2020 Surety Market Predictions

The Construction Employers Association (CEA) in a recent report has both good and cautionary news about construction and surety bonding. Employment is high, work is plentiful, and bonding is easy. There are more credit-based programs and credit- based limits continue to rise. Competition remains ferocious amongst sureties for the vast majority of bonding.


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What our underwriters believe the CEA is missing is that the surety industry may be contributing to its own claims. Contractors admittedly struggle to fill key roles with competent help as some sureties approve more capacity without question or proper vetting. However, Allstar Surety remains focused on superior service and building a long-term relationship with the agent and contractor. This will be very beneficial when the surety market hardens.

Data analytics suggest that although the construction industry will see slower growth, it will not be a repeat of what the industry saw during the Great Recession of 2008.

According to Dodge Data & Analytics, economic growth is slowing but is not anticipated to contract next year. Construction starts will decline, but the level of activity will remain close to recent highs.

From a surety perspective, experts see steady, if not phenomenal growth. According to the CEA report, there are instances of some large contractor failures accruing that may affect the broader market once they become fully realized, but not so much that it would change surety underwriting behavior in the short term.

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