Term
Surety bond
9 stories mention it
A surety bond is a three-party contract where a surety guarantees a party will meet an obligation, paying out if they fail to.
Three parties are involved: the principal (who must perform an obligation, such as completing a construction contract or holding a license), the obligee (who is owed that performance), and the surety, which guarantees it. If the principal defaults, the surety pays the obligee or covers the cost of completion, then seeks reimbursement from the principal, who typically has indemnified the surety in advance.
This differs from ordinary insurance in a key way: a surety bond is not meant to absorb an expected loss the way a fire or auto policy does. It is closer to a credit product than a risk-transfer one, because the surety underwrites the principal's ability to perform and expects to recover what it pays out rather than treat it as a claim to be shared across a pool of policyholders.
In insurance technology, this shows up as digital bonding platforms that let agents and brokers quote, issue and deliver bonds online instead of through paper applications and underwriter review, along with automated underwriting that screens a principal's credit and financial history to speed approval for smaller, more standardized bonds.
Written by Insurtech Daily.
For the running coverage rather than the definition, see the Insurtech hub.
Companies in these stories
Surety bond in the news
-
CopperPoint Completes Acquisition of Surety Specialist GIG and Tech Platforms
CopperPoint Insurance Co., a workers’ compensation and commercial insurance provider based in Phoenix, has completed its acquisition of Boston-based General Indemnity Group (GIG), an insurance holding company…
-
Surety underwriting’s transformation sits outside the COO’s office
Brock Masterson pairs surety trainees with 25-year veterans and uses AI to speed knowledge transfer
-
Willis Re appoints Zara Fountaine to strengthen its credit, surety and political risk team
Willis Re, the reinsurance advisory and broking joint venture between Bain Capital (BCIS) and WTW, has welcomed Zara Fountaine to its team, bringing additional expertise in credit, surety and political risk. Fountaine…
-
Munich Re Specialty enters Italian market with construction, property, and surety
Munich Re Specialty is entering the Italian primary specialty insurance market, its fifth European country launch in as many years, with first risks expected to be underwritten in early 2027.
-
BPL launches new surety business line
BPL, an independent credit and political risk insurance broker, has launched BPL Surety, a new business line designed to support corporates and financial institutions seeking solutions for global guarantee requirements.
-
BPL launches surety desk as bank guarantee demand tightens
Corporates are diversifying away from bank guarantees and insurers are building dedicated capacity to serve them
-
ProBond Launches Digital Portal to Simplify Insurance Surety Bonds
-
ProBond Launches Digital Portal to Simplify Insurance Surety Bonds
-
ProBond Launches Digital Portal to Simplify Insurance Surety Bonds