The surety bonding market is experiencing significant changes, driven by various economic and legislative factors.
By Ron Metcho
As we move through 2025, several key trends and developments are shaping the future of this essential industry.
Federal Initiatives Boost Demand
One of the most notable drivers of growth in the surety bonding market is the influx of federally funded projects. The Infrastructure Investment and Jobs Act (IIJA) and the Broadband Equity, Access, and Deployment Program are injecting substantial funds into infrastructure projects across the United States.
These initiatives are creating a robust demand for surety bonds, as contractors and developers seek to meet the bonding requirements for these large-scale projects.
Market Trends and Challenges
The global surety market, valued at $18.19 billion in 2023, is projected to grow to $27 billion by 2030.
The growth is fueled by increased construction activities, resulting in a corresponding increase in the need for surety bonds. However, the surety industry is also facing challenges. Rising construction costs, a limited skilled labor pool, and supply disruptions have negatively affected the construction industry and its profitability. The surety industry loss ratios may be impacted by these factors as well. Additionally, there is a noticeable increase in fraud, which also negatively affects surety loss ratios and prompts stricter underwriting requirements.
Legislative Impacts
Recent legislation, such as the Inflation Reduction Act (IRA) and the CHIPS Act, are also influencing the surety market. These laws are driving demand for surety bonds through increased infrastructure and technology projects.
The Surety & Fidelity Association of America (SFAA) has been actively educating lawmakers about the importance of surety bonds, ensuring that these requirements remain a critical component of federal projects.
Future Outlook
Looking ahead, the surety bonding market is expected to continue its growth trajectory. The combination of federal funding, legislative support, and the ongoing need for infrastructure development will sustain the demand for surety bonds. However, market participants must navigate the challenges posed by inflation and fraud to maintain profitability and stability.
The surety bonding market is at a pivotal point, with significant opportunities and challenges on the horizon. By staying informed about current trends and adapting to the evolving landscape, industry stakeholders can ensure they are well-positioned to meet the demands of the future.
Connect With the Team
We understand that these challenges can significantly impact your business operations and profitability. At OneGroup, we are committed to providing the support and expertise you need to navigate these changes. Our team is here to help you secure the bonds you need and offer guidance on best practices to mitigate risks. Contact our Surety Team to discover tailored solutions for your surety needs.
This content is for informational purposes only and not for the purpose of providing professional, financial, medical or legal advice. You should contact your licensed professional to obtain advice with respect to any particular issue or problem. Please refer to your policy contract for any specific information or questions on applicability of coverage.
Please note coverage can not be bound or a claim reported without written acknowledgment from a OneGroup Representative.