SURETY BONDS

July 4, 2020

Insurance regulator IRDAI has formed a panel under G Srinivasan, director, National Insurance Academy, to assess the suitability of the Indian insurance industry or any other sector to offer Surety Bonds for road contracts in the country.

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Surety Bond is a three-party agreement that legally binds together a principal who needs the bond, an obligee who requires the bond and a surety company that sells the bond.
Surety bonds provide financial guarantee that contracts will be completed according to pre-defined and mutual terms. When a principal breaks a bond’s terms, the harmed party can make a claim on the bond to recover losses.
Currently, Surety Bond for contractors is not being offered by insurance companies in the market to guarantee satisfactory completion of a project by a contractor and provide performance security to various government agencies.

Source : Indian Express