IRDAI chairperson Debasish Panda said the insurance regulator has tried to address some of the “pain points” in relation to surety bonds, and stressed that it may make further changes if needed. The surety bond insurance is a risk transfer tool for the principal and shields the principal from the losses that may arise in case the contractor fails to perform their contractual obligation.
The product gives the principal a contract of guarantee that contractual terms and other business deals will be concluded in accordance with the mutually agreed terms.
“We have tried to address some of the pain points. In case there is need for some tweaking, we will consider. Let industry come up with suggestions, we will examine them,” Panda told reporters.
Minister for Road Transport and Highways Nitin Gadkari said the finance ministry has agreed to allow contractors engaged by state – owned NHAI and NHIDCL to convert their bank guarantees to insurance surety bonds from retrospective effect.
