Committee hears bill to allow U.S. Treasury listing for contractor surety bonds; contractors board opposes change

Carson City — The Nevada Assembly Committee on Commerce and Labor heard testimony on Senate Bill 327 on whether Nevada should accept a U.S. Treasury listing ("T listing") as an alternative to the current long‑standing requirement that surety companies writing contractor bonds hold an AM Best rating of A or better.

Sen. Shelley Cruz Crawford, sponsor of SB327, told the committee she introduced the bill after conversations with small contractors and industry representatives. "Last year, there was a surety bond company whose rating was downgraded from A to A-. And under, Nevada law, all of the contractors who had bonds with this company had to get new bonds, even though it didn't appear that there was any solvency concern about the bonds," said Adam Brackmeyer, vice president of government affairs for the Surety and Fidelity Association of America, who presented details for the sponsor. Brackmeyer said the bill would allow the Contractors Board to rely on Treasury listing as a secondary screen rather than monitoring multiple rating changes, and that a neighboring state (Utah) uses a Treasury listing requirement.

The bill proposes revising NRS 624.27 and NRS 624.276, which currently require bonds issued by a person whose long‑term debt obligations are rated A or better by a nationally recognized rating agency, to instead accept firms listed under certain federal Treasury publications described in the bill text.

The Nevada State Contractors Board opposed the bill. David Behar, the board's executive officer, described the historic basis for Nevada's current standard, citing multiple surety insolvencies in the late 1990s and early 2000s that left contractors and consumers exposed. "In early 2001, AmWest, a surety company conducting business in Nevada, went bankrupt," Behar said, and he told the committee that subsequent statutory changes required the A-or-better standard to protect the public. Licensing supervisor Bree Welch added that the board typically accepts bonds with "excellent or higher" ratings and that ratings below A or A‑ indicate financial vulnerability that could affect claim payments. She said the board gives contractors a 30‑day period to replace a downgraded bond or post cash to avoid suspension.

Industry testimony was split. The Surety and Fidelity Association of America (SFAA) and a representative from the American Property Casualty Insurance Association expressed support, arguing that Treasury listing provides ongoing monitoring and would avoid unnecessary bond cancellations. Lisa Stevens, a licensed broker and board member of the Surety and Fidelity Association of Nevada, opposed the change. She told the committee that only 36 of more than 18,000 licenses had needed re‑bonding because of a downgrade ("less than 0.2%"), and said AM Best provides continuous monitoring and early warning (she cited Western Insurance Company, which was downgraded before liquidation in 2011).

Adam Plain of the Nevada Division of Insurance testified in a neutral capacity and reminded the committee that surety companies are licensed insurers under Nevada law but that surety and fidelity bonds are excluded from guarantee association coverage (NRS 687A.020), so a state guaranty fund would not backstop surety insolvency claims.

The committee took testimony from proponents, opponents and neutral parties but did not take a committee vote during this hearing. Chair Marzola closed the SB327 hearing after the last witness and moved to open the hearing on a separate bill.

SB327 would change statutory language in two NRS sections governing bond acceptance; the Contractors Board and several brokers and trade groups urged caution, citing past surety insolvencies and the board's consumer‑protection responsibilities.

Ending: The committee did not advance SB327 at the hearing. Sponsors and opponents said they would continue discussions; sponsor Shelley Cruz Crawford said she would work with stakeholders following last‑minute opposition comments to find a compromise. No formal work session or vote on SB327 occurred during this meeting.