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India, Introduces Guidelines for Surety Insurance2022-02-04

The Insurance Regulatory and Development Authority of India (IRDAI) released <IRDAI (Surety Insurance Contracts) Guidelines, 2022> in an effort to promote healthy development of Surety Insurance Business in India. This guideline, effective as of 1st April 2022, will open the surety insurance market to general insurers which has previously been occupied by banks only.

 

The guideline, being the first to officially recognize surety as an insurance product, provides a set of criteria and framework that general insurers must adhere to in order to underwrite surety insurance. These include maintaining 1.25 times solvency margin, capping the surety premium to 10% of the total gross premium, and establishing Board-approved philosophy on risk management, etc.

 

Once in force, the market speculates that the new measure will provide adequate liquidity and relief that were much needed in the construction and infrastructure sector.

 

The original text of the Guideline is attached.

IRDAI (Surety Insurance Contracts) Guidelines 20220103_signed (1).pdf