The Surety Association of Canada has released a white paper promoting the use of digital bonds.

Since the onset of the COVID-19 pandemic in Canada, the association says there has been a need for dramatic shifts in the methods for the distribution of surety bonds, and specifically for construction projects and service/maintenance contracts.

The white paper, Digital Bonds the Way of the Future – and the Present, provides a detailed overview of digital bonds, including the requirement for such bonds to meet the three threshold criteria identified by SAC as essential to any legitimate digital bond:

• integrity of content – the assurances that the document received is the true document executed and the content has not been changed or altered.
• secure access – restricting the access to the document to those authorized to view and/or download it.
• verifiability and enforceability – assurances that the document was duly executed by the parties identified and that it is enforceable in law.

The document cautions users to be wary of commonly used substitutes for digital bonds such as scanned images which may be expedient, but do not meet these cornerstone criteria.

“Over the past number of months, SAC has been inundated with inquiries from both owners and contractors about how to obtain a digital bond,” says SAC president Steven Ness. “And although we have stated our recommendation previously and provide comprehensive information on our website regarding e-bonding and digital bonds, we felt it necessary to create this white paper to provide a printable resource for various stakeholder groups”.

The paper also looks at the benefit of digital bonds over paper counterparts. Specifically, that the process is fully automated and more streamlines, and that the digital bond offers built-in verifiability and integrity. Digital bonds also allow for fewer errors and improper execution.

“To assist stakeholders in becoming more informed and knowledgeable about e-bonding and digital bonds, we also launched an FAQ section on our website of some of the most common questions that we have received since the start of the pandemic as we saw an increase in the number of requests for digital bonds,” said SAC director of operations, membership & stakeholder services Sharon Clark-Koufis.