Insurance news:
Approximately 700 insurance surety bonds valued at around ₹3,000 crore have been issued by various insurance companies to date, an official statement said on Wednesday. The statement also noted that state-owned NHAI has so far received 164 insurance surety bonds, including 20 for performance security and 144 for bid securities.
ISB are financial instruments where insurers act as ‘surety’ and provide a financial guarantee that contractors will fulfill their obligations according to the agreed terms. Wider adoption of these instruments is expected to bolster infrastructure development in the country.
According to the statement, the Ministry of Finance has equated ISB with bank guarantees for all government procurement. NHAI has been encouraging insurers and contractors to use ISB as an additional method for submitting bid and performance securities.
On Wednesday, NHAI organized a workshop in New Delhi on the implementation of ISB for its contracts. The workshop aimed to review the progress of ISB implementation and to encourage stakeholder participation for broader adoption of the instrument.
Road, Transport and Highways Minister Nitin Gadkari launched the country’s first-ever surety bond insurance product on December 19, 2022, to reduce the reliance of infrastructure developers on bank guarantees. This product, developed by Bajaj Allianz, was created in response to a demand identified by the industry and the government.
