and recover damages to make up for the payment to the principal. If the principal defaults and the surety turns out to be insolvent, the purpose of the bond is rendered nugatory. Thus, the surety on a bond is usually an insurance company whose solvency is verified by private audit, governmental regulation, or both. A key term in nearly every surety bond is the penal sum. This is a specified amount of money which is the maximum amount that the surety will be required to pay in the event of the principal's default. This allows the surety to assess the risk involved in giving the bond; the premium charged is determined accordingly. Surety bonds also occur in other situations, for example, to secure the proper performance of fiduciary duties by persons in positions of private or public trust. Reason for having a guarantor A surety most typically requires a guarantor when the ability of the primary obligor, or principal, to perform its obligations to the obligee (counterparty) under a contract is in question or when there is some public or private interest that requires protection from the consequences of the principal's default or delinquency. In most common law jurisdictions, a contract of suretyship is subject to the Statute of Frauds (or its equivalent local laws) and is unenforceable unless it is recorded in writing and signed by the surety and by the principal. United States industry The SFAA published US and Canadian H1 surety results on September 5, 2019. Direct written premium totaled $3.5 billion and a direct loss ratio of 18.2%, highlighting strong profitability in the surety industry. The industry remains highly fragmented with over 100 companies directly writing surety bonds with new market entrants entering or reentering on a fairly common basis. annual US surety bond premiums amounted to approximately $3.5 billion. State insurance commissioners are responsible for regulating corporate surety activities within their jurisdictions. The commissioners also license and regulate brokers or agents who sell the bonds. These are known as producers; the National Association of Surety Bond Producers (NASBP) is a trade association which represents this group. In 2008, the New York Times wrote "posting bail for people accused of crimes in exchange for a fee, is all but unknown in the rest of the world". Miller Act The Miller Act may require a surety bond for contractors on certain federal construction projects; in addition, many