The vital importance of payment and performance bonds issued by surety insurers has been clearly illustrated by a high-profile insolvency, the International Underwriting Association (IUA) has claimed. Henry Construction Projects has appointed administrators, highlighting the continued uncertain and challenging trading environment for many UK businesses. Surety cover, however, can provide a necessary protection for firms dealing with rising supply-chain and operational costs.
Chris Jones, Director of Legal and Market Services at the IUA said: “The Henry Construction insolvency is a very large insured exposure for the surety market, but a clear example of where insurers are assisting clients to meet their obligations by providing quick and meaningful claims handling support. The economic protection offered by such cover mitigates the devastating effects that insolvencies can have on third party contractors, employees and the wider economy.”
“Surety bonds and guarantees are also an important tool for companies to maintain financial flexibility and cashflow liquidity in their day-to-day operations and help satisfy counterparties’ own security requirements in trading.”
The IUA is the representative body for the London surety market. It operates a Surety Committee, made up of senior underwriters and legal counsel from across the sector. The group provides a forum to discuss technical questions, emerging risks and promotes best practices across the market.
The committee has urged UK businesses to consider the value of surety bonds and guarantees as a crucial financial implement to ensure their operations thrive and overcome times of difficulty.
Surety bond providers in the UK are highly capitalised and regulated and have extensive experience in managing companies and projects in difficult economic circumstances across the world. Collectively, they provide protection for insured exposures totalling hundreds of billions of pounds and provide significant further value in assisting clients with risk management support throughout their business.
