| Trend | Range | |
|---|---|---|
| Surety |  |
Flat to +5% |
The economy remains stable and credit continues to perform at acceptable levels. High yield programs have more attention on terms. Underwriters have become less flexible as they monitor challenging programs.
Surety capacity remains stable.
High yield programs have the most focus.
Contractor backlog is not growing as fast as in the past 12 to 24 months.
The first half of 2024 has remained steady for the commercial surety segment of the industry. Rates remain stable, appetites unexciting, underwriting consistent with prior quarters and new loss activity is quieting down. Capacity remains strong for most credit qualities.
Commercial bonding demand will increase due to activity under the Broadband Equity, Access, and Deployment (BEAD) Program, which will secure the performance of the buildout of high-speed internet infrastructure to 56 U.S. states and territories.
AI is a strong motivator in the economy, driving significant investment in all sectors. The demand for capacity in data centers, chip availability and equipment manufacturing will be a focus of the technology industry for the balance of 2024 and well into next year. The use of AI in various industries should be a major disrupter this year.
Global cooling of traditional energy demand could slow the development of domestic sources. The approaching U.S. election will impact this industry immensely, setting a course in the surety industry for the coming years.
Continued expansion in surety keeps demand for talent strong. Entry level hiring in the last few years is paying off as the industry fights to fill upper-level positions as long-tenured leadership retires.
International surety market growth will be fueled by increased infrastructure spend as countries around the world attempt to uphold a net-zero commitment to drop global greenhouse gas (GHG) emissions by nearly half by 2030.[1] The United Nations estimates that 75% of the infrastructure build needed by 2050 to close the net-zero gap has not even started, and most of this infrastructure spend is in emerging markets.[2] The commitment to global infrastructure spend is also evident in the G7’s commitment to invest $600 billion by 2027 (of which the U.S. has committed $200 billion).[3]
From a regulatory standpoint, Basel III’s increased reserve requirements continue to dampen the banking industry’s appetite to provide LOCs to support projects and is opening the door for surety in traditionally LOC markets. Basel III’s positive impact regarding surety demand is evident in new legislation in emerging countries introducing the use of surety bonds for large infrastructure projects. Countries which have begun exploring the surety solution since 2022 include Mongolia and India.
From an economic standpoint, surety will also be bolstered by continued high interest rates. According to the World Bank, global interest rates are expected to average about 4% over 2025 to 2026, which is roughly double pre-COVID.[4] Continued high interest rates will make the surety product more economically attractive, especially in Asia, the Middle East and Africa.
Finally, from a geo-political standpoint, 2024 marks a year of political change as more than 70 nations (comprising 44% of the global population) will be selecting its leaders.[5] Continued partnership and collaboration among the world’s nations will be important for the commitment to global infrastructure spend.
Willis Towers Watson hopes you found the general information provided in this publication informative and helpful. 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 advisors. In the event you would like more information regarding your insurance coverage, please do not hesitate to reach out to us. In North America, Willis Towers Watson offers insurance products through licensed entities, including Willis Towers Watson Northeast, Inc. (in the United States) and Willis Canada Inc. (in Canada).
