Surety follows contracts, and a great many of the contracts that need a bond are outside the two or three postcodes that dominate coverage of the Irish economy. Water and wastewater schemes, regional road works, port and quay works, grain and feed handling, food processing plant upgrades: all of them come with performance bonds, retention, and often an advance payment guarantee as well.
The counterparties are different too. A regional contractor bidding for local authority work is dealing with an employer that uses a standard form and rarely varies it, which makes the wording conversation short and the aggregate conversation long — the same contractor may hold six live bonds across four employers at once.
Two features of that work shape how we underwrite it. Advance payment guarantees are more common where plant and materials are ordered long before they are installed, and they need an expiry tied to delivery rather than to the contract as a whole. And retention on a series of small contracts adds up to a material amount of a smaller contractor’s working capital, which is where a retention bond does the most good per euro of premium.
The practical consequence for a broker outside Dublin is that a facility beats a bond. Sized for the year, against one set of accounts and one counter-indemnity, it turns each subsequent bond into a phone call rather than a submission.
Written by the underwriting team at FDI Insurance d.a.c., Dublin. This piece is general information, not advice on any particular transaction — and it is not an offer of insurance.
