Surety Bonds Boom With $550B Infrastructure Act

Biden's Infrastructure Package Fuels Surety Bond Market Growth

President Biden's $550 billion infrastructure package has sparked a 15.7% growth in direct written premium (DWP) for surety bonds, according to the Surety & Fidelity Association of America. The rising demand for surety bonds, a financial safety tool in the construction industry, is projected to drive growth in the market.

The Vital Role of Surety Bonds

Surety bonds are essential for construction and public projects as they provide financial protection against non-performance, default, and contract breaches. Contract surety bonds are common in construction, while commercial surety bonds cater to public, legal, and government entities.

Infrastructure Investment and Jobs Act as a Catalyst for Growth

The Infrastructure Investment and Jobs Act (IIJA) is set to fortify U.S infrastructure with a $550 billion investment, which covers bridges, airports, waterways, and public transit systems. Notably, the Broadband Equity, Access, and Deployment (BEAD) Program, a $42 billion initiative, is aimed at expanding high-speed internet access nationwide.

Grid Modernization and the Surge in Surety Bonds

IIJA's focus on grid modernization is likely to augment the demand for surety bonds. This augurs well for the surety bond market and the insurance companies adjusting to the increased need for capacity. With the surety bond market thriving, it reflects the critical role of surety bonds in protecting public and private investments.

Key Points:

• The infrastructure bill has triggered a 15.7% rise in DWP for surety bonds in 2022.
• The bill assigns $550 billion for new infrastructure investments across the US.
• The BEAD Program, backed by $42 billion, targets enhanced high-speed internet access.
• Grid modernization initiatives are set to fuel further demand for surety bonds.
• Insurers are ramping up capacity to cater to this burgeoning demand.