Construction Rebound Boosts Surety Bond Sector

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Increase of Surety Bond Sales for the Construction Industry

With the pickup in overall construction, construction surety bond sales also have increased, according to the Washington-based Surety & Fidelity Association of America. Direct written premiums totaled $5.50 billion in 2014, a 4.7% increase compared with 2013 and just $2 million shy of the record in 2008, according to the association. “There has been an increase in the demand for surety bonds, … but I believe we are only getting back to where we were in 2008,” said Thomas Niland, vice-president and surety practice leader at Cook Maran & Associates in Melville, New York.

Construction Surety Bonds for Public-Private Partnership Construction Projects

Private and public construction projects are driving the rebound in construction and surety bond sales. Numbers don’t tell the whole story, however, as construction projects grow larger and more often are public-private partnerships, dubbed P3s by the industry. “Public private partnerships continue to grow as a popular way to bridge the financing void primarily for large infrastructure projects,” Mr. Grove said. Thirty-four states and Puerto Rico have enacted legislation enabling such partnerships, according to the Federal Highway Administration.Such multiyear, more complex projects require specialized bonds, Mr. Rosenberg said. Some surety bond agencies have developed a construction bond form for public-private partnership construction projects. This new bond form features a liquidity component which allows advance payment to allow a project to continue during claims in addition to the more traditional performance and payment bond, and has been used to bind five public/private partnership projects in Canada.

Construction Surety Bonds at The ProSure Group

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