Mike George has been a leader in the surety marketplace in Canada for over 30 years. From humble beginnings in the banking industry, George eventually found his way into the surety industry and ultimately fell in love with the business. The idea of helping contractors build their business, growing a team, mentoring and leading all came naturally to George. We recently sat down with George to discuss his latest endeavour, the launch of a new greenfield insurance company backed by Tokio Marine, a global insurance giant with a stellar reputation.
Q. What are the top three practices of a good contractor in today’s marketplace?
A. In my opinion, the first is having a clear vision of the future. It is hard to do this in a lump-sum bid environment, particularly given COVID, but it’s important to have an idea of where your business is going. This allows you to plan ahead and be prepared for the inevitable curveballs that are part of construction. The second is not over stretching your company. I think the best contractors ensure their business is able to take on the volume of work they secure, that you have the team in place and the balance sheet to support that growth. Finally, build a great team. Even the best owners can’t achieve their business goals on their own. Hire the best, invest, train and empower them to help build the business.
Q. What do you feel are the biggest risks for contractors over the next 12 to 24 months?
A. If there is a rapid expansion, post COVID, it could present challenges for contractors in executing their growing backlogs. Rapid growth coming out of a challenging economic period presents risks for Canadian contractors in financing that growth, securing labour and accessing qualified trades. Contractors need to be careful and pick their spots. It is critical that as they scale their business they remain nimble and have the ability to scale back down and avoid being trapped with large overheads.
Escalating material costs is also an emerging new risk. Being caught on the wrong side of rising material costs contractually can have a significant negative impact on a business. Ensuring those risks are tied down will help insulate from those spikes.
Lastly, as government supports wind down, I fear that many companies will experience financial challenges so managing the credit risks to your business from other contractors, owners and business partners will be critical.
Q. We are a few years into prompt payment, what impact has this had on contractors in general and does this change how Tokio Marine will think from a surety perspective about the overall risk profile of contractors?
A. I think prompt payment legislation is a positive development for the construction industry and I strongly support parties in the construction pyramid being paid promptly for work they execute. It is the foundation of keeping projects on time and on budget.
I also believe that labour and material bonds continue to have a significant role in backing up the legislation and ensuring that when contractors aren’t paid they have a remedy to be made whole. Surety companies continue to pay out hundreds of millions of dollars under their labour and material payment bond obligations throughout North America annually.
Q. In your opinion, what are some of the things the surety companies can do a better job of in providing service, flexibility and capacity to Canadian contractors?
A. I believe that a surety relationship should be long-term. Sureties should be getting to know their contractors better, understanding their business plans and vision of the future and helping contractors with their business challenges. Obviously the more comfortable and confident the surety is in understanding their contractor, the greater the flexibility and capacity they can provide. A contractor should have a clear idea from their broker and surety how they can maximize their surety credit at the best available terms and conditions. Ultimately, as a contractor, I believe you should have the best partners in your corner who understand your business and have the network and resources to help you achieve your goals.
Q. In a competitive surety marketplace in Canada, how does Tokio Marine Canada carve a niche for itself? In 10 years what do you want people to say about Tokio Marine as a player in Canada?
A. My vision for the company is to build a significant operation in both surety and a wide array of insurance products and services. I believe we can achieve this by getting back to focusing on relationships, providing exceptional service and expertise and doing a great job for our brokers and contractors. We intend to deliver on their needs and requirements by providing advice and guidance through consultative relationships. We hope to build a company that our brokers and their clients value and align with so they actually seek us out as their partner of choice. Tokio Marine’s vision statement is “to be a good company.” This really resonates with me. We intend to be socially responsible, operate with integrity and contribute to our society. We want to help clients in their times of need. Hopefully, when we look back in 10 years we can say we have achieved this vision and be proud of the legacy we have built.
Jamie Collum is the vice-president of construction for FCA Insurance. He has delivered numerous seminars and presentations on construction bonding and general industry updates in Ontario to various construction associations over the years. Andrew Cartwright is the vice-president of surety for FCA Insurance. With over 10 years of experience as an RVP of a large national surety company, Cartwright uses his expertise to help FCAs clients manage and build their surety capacity.
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