Recognizing the importance of Surety Insurance Bonds, IRDAI had issued ‘IRDAI (Surety Insurance Contracts) Guidelines’ in January 2022
Hyderabad:
In a significant measures to develop a Surety Insurance Bonds market in the country, the IRDAI Tuesday has reduced the solvency requirement applicable for such products to control level of 1.5 times from 1.875 previously prescribed.
Further, the prevailing 30% exposure limit applicable on each contract underwritten by an insurer, has also been removed.
These amendments follow the earlier notification removing the cap on premiums that could be underwritten in a financial year by mono-line insurers transacting only Surety Insurance Business.
These decisions have been taken on the basis of the evaluation of various representations received by the IRDAI.
Surety Bonds are a type of insurance policy protecting parties involved in a transaction or contract from potential financial losses due to a breach of contract or other types of non-performance. They serve as a risk mitigation tool for maintaining integrity, quality, and adherence to contractual terms, ultimately contributing to the smooth functioning of projects especially in infrastructure sector and fostering a healthy business environment.
Recognizing the importance of Surety Insurance Bonds, IRDAI had issued ‘IRDAI (Surety Insurance Contracts) Guidelines’ in January 2022.
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