Anand Pejawar, whole-time director, SBI General Insurance
Anand Pejawar, whole-time director, SBI General Insurance said, “We are confident that this product will serve as an effective tool for the infrastructure sector. Surety bonds offer financial security, risk mitigation, and peace of mind for all the parties involved in a contractual agreement. They foster trust, stability, and efficient project completion, ultimately contributing to the overall development and prosperity of the nation.”
Mumbai:
SBI General Insurance on Tuesday announced the launch of its surety bond solution- the ‘SBI General Surety Bond Bima (Conditional & Un-Conditional)’.
The product is designed to provide protection against breach of terms and conditions by the contractors either during the bidding stage or during the performance stage of a project.
The Surety Insurance product consists of a wide range of bonds, such as Bid bonds, Advance Payment bond, Performance bond, and Retention Money bond. Additionally, there are two variants available in the product i.e. Conditional & Un-Conditional. In Conditional bond, a specified sum is paid to the beneficiary upon claim when specific conditions are met, while an Unconditional bond allows the beneficiary to claim the money almost without any conditions.
Anand Pejawar, whole-time director, SBI General Insurance said, “We are confident that this product will serve as an effective tool for the infrastructure sector. Surety bonds offer financial security, risk mitigation, and peace of mind for all the parties involved in a contractual agreement. They foster trust, stability, and efficient project completion, ultimately contributing to the overall development and prosperity of the nation.”
The infrastructure sector has witnessed a remarkable growth in recent years, making a substantial contribution to the overall growth in economic activity in India. At SBI General, we are at the forefront of providing innovative risk solutions to our customers,” he added.
Earlier, Bajaj Allianz General Insurance and New India Assurance had announced that they were launching Surety Bonds without giving any further details.
Surety Bond products are majorly reinsurance driven and global reinsurers including Munich Re and Swiss Re had helped Indian general insurance companies to design surety bond products.
National Highway Authority of India(NHAI) needed Surety Bond products in place of bank guarantees to award its projects to contractors.
Recently, in a bid to develop a Surety Insurance Bonds market in the country, the IRDAI had reduced the solvency requirement applicable for such products to control level of 1.5 times from 1.875 previously prescribed earlier.
Further, the prevailing 30 per cent exposure limit applicable on each contract underwritten by an insurer, was 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.
This product was developed in response to the government’s vision to upscale infrastructure development.
The Surety insurance provides an assurance to the project owner in the form of a Surety Bond that the contractor would complete the project as per the agreed terms and conditions.
The product is designed to insure the contractors for non-performance and financial exposures in case of contractual default. It helps in ensuring the contractors fulfil their obligations in the projects awarded, thereby providing financial security to the beneficiary.
By providing project owners with peace of mind on individual projects, surety bonds help to promote successful and efficient project outcomes.