Tata AIG issues India’s biggest surety bond for Rs 100 crore

Mumbai: Tata AIG General Insurance has issued India's largest Performance Surety Bond, valued at over Rs 100 crores in Mumbai, India. This follows the company’s launch of Surety Insurance Bond offerings to the market two months ago.

Surety Insurance Bonds are designed to protect project owners or beneficiaries from losses resulting from a contractor's non-performance, non-fulfillment, or breach of contractual obligations as outlined in agreements or bidding documents. In India, the government had permitted contractors to offer surety bonds instead of bank guarantees. However, the product had not taken off in a big way. According to insurers one of the reasons is that insurers do not have the same right as other financial creditors in a bankruptcy.

TATA AIG provides both conditional and unconditional Surety Insurance Bonds, which are instrumental in ensuring the smoother execution of infrastructure projects and commercial contracts in both the government and private sectors.

With India estimated to require approximately Rs 90-lakh crore in bank guarantees over the next five years, surety bonds will have a big role to play in capital conservation.

According to Deepak Kumar, Senior Executive Vice President & Head - Reinsurance, Credit & Aviation Insurance at TATA AIG General Insurance, TATA AIG has marquee clients in the infrastructure sector and the new cover will help in partnering with them in their growth. "Through this issuance, we are standing by our client to fulfill their contractual obligations throughout the entire tenure of the project, which spans seven years," he said

The current product suite from TATA AIG includes all contract bonds permitted under IRDAI guidelines, such as bid performance bonds, advance payment bonds, and retention money bonds. This comprehensive offering underscores TATA AIG's commitment to supporting India's growing infrastructure needs and economic aspirations.