The Condition and state of the surety bond market
Similar to the credit market at one time surety credit was like a raging river but now it has turned into a trickling creek. Well who turned off the faucet ?
There are many factors on why surety bonds are harder to get.
One factor is due to the influx of claims. Claims have been on the rise for the last two years, but now they have seemed to have bottomed out. So when will surety companies start writing more classes of business such as surety bonds for the trucking industry like ICC Bonds or financial guarantees like sales tax and utility bonds? Well no one really knows for sure as of yet but it will happen again one day but it will probably take place slowly over the next ten years. Many surety companies have suffered from loses do to the mortgage melt down as well as the construction industry and the car industry. It will take some time for them to recoup their losses from theses business.
Do to Underwriting changes, requirements have become more ridged. Companies that qualified for bonding a year ago or now facing the dilemma of closing there business because they can’t obtain surety bonding anymore.
Startup companies are also having this dilemma since surety bonding companies want to write established business. Surety Bond amounts are also coming into play since the majority of surety bond amounts have increased making it harder for business to qualify.
No business or personal credit is a factor as well the surety considers no credit to be hazardous since there is no established payment history
Tags: bonds, surety, surety bond, Surety Bond Market
