Page 50 - Insurance Times June 2024

innovation in delivering products and processes that prioritise Available in conditional and unconditional formats, TATA
simplicity and customer-centricity. AIG’s Surety Insurance Bonds have been designed to
facilitate smoother execution of infrastructure projects and
While the launch of ICICI Pru Platinum represents a
commercial contracts in the government and private
significant milestone for ICICI Prudential Life Insurance, sectors, catering to diverse project needs.
investors should conduct thorough due diligence and consult
with financial advisors to assess whether this product aligns In recent days, Surety Insurance Bonds have emerged as a
with their investment objectives and risk tolerance. robust alternative to traditional bank guarantees for
contractors. By opting for Surety Insurance Bonds,
contractors can unlock capital and enhance their bidding
TATA AIG launches Surety Insurance capacity, thereby overcoming liquidity and capital

Bonds constraints.
TATA AIG General Insurance, has rolled out Surety Insurance TATA AIG’s current product suite includes the contract bonds
Bonds to support the government’s ambitious agenda on permitted under IRDAI guidelines, such as bid performance,
infrastructure development, which has been allocated 3.3 advance payment, and retention money bonds.
percent of the GDP in FY 2024. Last year, IRDAI Chairman Debasish Panda highlighted that
Put simply, a Surety Insurance Bond covers the project India is expected to spend about ?100-lakh crore on
owner or beneficiary against losses arising from the infrastructure through the National Infrastructure Pipeline
in the next five years. This requires bank guarantees of
contractor’s non-performance, non-fulfillment, or breach of
about ?90-lakh crore in the next five years, which banks
contractual obligations as stipulated in the agreement or
currently do not have the capacity for. This is where surety
bidding documents.
bonds need to step in to complement bank guarantees, he
Deepak Kumar, Senior Executive Vice President & Head - had noted.
Reinsurance, Credit & Aviation Insurance, TATA AIG General This is important as India is estimated to become the third-
Insurance, said, “With the launch of our Surety Insurance
largest economy by 2030.
Bond, TATA AIG is committed to addressing the critical
A surety bond is a legally binding agreement between three
liquidity and capital challenges faced by contractors in the
infrastructure sector. We are confident that this product will parties: the obligee (the entity requiring the bond), the
principal (the party required to fulfil a certain task or duty),
not only facilitate smoother project execution, but we will
and the surety (the party ensuring that the principal can
also contribute in our own way to the infrastructure segment
towards India’s goal of becoming a $ 5 trillion economy”. perform the assignment). The surety bond, which is most
typically used in construction and infrastructure projects,
With this range of surety bonds, Tata AIG is cementing its guarantees that the principal will meet the commitments
dedication to fostering growth and development through indicated in a contract. If the principal fails to meet these
innovative insurance solutions for the country’s infrastructure obligations, the surety compensates the obligee, reducing
companies, he said. their financial risk.

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46 June 2024 The Insurance Times