OLDWICK, N.J.--(BUSINESS WIRE)--The February issue of Best’s Review includes the following exclusive rankings:

Largest Surety Insurers

Largest MENA Insurers

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These stellar results reflect more than simple scaling. The industry’s direct incurred loss ratio improved dramatically, falling to 20.5% through the third quarter of 2025 compared to 24.9% a year earlier. Despite maintaining relatively stable pricing, with increases of less than 1% for 13 of the past 14 quarters, the surety line generated nearly double-digit premium growth through the first nine months of 2025, the report said.

This organic growth—driven by macroeconomic factors rather than rate increases—demonstrates the robust underlying demand for surety bonds as contractors undertake more projects.

The Infrastructure Investment and Jobs Act of 2021, along with the Inflation Reduction Act of 2022 and the CHIPS and Science Act of 2022, have been instrumental in propelling this expansion, AM Best said. These legislative initiatives have directed substantial funding toward clean energy and semiconductor manufacturing projects, many of which require surety bonds for contractors.

While infrastructure investment has created a favorable environment, surety underwriters face mounting pressures that could erode gains achieved in recent years, AM Best said.

These stellar results reflect more than simple scaling. The industry’s direct incurred loss ratio improved dramatically, falling to 20.5% through the third quarter of 2025 compared to 24.9% a year earlier. Despite maintaining relatively stable pricing, with increases of less than 1% for 13 of the past 14 quarters, the surety line generated nearly double-digit premium growth through the first nine months of 2025, the report said.

This organic growth—driven by macroeconomic factors rather than rate increases—demonstrates the robust underlying demand for surety bonds as contractors undertake more projects.

The Infrastructure Investment and Jobs Act of 2021, along with the Inflation Reduction Act of 2022 and the CHIPS and Science Act of 2022, have been instrumental in propelling this expansion, AM Best said. These legislative initiatives have directed substantial funding toward clean energy and semiconductor manufacturing projects, many of which require surety bonds for contractors.

Rising Costs and Labor Challenges Threaten Future Growth

While infrastructure investment has created a favorable environment, surety underwriters face mounting pressures that could erode gains achieved in recent years, AM Best said.

Rising construction costs, skilled labor shortages, and supply chain disruptions are combining to increase claim incidences and elevate losses for insurers. Additionally, the tight labor market has forced sureties to adopt firmer underwriting standards, disciplined pricing strategies, and stricter risk selection practices to maintain profitability.

The high underwriting expense ratios typical of surety underwriters—exceeding 49.7% historically—have created a formidable barrier to entry for insurers lacking specialized systems and operational efficiencies, according to the report.

This expertise-intensive barrier has kept the market relatively consolidated, with most surety specialists dedicating over 90% of their net premium written to the surety line. However, this structure also demonstrates the technical competence required to navigate the complexities of surety underwriting successfully, AM Best noted.

Private construction spending has declined moderately through the first half of 2025, a shift that could signal challenges ahead for premium growth.

The decline in private sector construction has been partially offset by increased public construction spending tied to ongoing infrastructure projects, but this advantage carries an expiration date: IIJA funding is set to expire in September 2026, potentially leading to a decline in public construction spending once the law’s provisions wind down.

However, hi-tech manufacturing projects, the creation of data centers, and other capital expenditure projects are also creating opportunities where there is a need for surety bonds.

“As technologies become more advanced and insurers consider expansion opportunities in emerging risk areas, the build-out through additional projects may spur future premium growth attributable to public and private infrastructure initiatives over the near term,” said David Blades, associate director of AM Best.

Insurance and surety bonds are playing an increasingly essential role in the sustainable development of the construction market, according to Aon’s 2025 Construction Insurance and Surety Market report. The study comes against the backdrop of inflationary pressures, economic volatility, and large-scale projects involving both public and private funding.

In Romania, construction remains one of the most dynamic sectors, but risks are intensifying year after year. Companies face a shortage of skilled labour, rising material prices, political and economic instability, and delays in accessing European funds, particularly from the PNRR programme.

The adoption of green technologies and digitalisation, necessary for competitiveness, adds further costs. Compared with mature markets such as Germany or France, where sustainability and digitalisation are already standard, Romania is still consolidating.

“The construction sector is an important driver of Romania’s economy, but also one of the most vulnerable to risks: from rising costs and labour shortages to delays in execution and financing issues. In an environment where the sustainability of projects is being tested, surety bonds and insurance can no longer be treated as mere contractual obligations. They become strategic tools for protecting capital and ensuring project completion,” said Eugen Anicescu, CEO of Aon Romania.

Globally, the report points to a sharp increase in demand for insurance and surety products, especially in public infrastructure projects financed through European and national funds. The surety market is expected to grow by around 5 percent annually, reaching USD 30 billion by 2030.

In Romania, demand for surety bonds has already increased significantly over the past 12 months, following the insolvency of several major players. Road and rail infrastructure are the most active segments, with PNRR-financed projects requiring strong guarantees. The most requested products include bid bonds, performance bonds, advance payment bonds, and maintenance bonds. Surety insurance is also gaining traction among SMEs due to its flexibility compared with bank guarantees.

“In Romania, we are seeing growing demand for surety bonds, particularly in large infrastructure projects, where eligibility requirements are becoming stricter. Bid bonds, performance bonds, and advance payment bonds are mechanisms that enable companies to access major contracts and provide trust to their partners. Our role is to deliver tailored solutions that help them complete projects on time, avoid blockages, and protect their capital,” said Silvia Serrano Cabrera, Executive Director & Head of Construction and Surety Bonds Practice, Commercial Risk Solutions.

The report also notes a clear shift in mindset: companies are moving from reaction to prevention, integrating risk management from the design phase, collaborating more closely with brokers, and using digital tools for monitoring and reporting.

“The local market has huge potential, but to unlock it, companies must adopt an integrated vision of risk. Surety bonds and insurance are no longer just a checkbox in project documentation, but a real resource that allows them to attract financing, win tenders, and remain competitive in an increasingly demanding environment,” added Serrano Cabrera.

Aon’s findings also address common myths, such as the perception that insurance is merely a formality for tenders or that surety policies are difficult and costly. In reality, they are becoming more accessible, especially for small and medium-sized projects, and play a growing role in providing financial protection.