Ryan Brady and Jennifer Love of Intact Surety, plus broker Andrew Cartwright of FCA Surety, sit down with host Daniel Arsenault for an unvarnished education on construction bonding — what surety is, why Atlantic Canada’s private-development sector is flying blind without it, and exactly how underwriters decide whether to back you on the next big job.
Most contractors understand insurance. You pay a premium, something goes wrong, you make a claim. Surety is different — and the difference is consequential enough that getting it wrong can strand a project, expose a lender, or end a GC’s run.
The core distinction the episode opens on: a surety company isn’t paying a claim on your behalf the way a property insurer does. What “surety company is doing is they’re lending their balance sheet to the contractor” means in practice is that it’s a credit product. The surety vouches to a project owner — Halifax Regional Municipality, NSTIR, a private developer — that you’ll perform. If you don’t, the surety is on the hook, and it will come after you for reimbursement. That three-party dynamic (contractor, owner, surety) reshapes every conversation about bonds, pricing, and claims.
For a GC or sub trying to level up their bonding capability, this episode is the clearest explanation of the product that exists in Atlantic Canada.
The bid bond is where the relationship starts — and the exposure is real
There are two bonds most contractors encounter: a bid bond (you submit it with a tender, guaranteeing you’ll sign the contract if you win) and a performance bond (you post it once the job starts, guaranteeing completion). They’re not the same underwriting moment.
“the bid bond for us is probably the most important time because that’s when you’re doing all your vetting” — once the surety backs a bid, it’s committed. If the contractor wins and walks away — refuses to sign, goes dark — the surety covers the spread between that contractor’s price and the next-lowest bid. That’s real money on large public tenders.
New legislation is making these conversations unavoidable. “in ontario for example any publicly funded project over half a million dollars must have a bond” — and New Brunswick’s Construction Remedies Act is pushing the same requirement east. For GCs working public work in Atlantic Canada, bonding is no longer optional on major contracts. For subs, it’s increasingly the price of being considered at all.
The private-sector blind spot that nobody talks about
Where public-sector bonding requirements are tightening, private-sector Halifax has a gap the episode’s guests flag with some urgency. Look at the construction cranes on the peninsula skyline — condo towers, mixed-use mid-rises, student housing — and ask how many of those jobs are bonded. The answer is uncomfortable: “look around downtown Halifax most of it is all private and I don’t even know if much of it is bonded at all”.
That exposure lands on developers and their lenders. A private developer whose contractor defaults mid-tower has no financial backstop — no surety to manage the completion, no performance bond payout to fund a replacement GC. They’re negotiating in the open with whatever the situation gives them, which is usually very little.
For the sub-trade trying to decide whether bonding is worth the administrative work, there’s also a competitive argument. Getting pre-qualified compresses your bidding pool: “you’re gonna be bidding against a smaller pool of bonded contractors to pick up that work”. Fewer bidders, better margins, owners who have already screened for quality.
How underwriters actually make the call
The decision is not actuarial. “first step is yes or no like we’re not going to accept every risk” — premium rates follow creditworthiness; they don’t set it. The surety is deciding whether to extend credit, not pricing a probability distribution of losses.
The framework is the three C’s: character, capacity, capital. Character is track record, reputation, candor with the underwriter. Capacity is the skill to actually execute the work — the people, equipment, experience with similar project types. Capital is the balance sheet. All three matter, but they’re not equal.
“if you have the character character is huge it’ll get you a long way”. A contractor with a thin balance sheet but an impeccable track record and a straight-talking relationship with their underwriter can get a stretch project approved that a better-capitalized but unknown contractor cannot. Conversely, a contractor who hides problems, delays financial submissions, or surprises their surety mid-job destroys the thing that matters most.
The bonding facility itself works like a line of credit: “think almost like you’re applying for a line of credit with the bank the bank will determine what your maximum limit should be”. The surety sets a ceiling — say, $10M in outstanding bonds at any time — and tracks headroom as active jobs consume it. A $3M job running on your books eats $3M of that facility until the job closes out.
During volatile stretches — COVID, the labour shortage, supply-chain chaos — the financials alone don’t tell the whole story. “we get to have a lot of these one-on-one we’re talking about covid we’re talking to our contractors and their brokers” — that direct intel, the candid conversation about what’s actually happening on sites, is what separates contractors who kept their bonding intact through the last few years from those who didn’t.
Why your broker matters more than you think
In Ontario, specialist surety brokers are standard infrastructure. In Atlantic Canada, the market has historically been thinner, with more direct underwriter relationships and fewer full-time surety experts. That gap matters when you need a stretch approval or have a complicated job to place.
A specialist broker knows which underwriters have appetite for your project type, constructs your submission in language that underwrites well, and advocates for exceptions when you need them. A generalist commercial broker handling surety as a sideline is doing their best, but “it’s almost like having your car mechanic fix your boat right you can probably struggle his way through it”. You might get there — or you might not — and in the middle of a tender deadline is the wrong time to find out.
The broker’s job is to present the contractor in the best possible light — not by papering over problems, but by making sure the story is complete, the financials are framed correctly, and the underwriter understands the relationship history. That advocacy is what gets borderline approvals across the line.
Contract type changes the exposure — know where the risk sits
Not all construction contracts carry the same surety risk. Lump-sum is the cleanest from a bonding standpoint: the contractor owns the scope, the price is fixed, the risk is defined. Design-build adds a complication: “a design in relation to a bonded project if the insurance isn’t adequate the owner may try to go after a bond” — if the design professional’s errors-and-omissions insurance has gaps, a design-build owner may argue the bond covers design liability. Underwriters price that.
Construction management not-at-risk is different again. In a lump-sum, the GC holds the sub-trade contracts: “if there’s a sub-trade issue that’s a gc’s problem whereas in a not-at-risk contract it becomes the owner’s problem”. The owner is the direct employer of the sub-trades in a not-at-risk model, so sub-trade default risk migrates up to them. Understand the delivery model before you ask for a bond — and make sure the bond form actually fits what you’re building.
A scanned PDF is not a bond
Digital bonds came into focus during COVID when wet signatures became logistically impossible. The industry moved, but not cleanly. “a pdf scan version is not technically a valid verifiable bond because you know you can scan that off” — and then alter it. A scanned bond is just a document; anyone with basic software can produce a fraudulent version. The standard that matters is a bond issued through a certified digital verification service provider, where the owner can query an independent database and confirm the bond is real and unmodified.
For owners and developers: require verifiable digital bonds, not scanned PDFs. It’s the only version that holds up.
Most potential claims never become claims
The episode closes the claims conversation with a number that surprises most people outside the surety world. “nine times out of ten any potential bond issue claim issues are resolved before we even receive a letter”. When a project goes sideways — a contractor slow to pay subs, a performance dispute brewing — the surety’s involvement as a neutral third party often breaks the impasse without a payout. Both sides know the surety is watching; neither wants to look unreasonable in that investigation.
The contrast with a letter of credit: “a letter of credit won’t do that … they can just cash that at any point if they think they’re gonna be an issue”. A letter of credit is immediately cashable — no investigation, no process, no protection for a contractor who may be in the right. A bond triggers a formal review. That’s harder for the owner, yes — but it’s also the mechanism that keeps nine out of ten disputes from becoming formal claims.
Intact Surety and FCA Surety
Intact Surety is the surety-bond underwriting division of Intact Insurance, part of Intact Financial Corporation (TSX: IFC) — Canada’s largest property-and-casualty insurer. It writes contract and commercial surety bonds (bid, performance, labour and material payment, and more) through insurance brokers across 12 branches nationwide, including Atlantic Canada. Ryan Brady manages the Atlantic Region from Halifax.
Western Surety Company is a Canadian monoline surety insurer that exclusively writes surety bonds — contract surety for the construction industry and a full line of commercial surety bonds. It operates in all Canadian provinces and territories as a member of the Hill Group of Companies.
FCA Insurance Brokers (Surety Division) — formally Firstbrook Cassie & Anderson Ltd. — is an independent Canadian surety brokerage that describes itself as the fastest-growing independent surety brokerage in Canada, placing construction and commercial bonds from multiple underwriters. Andrew Cartwright, VP Surety, joined FCA in August 2020 after covering Ontario and Atlantic Canada at Trisura. Find them at fcainsurance.com/surety.
Guests: Ryan Brady and Jennifer Love, Intact Surety (Halifax); Andrew Cartwright, FCA Insurance Brokers (Toronto). Episode 18 of the Atlantic Construction Podcast, published September 13, 2021. Watch the full episode. Receipt sources: Ontario mandatory bonding threshold confirmed at lxmlaw.ca; digital bond verification standard confirmed at surety-canada.com.