In India, infrastructure facilities like power, transportations, communication networks, electrical systems, among others, have taken a big leap forward in the past decades.
With new road and network projects being built for both urban and rural development, the country has planned to spend $1.4 trillion on infrastructure between 2019-2023.
And soon, this will be supported with the help of Surety Insurance.
You see, construction projects necessitate borrowing huge sums of money from a lending authority such as the government or a bank for financing the operation and ensuring steady flow of working capital.
But, this lending sector has been dealing with some major problems - primarily, delays in project completion and default of borrowers.
To combat these common risks, India’s insurance regulator IRDAI has introduced Surety Insurance in its 2022 guidelines.
Under a Surety Insurance Bond, the insurer will guarantee the lending authority protection from poor service, failure to complete a project, or default by the contractor.
In other words, the insurance company will become liable for the debt, insolvency or failure of the borrowing contractor.
Surety Insurance is set to help construction projects make efficient use of their working capital and foster a robust ecosystem.
This is not the first insurance product to help boost India's economy! Read about how the government is supporting India's exports through Insurance next.