IRDAI EXAMINING SURETY BONDS FOR ROAD CONTRACTS

The insurance regulator Insurance Regulatory and Development Authority (Irdai) has decided to examine the feasibility of introducing surety bonds by insurance companies for road contracts in the country. In the wake of the Covid-19 pandemic and its subsequent economic impact on liquidity and cash flow in the Indian banking sector, the Ministry of Road Transport and Highways (MORTH) had requested the regulator to examine possible offering of surety bonds by the general insurance companies. Now, the regulator has set up a nine-member working group to study the legal framework and suitability of the Indian insurance industry or any other sector to offer such bonds.