Irdai issues draft rules for promoting and regulating surety insurance biz

A general insurer can start a surety business if it has 1.25x the solvency margin; but if solvency goes below the required level, insurer will stop underwriting new business

The insurance regulator has issued draft guidelines to promote and regulate sustainable and healthy development of the surety insurance business in the country.

Surety bonds protect the beneficiary against acts or events that impair the underlying obligations of the principal. Surety bonds guarantee the performance of a variety of obligations, from construction or service contracts to licensing and commercial undertakings.

A working group set up by the regulator had recommended promoting the development of the surety bonds markets in the country.

According to the regulator, a general insurer can commence a surety insurance business if it has 1.25 times the