Regulator Irdai has decided to examine the feasibility of introducing surety b
Regulator Irdai has decided to examine the feasibility of introducing surety bonds by insurance companies for road contracts in the country.
In the wake of the Covid-19 pandemic and its subsequent economic impact on liquidity and cash-flows in the Indian banking sector, the Ministry of Road Transport and Highways (MoRTH) had requested the regulator to examine possible offering of surety bonds by the general insurance companies.
Now, the Insurance Regulatory and Development Authority of India (Irdai) has set up a nine-member working group to study the legal framework and suitability of the Indian insurance industry or any other sector to offer such bonds.
Headed by G Srinivasan, Director, National Insurance Academy, the group comprises members from public and private insurance companies and Irdai, the sectoral regulator said in a circular.
Currently, surety bond for contractors is not being offered by insurance companies in the Indian market. The bonds guarantee satisfactory completion of a project by…