The Indian surety insurance market is set to witness a higher growth path as India’s Insurance regulator, IRDAI relaxes norms for surety bonds to increase the availability of such products.
IRDAI has reduced the solvency requirements applicable for surety insurance contracts from 1.875 times to 1.5 times now as per the changes made to the Surety Insurance Contracts guidelines with effect from 15th May 2023. Significantly, the exposure ceiling of 30% has been removed as applicable to each contract underwritten by an insurer.
These changes are in addition to the removal of the cap on premiums underwritten in a financial year for surety insurance business by mono-line insurers.
The reforms in surety Insurance bonds will increase contractors’ liquidity and give an impetus to the infrastructure sector, in particular.