Irdai working group on surety bonds, has said insurers should be allowed to enter into surety bond insurance business with solvency margin above a certain threshold. This is because the experience of surety bond insurance is yet to develop in Indian market and the risk exposure under this business is quite significant compared to other lines of business which are reasonably mature in Indian insurance market. “If the insurer’s solvency ratio falls below the specified threshold limit at any point in time, the insurer shall stop writing new surety bond business until its solvency ratio improves above the specified threshold limit,” the working group said in its recommendations.
