Page 17 - Insurance Times April 2021

2nd Prize Winner : Technical Paper Writing Contest 2020 Cover Story

SURETY BONDS -

GLOBAL MARKET

UNDERSTANDING

AND INFORMATION

TECHNOLOGY

SOLUTION THEMES

Abstract
The history of Surety Bond has a very interesting history dating back to 2,750 BC when the first known contract was
recorded on a Mesopotamian tablet. The recoding of the contract reveal that a farmer being called for the king's
army, hence a second farmer who agreed had to work in the fields, while agreeing to split the profits equally. A local
merchant provided surety; he guaranteed that the second farmer would keep his word. He thereby being the world's
first surety. Moving on in 1837, William L. Haskins formed the New York Guarantee Company, which was the first surety
company in America. During the growth of the Surety Bond industry, there have been large amounts insured as the $
100 million bond used by Westpac Derivative Products Ltd, in 1993 and earn highest ratings in business. Likewise, the
Surety Bond industry has seen its share of large losses in its history. AIG and Travelers have paid a huge sum of $900
million to Enron customers following the crash. Similarly, Bondfield, Carillion and Astaldi claims being large Surety Bond
claims in Canada have significantly affected the market.
While considering the current impact of Covid-19 on the Surety Bond market globally, this market apart from other
liability lines are likely to be affected by large-scale settlement delays, dwindling credit facilities and probable
insolvencies. We could expect a material impact on this class of business this year. The impact of large losses are set to
affect reinsurers also in the current year.
In this paper I like to discuss the Global Surety Bond market, drivers to boost this business growth, analysis of the
market in top countries in the world, how the market is set to boom in India as a new business and SWOT analysis of
the market. Further the role of Information Technology to address the challenges in the risk management; underwriting
and policy management functions are discussed. The role of electronic bond issuance and new Information Technology
themes set to change Surety Bond market are discussed at length.

Surety Bonds - Global Market
About the author
understanding
Kanya Saraswathy Chandrasekaran The Surety market is gradually transforming from a country
Tata Consultancy Services
level business based on understanding the needs of the local
market. Increased globalization has paved way for

The Insurance Times, April 2021 17