Insurance regulator IRDAI has relaxed norms for surety bonds with the goal of growing the surety insurance market by increasing the availability of such products.
The changes to the “IRDAI (Surety Insurance Contracts) Guidelines” took effect on 15 May 2023, the date of a circular on the subject issued by the IRDAI.
In a statement, the IRDAI says that the solvency requirement applicable for such products has been reduced to 1.5 times from 1.875 times previously.
Further, the 30% exposure ceiling, applicable to each contract underwritten by an insurer, has been removed.
These amendments follow an earlier notification removing the cap on premiums that could be underwritten in a financial year by mono-line insurers transacting only surety insurance business.
Recognising the importance of surety Insurance bonds, the regulator issued “IRDAI (Surety Insurance Contracts) Guidelines” in January 2022.
Surety insurance will increase the liquidity of contractors and provide a strong boost, especially to the infrastructure sector, the IRDAI says in the statement.
