As the world transitions to a greener and more sustainable future, the demand for green infrastructure investment is rising. Surety plays a crucial role in supporting the financing and successful completion of infrastructure projects in this evolving landscape.
Persistently high interest rates and escalating material and labor costs can challenge infrastructure project budgets and timelines. Surety can provide financial security and reassurance to project owners and investors, mitigating the risks associated with these challenges. By guaranteeing project completion and the fulfillment of contractual obligations, surety enables the smooth execution of infrastructure initiatives.
Surety has evolved beyond traditional use cases and now finds applications in a wide range of industries. Bank-fronted surety and performance guarantees are increasingly used in shipbuilding, commodity trading, and green transition mining, for example. These applications enable businesses to secure contracts, enhance their credibility, and foster stakeholder trust. Surety is a valuable tool for businesses seeking to participate in these industries and contribute to the global transition to a greener economy.
The scale of this transition opportunity is likely to remain significant, with trillions of dollars of government spending on infrastructure and green transition projects yet to be spent.
In 2023, the industry witnessed an increase in claims frequency and severity. This trend highlights the importance of robust risk management and the need for reliable surety solutions. Insurers continue to be generally supportive of sureties with total direct written premiums in 2024 likely to maintain sureties’ current trend of low double-digit annual growth. Insurers work closely with project stakeholders to assess risks, provide guidance, and ensure the successful completion of projects.
Partnering with experienced surety providers is crucial to navigate the complexities of green infrastructure investment and leverage the benefits of surety. Partners can offer tailored solutions, industry expertise, and risk management support. By collaborating with trusted surety providers, businesses can unlock opportunities, manage risks effectively, and contribute to a sustainable future.
