Liberty Mutual surety leader warns infrastructure growth could push overconfident contractors into costly, long-term failures without early underwriting discipline
Ottawa’s latest federal budget promises roughly $115 billion in infrastructure spending over five years – a pipeline of mega‑projects that will reshape roads, hospitals, ports and power systems across Canada. For contractors and their brokers, it looks like a once‑in‑a‑generation opportunity.
From a surety perspective, that’s exactly when things can go wrong.
Steve Hastings (pictured), SVP, head of surety for Liberty Mutual Canada, said the riskiest periods for contractors aren’t downturns – they’re booms.
“We see more contractors fail in times of plenty than in leaner times,” he said. “When there’s a lot of spending and a lot of work, contractors believe they have the ability to take it all on and complete it successfully. Contractors are very confident and very proud.”
Ottawa’s latest federal budget promises roughly $115 billion in infrastructure spending over five years – a pipeline of mega‑projects that will reshape roads, hospitals, ports and power systems across Canada. For contractors and their brokers, it looks like a once‑in‑a‑generation opportunity.
Surety underwriters, he stressed, are effectively standing beside those contractors on every job.
“As a surety, we guarantee the obligations of our contractors,” Hastings said. “We are their surety. If they fail, there is a call on the bond and we answer that call.”
That means the surge of large, long‑duration projects now coming to market poses a very specific set of challenges.
Surety underwriters, he stressed, are effectively standing beside those contractors on every job.
Ten‑year bets in a volatile world
The new wave of infrastructure work doesn’t look like a two‑year local road job. Many projects will be multi‑billion‑dollar undertakings that can run for a decade or more from concept to completion – and the surety is on the hook for the entire life of the obligation.
“By the time they’re initially discussed, designed, procured, started, and finished – you could be well north of 10 years,” Hastings said. “As a surety, we guarantee that obligation for as long as it’s out there. The longer tenure and greater complexity of infrastructure projects make constant communication between the GC or contractor and their surety so vitally important.”
Those timelines magnify every miscalculation: labour shortages, supply‑chain shocks, inflation, political shifts and climate resilience requirements can all derail a project that looked profitable on day one.
Hastings said the biggest danger isn’t one specific red flag – it’s a pattern of overreach.
“Here’s how contractors can run into problems in boom times: They procure the work, and then they can encounter significant cost escalation, run out of cash or they may not have the necessary amount of skilled labour available,” he said. “The risk simply hasn’t been evaluated and managed correctly. Good surety can and should be a partner in helping contractors analyze their ability to take on new work,” he added.
The problem is especially acute for mid‑sized contractors who see the federal spend as their chance to “level up”.
“You’ll see it with a contractor, maybe not in this space currently, but more on smaller or middle‑market projects, who, because of the opportunity, wants to jump into that next level,” he said. “They just really don’t know what they’re getting into, especially without our guidance and us being that trusted adviser for them.”
Why early engagement with surety matters
Because of the size and complexity of the upcoming projects, Hastings argued that brokers and contractors need to bring their surety partners in much earlier than they might have in the past.
“We bring a lot of value to the table, and for us to show up to the best of our ability, we need as much time as possible,” he said. “If a client is looking at one of these projects and engages us early, we can provide all that value, guide them through the process and help them maximize their ability to succeed.”
Unlike traditional insurance, surety is built on the assumption that no losses will occur.
Hastings said that a key tenet for surety is that it is a very heavy financial underwrite, because they are guaranteeing the obligations of these contractors.
“We underwrite to a zero loss ratio. In the insurance side of the business, you model for claim activity and price the risk accordingly. Surety agrees to take on a client, anticipating no loss activity.”
With $5 billion‑plus projects stretching over a decade, that pure balance‑sheet focus has to be combined with a detailed view of execution risk.
It turns into much more of a project underwrite as well, he said.
“Is this contractor qualified to take on something of that size and complexity – from a financial perspective, a capacity perspective? Do they have the necessary labour, the knowledge to actually do this thing and see it through?”
Hastings said Liberty Mutual sets up surety programs based on a contractor’s existing profile, but the scale of the new infrastructure work will often blow past those limits.
“If they’re looking at any of these projects, all of a sudden their surety program has to be renegotiated because none of them will take into account projects of this size,” he said.
It points to the fact that communication is so vitally important for a surety provider. “If we are given the time to build a bigger program and let them know what’s required to do so, then we’re both set up for success,” he noted.