Obtaining Surety bonding has become difficult with more government regulations as well as stricter underwritten requirements it has become hard to get a bond. Many bonds that were once at a low penalty have now been increased. Bond amounts as well as bond forms have changed. Many companies that qualified last year for bonding cannot qualify this year due to credit or their financial situation.
The Surety Bond market has under gone many changes over the last year. With many surety bonding companies going out of business or just getting out of the bond market all together. So far this year two companies have stopped writing bonds for new business, and only serving their existing book of business.
Many bonding companies are scared and really don’t know how many more claims they may suffer. Keep in mind bonding companies should be at least on paper a no loss business. Meaning if a claim occurs you must restore the surety to the state it once was at. In the state of the economy if a surety suffers a claim it is hard for them to recoup their loss because the business is already in the red and have nothing to pay the surety company back. A few years ago the market was soft and claims were not the norm. Now the market has changed into a hard market do to less new applicants, businesses non-renewing their polices because of their business closure and claims.
Surety companies have tightened their belts and our keeping their liabilities down to weather the storm. Once the economy picks up and claims have settled we should see the flood gates open once again
Surety Bonding has been difficult over the last few years but we will see the flood gates open again. To learn more about surety bonds please visit our Surety bond blog
Click the XML Icon Above to Receive Insurance Articles Via RSS!
