For the second year in a row, the surety industry experienced record growth. In 2017, the direct premium written increased from $5.9 billion to $6.2 billion. This is the fifth straight year of steady increase. The industry premium has more than doubled over the past two decades – up from $2.9 billion in 1998.
The statistical department of The Surety & Fidelity Association of America (SFAA) reviewed the data from 2013 to 2016 and reported the areas of largest premium increases were in private contract bonds and judicial court guarantee bonds. Other areas with significant premium increase include: airport buildings at state/municipal, federal and private level; private building and building related construction; private completion bonds; state/municipal subdivision bonds; coal reclamation bonds; and mechanic’s lien bonds.
Since 1998, the surety industry has protected more than $9 trillion in contract and commercial surety exposure - $600 billion in 2017 alone. Approximately $25 billion in losses were paid out, and another $50 billion in loss adjustment, underwriting and general expenses were incurred since 1998. The continuing low loss ratio signals that the adherence to underwriting criteria and prequalification, along with a greater emphasis placed on efficiency regarding expenses, remain strong factors in the industry’s growth.
“The expansion of the private construction market demonstrates that the promotional and educational efforts on behalf of the industry have raised awareness on the benefits of surety bonds and have shown others what we in the industry have known for years – that bonding protects,” said Mr. Fisher.