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Survey Report

Insurance Marketplace Realities 2020 Spring update – Surety

COVID 19 Coronavirus

May 7, 2020

With the potential for volatility in certain industries, buyers should be transparent about their financial situation and potential contract uncertainties.
Rate predictions
  Trend Range
Surety Neutral (flat yellow line) Flat

Key takeaway

With the potential for volatility in certain industries as the COVID-19 economic downturn develops, buyers should be transparent about their financial situation and potential contract uncertainties with brokers and underwriters.


  • Early in 2020, a large global carrier exited the surety marketplace, while another top 20 surety carrier was downgraded by AM Best.
  • The marketplace is mostly stable and surety continues to be one of the most profitable lines for most insurers.
  • Loss and claim activity remain exceptionally low, although pockets of activity exist in retail and other industries.
  • Impact from COVID-19 will likely come from financial distress due to economic uncertainty, delayed schedules, reduced access to facilities, workforce reduction and declines in revenue/cash flow. The inability to quickly and accurately quantify the initial impact will lead to conservative management of programs and capacity.
  • Long-term impact from COVID-19 in the form of operating losses, slowed or stalled projects, compressed schedules, and overall financial struggle in the economy could have a significant negative effect on the financial structure of municipalities, construction companies and all sizes of businesses, not to mention financial institutions.

Contract Surety

  • Ample capacity remains for best-in-class contractors.
  • The industry has seen an increase in loss ratio of 2% since 2018, and claim activity is slightly on the rise, according to the Surety and Fidelity Association of America.
  • As the construction P&C market hardens, sureties remain cautious but do not expect rates to harden.
  • COVID-19 will certainly impact project schedules either through terminated contracts, restricted site access, unavailable labor, and delay or unavailability of equipment, materials and permitting. A contractor’s right to make a claim for delays and extension of time will be governed by its contracts.
  • Mega construction projects continue to face tightening underwriting conditions.

Commercial Surety

  • The availability of excess capacity in the marketplace for most needs will be dependent on the depth and length of the economic slowdown.
  • Rates remained soft in the first quarter of 2020. This will likely change due to the impact of the COVID-19 emergency measures on corporate earnings.
  • New product development continues to be a focus for sureties.
  • The current economic turmoil will be felt in the financial structure of most companies in decreased revenue, slowed cashflow or goods and material availability. The long-term impact will surely depend on organizations’ ability to weather long-term depressed markets and the length of the crisis.
  • Those industries most affected by the economic downturn will receive increased underwriting scrutiny.


Each applicable policy of insurance must be reviewed to determine the extent, if any, of coverage for COVID-19. Coverage may vary depending on the jurisdiction and circumstances. For global client programs it is critical to consider all local operations and how policies may or may not include COVID-19 coverage. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal and/or other professional advisors. Some of the information in this publication may be compiled by third party sources we consider to be reliable, however we do not guarantee and are not responsible for the accuracy of such information. We assume no duty in contract, tort, or otherwise in connection with this publication and expressly disclaim, to the fullest extent permitted by law, any liability in connection with this publication. Willis Towers Watson offers insurance-related services through its appropriately licensed entities in each jurisdiction in which it operates. COVID-19 is a rapidly evolving situation and changes are occurring frequently. Willis Towers Watson does not undertake to update the information included herein after the date of publication. Accordingly, readers should be aware that certain content may have changed since the date of this publication. Please reach out to the author or your Willis Towers Watson contact for more information.

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