The "North America Surety Market Forecast to 2027 - COVID-19 Impact and Regional Analysis By Bond Type (Contract Surety Bond, Commercial Surety Bond, Court Surety Bond, and Fidelity Surety Bond); and Country" report has been added to ResearchAndMarkets.com's offering.
The North America surety market was valued at US$ 8,573.43 million in 2019 and is expected to grow at a CAGR of 6.4% during the forecast period from 2020-2027 to reach US$ 13,498.40 million by 2027.
The surety market is traditionally a local business based on know-how of the local market. However, with increasing globalization, large surety market players are setting up operations in developing markets such as Canada and Mexico. One of the major challenge faced by surety companies is to acquire the knowledge on local political and regulatory landscape. Global companies, however, have the capacity to hire professional local underwriters to compete in the market.
Many of the mature economies across the globe are facing major challenges owing to their ageing infrastructure. For instance, as per the American Society of Civil Engineers', the US would need around US$ 4.5 Tn by 2025 to upgrade the state of its roads, bridges, airports, dams, schools, and more. Moreover, ageing power generation and distribution infrastructure are becoming a key biggest challenges for utilities in developed countries.
For instance, in the US, the power grid is believed to be valued an estimated US$ 876 Bn, renovating infrastructure would cost hundreds of US$ Bn, as per the US Department of Energy. Upgrading generation, as well as transmission facilities in these countries, would draw significant investments hence, the surety market is expected to bolster.
Since, the US has a higher concentration of manufacturing and construction industry players, and the country is experiencing unparalleled growth in COVID-19 infected patients, the government has enacted strict lockdown measures, thereby terminating several construction activities. This has been reflecting delay in project completion, which is a key concern for the construction companies.
As of December 31, 2019, there were 323 insurers in the country that reported direct premium written for the surety market. The insurers that wrote performance bonds are expected to observe a rise in claim frequency and severity as a result of unemployment, constrained cash flows, and other phenomena impacting businesses.
Canada and Mexico have numerous smaller enterprises operating in the construction industry. The COVID-19 pandemic has raised significant concerns over their businesses as respective governments have enacted strict lockdown and social distancing measures.
Attributing to the lockdown measures, several construction players in Canada and Mexico experienced tremors in respective business. This situation is foreseen to continue till 2021, which is further expected to stall the year-on-year growth of surety market in the two countries.