- Is it Time for Employers to Revise Their Approved Surety List?
Is it Time for Employers to Revise Their Approved Surety List?
In the world of construction and project management, surety bonds play a critical role in ensuring that projects are completed as promised. These bonds act as a safeguard against disruptions, financial loss, and potential defaults. Employers have long relied on approved surety lists to dictate who can supply these bonds. However, in recent years, there's been a growing concern that these lists have become outdated and overly restrictive, limiting the potential of both contractors and the industry as a whole.
The Evolution of the Surety Market:
The surety market has evolved significantly over the past few decades. Traditional perceptions and preconceptions about who can provide reliable surety bonds have begun to change. Historically, employers have often favoured UK domiciled surety providers, believing that these entities offer the most secure options. While this might have been true in the past, the modern surety market has transformed in response to globalisation, technological advancements, and increased connectivity.
International Surety Providers: A Credible Alternative:
In today's interconnected world, international surety providers offer a credible alternative to traditional options. Thanks to improved communication and global financial networks, international surety providers can offer competitive rates and efficient services that can rival or even surpass those provided by local providers. Despite this, employers often hold onto outdated biases against international providers, assuming that they lack the reliability and stability of more familiar options.
Challenging Economic Times and Shifting Markets:
The COVID-19 pandemic and its economic aftermath have created unprecedented challenges for various industries, including the surety market. High claims and market uncertainty have put pressure on surety providers, particularly those in the UK. This has led to a more restricted availability of surety bonds from established providers, causing delays and complications for contractors seeking to secure bonds for their projects.
Flexibility and Openness: The Need of the Hour:
Given the current landscape, employers should seriously consider revising their approved surety lists. The rigid adherence to outdated perceptions can hinder the growth and development of the industry, making it difficult for contractors to access the necessary financial tools to undertake projects successfully. The time has come for employers to embrace flexibility and openness to new providers, including international ones, who can offer competitive solutions even in challenging times.
Benefits of Revising the Approved Surety List:
- Access to Diverse Options: By updating their approved surety lists, employers can open up opportunities for contractors to explore a wider range of surety providers. This diversification can help mitigate risks associated with relying heavily on a few providers.
- Competitive Rates: International providers often offer competitive rates due to varied market conditions and differing regulations. This can lead to cost savings for contractors and employers alike.
- Resilience in Uncertain Times: The current economic challenges underscore the need for adaptability. Having a more flexible surety list ensures that contractors have access to bonds even when traditional providers face constraints.
- Global Expertise: International providers bring with them a wealth of global experience and best practices. Their innovative approaches can contribute positively to the industry's evolution.
- Enhanced Project Success: A well-structured surety bond is a cornerstone of project success. With a broader selection of providers, contractors can choose the one that best aligns with their project's specific needs and requirements.
The time has come for employers to reconsider their approach to approved surety lists. Outdated biases and preconceptions about surety providers can limit the growth and innovation of the construction industry. As the surety market faces challenges in the wake of economic uncertainty and high claims, employers must adapt to the changing landscape. Embracing new providers, including international ones, can lead to a more resilient and vibrant industry, ensuring that projects can move forward with confidence, even in the most challenging times.
SB&G deal with UK and International Surety markets, all are reputable but not all are flexible or fit the needs of the applicant company so having access to a diverse range of providers ensures we are able to help our client achieve the Bond they need.
If you need haelp or assistance please get in touch today to see how we can support your specific needs, 02476 017646