Banking integrates easily into Jet’s decisioning algorithms, qualified businesses receive near-instant quotes.
Accurate vetting means savings — for underwriters and customers
Jet was founded eight years ago to bring surety bonds directly to the market, bypassing the intermediaries between small business customers and the insurance companies who pay the claims. By cutting out layers of intermediaries, Jet offers lower rates, an easier application process and faster approvals. It now underwrites thousands of types of surety bonds for various industries.
But as the number of fraudulent customers increased, Jet needed a reliable — and fast — method to verify applicants’ assets. Last year, they turned to Mastercard Open Banking’s Verification of Assets (VOA) product, provided by Finicity, a Mastercard company, for help.
“Shipping prices skyrocketed during COVID. Fraudsters spotted a golden opportunity: To get a surety bond, a fraudster would steal an identity and apply for a bond using the victim’s credit report. Upon securing their bond and license, the fraudster would quickly arrange as many loads as possible and get paid by the shippers but never compensate the truckers, leaving the surety company on the hook for tens of thousands of dollars in claims,” said Dakota Rhea, Head of Jet Surety’s Freight Broker Program.
With a few clicks on Mastercard’s easy-to-navigate interface, businesses can share information from their bank accounts with Jet, making the application process faster so that Jet can deliver quotes in minutes instead of days. Mastercard’s reputation for trust means customers feel confident that their data will be kept safe, and because Mastercard Open Banking integrates easily into Jet’s decisioning algorithms, qualified businesses receive near-instant quotes.
Modernizing underwriting and lowering prices
In addition, Jet can now see a fuller picture of a business’s finances, including lines of credit and cash reserves. The data is trustworthy because it comes straight from the bank, whereas documentation supplied by the applicant could be forged or outdated.
Insurers can weed out fraudsters simply by verifying who owns the account. That’s because bank account data from Mastercard Open Banking can be compared to the applicant’s submission in real time. The account information also helps Jet identify businesses that lack sufficient assets to fulfill their obligations.
Thanks to more accurate vetting, Jet is paying out less claims — and it passes the savings along to its customers. For example, a business that agrees to share its banking data may be eligible for a discount; Jet also offers monthly payment options and good value annual and multi-year terms, a rarity in the industry.
Better data means better performance
With a growing pool of accessible and reliable open banking data, Jet can analyze its performance among different bond types and continue to hone its underwriting criteria. Jet expects to use those insights to stamp out fraud and make surety bonds even more affordable for legitimate, qualified businesses.
“With Mastercard Open Banking, we get better information, we can underwrite better, and we reduce claims. We have more confidence in applicants who use Mastercard Open Banking, so we give them lower rates. It’s a win-win.”
— David Gonsalves, Chief Underwriter Officer at Jet Surety
Better Vetting
Since integrating Mastercard Open Banking solutions into its application process, Jet’s freight broker unit has paid minimal claims while other competitors have removed themselves from the freight market in the past year.
Trusted Results
Because the data provides such a reliable view of financial health, Jet offers some applicants a 25% discount for linking their bank accounts.
Growing the business
Fast approvals and low rates are helping Jet close new business. Within six months of partnering with Mastercard Open Banking, Jet’s freight broker unit was bringing in hundreds of thousands in premiums a month.
Certain open banking solutions are provided by Finicity, a Mastercard company.