Surety Market Size Projected to Generate Revenue of $24,371.2 million by 2031Download Sample Reports Overview
The Global Surety Market Size is predicted to be valued at $24,371.2 million by 2031, surging from $16,040 million in 2021, growing at a CAGR of 4.4%.
Impact Analysis of COVID-19 on the Surety Market
The COVID-19 pandemic had a significant influence on the surety industry. Surety bonds provide financial security and construction assurance by assuring project owners that contractors will perform the work and pay specified subcontractors, laborers, and material suppliers. As the pandemic has had a significant negative impact on the operation of the construction industry, the same held true for the surety market. Depending on the state of the construction industry, it may take more than a year for the global surety market to return to normal. The COVID-19 pandemic had an impact on the credit surety sector, but insurers hiked premiums since there were more claims during the pandemic to keep the businesses profitable. The COVID-19 outbreak has forced the stakeholders in the building industry to temporarily halt their ongoing operations. The market has witnessed an increase in demand for credit & surety insurance among businesses.
Global Surety Market Analysis
A surety bond can be defined in its simplest form as a written agreement to guarantee compliance, payment, or performance of an act. Surety is a unique type of insurance because it involves a three-party agreement. The three parties in a surety agreement are principal, surety, and obligee. Surety bonds are primarily used in infrastructure development to reduce indirect costs for suppliers and work-contractors, diversifying their options and serving as a substitute for bank guarantees. Surety bonds protect the beneficiary against acts or events that impair the underlying obligations of the principal. They guarantee the fulfilment of a wide range of obligations, from construction and service contracts to licensing and commercial ventures. These are the major factors anticipated to boost the surety market share during the forecast timeframe.
Surety bonds, a new concept, are risky, and Indian insurance companies have yet to develop expertise in risk assessment in such businesses. There is also no clarity on pricing, recourse against defaulting contractors, or reinsurance options. These are critical and may impede the development of surety-related expertise and capacities, ultimately discouraging insurers from writing this type of business. These are the major factors restraint the surety market share during the analysis timeframe.
Developing economies provide trade surety insurance solution providers with a significant potential to expand their offerings due to the increase in number of surety trades among businesses and the anticipated growth of the trade surety insurance industry. The use of trade surety insurance when contract with international markets is anticipated to be high due to the expansion of global trade and the rapid growth of domestic firms, notably in countries such as Australia, China, India, Singapore, and South Korea. Several developing countries in Asia-Pacific are also witnessing a significant rise in their industrial sectors. The region has developed into a major hub for manufacturing due to its diversity of manufacturing businesses.
Global Surety Market, Segmentation
The surety market is segmented on the basis of bond type, end-user, and region.
The bond type segment is further classified into contract surety bond, commercial surety bond, fidelity surety bond, and court surety bond. Among these, the contract surety bond sub-segment accounted for a highest market share in 2021. Owners of construction projects want to have confidence that the contractors they have chosen will finish the job on schedule and to their specifications. Traditional contracts can be breached, even though they are frequently used to provide explicit obligations for both contractors and subcontractors. Project owners can be left with unfinished work if this occurs. A contract surety bond can be useful in this situation. A bond contract is a recorded promise made by an employee to the employer pledging that he/she will pay a certain amount to the employer if he leaves the organization before the agreed period.
The end-user segment is further divided into individuals and enterprises. Among these, the enterprises sub-segment accounted for highest surety market share in 2021. Medium-sized firms tend to receive funding from different banks and financial institutions because they lack collateral, credit history, and guarantees. These companies are diversifying their operations, which is anticipated to boost the growth of surety insurance in this surety market.
The surety market in Asia-Pacific is projected to show the fastest growth. Due to the demand for surety insurance in the region is rising owing to the confirming banks and issuing banks' ongoing efforts to increase the scope of their trade finance offerings. Comparatively speaking, China is the country that contributes the most to the regional market. The market for surety insurance in the region is expanding owing to the increase in demand for goods and services, quick commercial transactions, and secure exchanges. This industry is driven by rising trader awareness of surety insurance and multinational corporations collaborating with regulatory organizations to conduct business abroad.
Key Players in the Global Surety Market
Some of the leading surety market players are
- Crum & Forster
- CNA Financial Corporation
- American Financial Group Inc.
- The Travelers Indemnity Company
- Liberty Mutual Insurance Company
- The Hartford
- HCC Insurance Holdings Inc.
- AmTrust Financial Services
- IFIC Security Group