Surety Market by Bond Type (Contract Surety Bond, Commercial Surety Bond, Fidelity Surety Bond, and Court Surety Bond), End-user (Individuals and Enterprises), and Regional Analysis (North America, Europe, Asia-Pacific, and LAMEA): Global Opportunity Analysis and Industry Forecast, 2022-2031

Global Surety Market Analysis

The Global Surety Market Size was $16,040 million in 2021 and is predicted to grow with a CAGR of 4.4%, by generating revenue of $24,371.2 million by 2031.

Global Surety Market Synopsis

The surety is the guarantee of one party's debts by another. A surety is a person or organization that agrees to pay the debt if the debtor policy defaults or is unable to make the payments. The party who guarantees the debt is known as the surety or guarantor. A surety is not a policy of insurance. The payment to the surety company covers the bond, but the principal remains liable for the debt. Surety bonds provide a defense against false claims and act as clear-cut representation when claims occur. Because surety bonds also lower risk for lenders, they can reduce interest rates for borrowers. These factors are anticipated to drive the surety market expansion during the forecast period.    

Some of the disadvantages of surety include lack of awareness among the people. The risk of a contracting party defaulting is shifted to a third party through surety. This is so that, if the contract that the surety guarantees is broken, a third party will take over responsibility for paying the payment. The 10% paid to the bondsman is not money the defendant will receive back, even if they show up for all court dates and are later found not guilty.

Small and medium-sized enterprises (SMEs) and service providers are covered by surety insurance against customer lack of payment. In addition, several businesses are seeking innovative ways to trade to increase their market share and grow internationally. Additionally, surety insurance is becoming more popular as a means for these companies to grow sustainably, which encourages small business owners to use it as a secure means of obtaining funding. Therefore, the market is expanding due to the rise in small and medium-sized firms looking to enter the global market and the multiple advantages surety insurance offers.

According to regional analysis, North America region accounted for a highest market share in 2021. The region's surety insurance market is expanding as a result of increased demand for goods and services, quick commercial transactions, and secure exchanges. Rising trader awareness of surety insurance and multinational corporations collaborating with regulatory organizations to conduct business abroad are driving this industry.

Surety Overview

A surety is an assurance of one party's debts to another. A surety is an entity or an individual who assumes the duty of paying the debt in the event that a debtor fails or is not able to make the payments. The party which guarantees the debt is called a surety, or the guarantor. A surety bond is a legally binding contract signed by three parties: the lender, trustee, and guarantor. The obligee, who is usually a government agency, allows the principal, who is usually a business owner or contractor, to receive a security bond as protection against future work output.

COVID-19 Impact on Global Surety Market

The COVID-19 pandemic has brought several uncertainties leading to severe economic losses as various businesses across the world were standstill. The construction sector was significantly decaling all across the world due to the COVID-19 outbreak in late 2019. The COVID-19 outbreak forced participants in the building business to temporarily suspend their projects. The construction sector grew slowly in 2021 because of the unprecedented COVID-19 impact and uncertainties in the economic situations of developed and emerging countries. During covid-19 decaling of the construction sector reflected a decline in the surety market internationally, which can be attributed to the fact that the surety market is significantly influenced by this industry. The surety sector had been anticipating a recovery in 2020 following a few years of difficult performance brought on by a few large claims. Additionally, the credit surety industry was impacted by the COVID-19 pandemic, but insurers raised premiums due to an increase in the number of claims during the pandemic in order to maintain the company's profitability. A high premium is expected to have an immediate impact on business revenue.

Rising Need for Innovative Insurance Solutions to Drive the Surety Market

Since the one belt, one road initiative is expected to provide growth opportunities to the surety market, there is a high demand for innovative construction insurance in high growth markets such as China. As a foreign policy directive, China's president launched the One Belt, One Road initiative in 2013. As a foreign policy directive, the determined investment. The determined investment strategy aims to promote both Chinese and global economic growth. The initiative, dubbed a mega infrastructure project, aimed to attract investment primarily in the transportation and energy sectors, which include roads, bridges, railway ports, and power grids. Commercial insurance is expected to see an increase in project-related premium income across the world's fastest growing surety market.

To know more about global surety market drivers, get in touch with our analysts here.

Increased Risk of a Contracting Party Defaulting to Restrain the Market Growth

In the event that the contract that the surety guarantees is broken, the third party will be held liable for paying the debt. Typically, this happens when the party under contract who is in charge of fulfilling these commitments becomes bankrupt and is then unable to make payments. In business initiatives involving worldwide commerce, sureties play a crucial role in reassuring potential investors that their investments in contracts with firms headquartered in international trade and legal jurisdictions will be repaid in the case of insolvency.

Use of Surety in Small and Medium Enterprises to offer Excellent Opportunities

Small and medium-sized enterprises (SMEs) and service providers are covered by surety insurance against customer lack of payment. In addition, a lot of businesses are seeking innovative ways to trade to increase their market share and grow internationally. Additionally, surety insurance is becoming more popular as a means for these companies to grow sustainably, which encourages small business owners to use it as a secure means of obtaining funding. Therefore, the market is expanding due to the rise in small and medium-sized firms looking to enter the global market as well as the numerous advantages provided by surety insurance.

To know more about global surety market opportunities, get in touch with our analysts here.

Global Surety Market, by Bond Type

Based on bond type, the market has been divided into contract surety bond, commercial surety bond, fidelity surety bond, and court surety bond. Among these, the contract surety bond sub-segment accounted for the highest market share in 2021, whereas the commercial surety bond sub-segment is estimated to witness the fastest growth during the forecast period.

Global Surety Market Outlook, by Bond Type, 2021

Source: Research Dive Analysis

The contract surety bond sub-type accounted for a highest market share in 2021. A contract bond is a guarantee the terms of a contract are fulfilled. If the contracted party fails to fulfill its duties according to the agreed upon terms, the contract “owner” can claim against the bond to recover financial losses or a stated default provision. The surety bond offers a framework that ensures both payments to the client and that the incompetent contractor will be held accountable. Contracts clearly define the duties of each party. The party who engaged the contractor may bring a claim for damages against the surety bond when the contractor fails to comply with one of those conditions, whether they do so by missing deadlines, going over budget, or doing work of substandard quality.

The commercial surety bond sub-type is anticipated to witness the fastest growth by 2031. Commercial bonds are contracts that guarantee the security of enterprises. They are sometimes referred to as company bonds or commercial surety bonds. They often safeguard a principal's vocation and are mandated by state legislation for specific businesses. Commercial surety bonds include a wide range of surety bonds that ensure the principal will fulfill the duty or undertaking specified in the bond. Commercial surety bonds can generally be divided into five types permit bonds and license, court bonds, fiduciary bond, public official bonds, and miscellaneous bonds.

Global Surety Market, by End-User

Based on end-user, the market has been divided into individuals and enterprises. Among these, the enterprises held a dominant share in 2021 and is predicted to be the fastest growing during the forecast period.

Global Surety Market Size, by End-user, 2021

Source: Research Dive Analysis

The enterprises sub-segment accounted for a highest market share in 2021. In the enterprises sector, surety is attributed to the fact that businesses in this category deal in large amounts of data and bulk trading. Additionally, due to their lack of guarantees, credit history, and collateral, medium-sized businesses frequently receive funding from a variety of banks and financial institutions. As a result of these businesses' operations diversification, the surety market's growth of surety insurance is anticipated to be accelerated.

Global Surety Market, Regional Insights

The surety market was investigated across North America, Europe, Asia-Pacific, and LAMEA.

Global Surety Market Size & Forecast, by Region, 2021-2031 (USD Million)

Source: Research Dive Analysis

The Market for Surety in North America to be the Most Dominant

The North America surety market is predicted to have the highest market share during the forecast period. Due to the region's confirming banks' and issuing banks' continued attempts to broaden the scope of their trade finance products, surety insurance demand is increasing. The country that contributes the most to the regional market, is the U.S. because of the region's rising need for products and services, brisk business transactions, and safe transactions. Rising trader knowledge of surety insurance and multinational firms working with regulatory bodies to conduct business overseas are the two main drivers of the regional market.

Competitive Scenario in the Global Surety Market

Investment and agreement are common strategies followed by the major market players. For instance, on 15 September 2022, Crum & Forster announced the launch of its new Life Insurance business unit, building on the organization’s 2021 acquisition of Monitor Life Insurance Company of New York.

Source: Research Dive Analysis

Some of the leading surety market players are American Financial Group, Inc., The Travelers Indemnity Company, Liberty Mutual Insurance Company, The Hartford, HCC Insurance Holdings Inc., Chubb, AmTrust Financial Services, IFIC Security Group, Crum & Forster, and CNA Financial Corporation.