The Surety Market in general has hardened and we are currently experiencing a tightening of surety capacity whereby underwriters, and their reinsurers, are being far more cautious resulting in many contractors struggling to get bonds or finding the terms for their facilities changing quite significantly. Not since the failure of Carillion (early 2018) has the surety market experienced such losses and this is being driven by:

· Inflation (especially where contractors signed up to fixed price contracts)

· Overall lack of liquidity in the supply chain and the potential negative impact of this on cash flow and profit margins across the sector

· Material and labour shortages

· Project delays

· Cladding and PI insurance-related issues

· Continued shock waves from the COVID-19 pandemic

· The fall-out from Brexit

As a result, underwriters are now facing capacity constraints and have been advised to prioritise careful management of the bottom line over chasing premiums. More notably, Surety underwriters are increasingly seeking out robust, cash-rich, and profitable companies with a high net worth as a priority.

An additional outcome of these shifts is the rise in premium rates. This surge is often spearheaded by reinsurers who are actively increasing their rates, contributing to the evolving landscape of the insurance market.