Page 18 - Insurance Times April 2021

prominent surety players to scale up their operations across of 7.5 % during the forecast period 2019 - 2027, to
developing markets including APAC and Latin America. In account to US$ 28.77 by 2027. Further the segment
many countries, Surety Bonds are set to capture or replace wise split of revenue expected in 2027 reveals: contract
some of the market share of Bank Guarantees, which have surety bond - 51.4 %; commercial surety bond - 29.1%,
their own limitations. By hiring local talent and bringing in court surety Bond 13.1 % and fidelity surety bond 6.2
international best practices, large surety players are able % (Global Surety Market to 2027, Sample Report, 2019)
to utilize their capacity while balancing the risk across
This is abundant capacity for all segments - small to
continents.
medium contractors, mega-contractors, commercial
surety and international surety.
ICISA
The International Credit Insurance & Surety Association (ICISA) The market cycles for Surety and construction have been
brings togetherthe world's leading companies that provide trade stable, resulting in increased competition.
credit insurance and/or surety bonds. Founded in 1928 as the first With the falling oil & gas prices, the current market
trade credit insurance association, the current members account scenario requires diligence as well as constant high
for over 95% of the world's private credit insurance business. underwriting standards.
Surety companies became members from the 1950s.
Terms and conditions related to underwriting are
PASA loosening as surety players are fiercely endeavoring to
The Panamerican Surety Association is a not-for-profit organization grow market share.
which was founded in 1972 by a group of sureties from the
As growth in construction continues and contractors
American continent. Today, with members from 35 countries in become more stretched, we have seen some
three continents, PASA represents the world market of suretyship contractors and subcontractors in particular stumble
and credit insurance and reinsurance thereof.
Full year 2019 results should show increasing losses for
Forum Cauzioni e Credito the surety industry and that will most likely continue
The GUARANTEE AND CREDIT FORUM is a free, non-profit
into 2020.
association, established in 2015 by insurance and reinsurance
companies operating in the surety and credit classes. The Bonds
and Credit Forum boasts a long experience and tradition, being Market Dynamics and Surety Underwriter's
the result of the modification and transformation of the previous Reactions and Claims Trends
Deposit and Credit Concordat founded in 1957.
A. Underwriter's Reactions
Surety and Fidelity Association of America [SFAA] Overall, global firms/insurers continue to have a higher
The Surety & Fidelity Association of America (SFAA) acts as the risk appetite than their American competitors,
thought leader and trusted adviser for the surety and fidelity particularly in project size and complexity, and
industry, state and federal agencies and legislators. As a licensed discernment of political risk.
rating agency/advisory organization and trade association, SFAA
Sureties find it challenging to sustain underwriting
serves its members, subscribers,federal, state and local discipline in this soft surety market. Competition on
government leaders and the public by providing statistical and
actuarial data, expertise, advocacy, education and promotion on underwriting terms is expected with new market
the value of surety and fidelity bonds. entrants
In view of excess capacity, soft market conditions, and
Figure 1 - Industry Bodies in Surety Bonds
considerable competition, maintaining underwriting
discipline is of great concern.
There are large industry bodies based in mature markets,
to stabilize and introduce best practices in the business as Major insures feel "excess capacity" was a significant
described in Figure 1 above. challenge in today's surety market.

Major carriers feel "deteriorating" terms and conditions
Surety Global Market Capacity and Trends
or "dilution" of underwriting terms and conditions as
The surety industry remains robust. difficult present challenges and emphasized that
Surety market on a global scenario was valued at US$ continued soft markets would put added pressure on
15.33 Billion in 2018 and expected to grow at a CAGR maintaining underwriting discipline

18 The Insurance Times, April 2021