In many areas of the economy, especially in construction – in the widest sense of the word, system manufacturing, machinery, etc, it is common practice for clients to demand security or deposits from their business partners in return for the awarding of a contract. This can be in the form of bonds or guarantees which are usually issued by the principal bank.
Specialized insurances companies can be seen as an alternative solutions provider for many companies as bonds/guarantees can be a very helpful supplement to the liquidity of a company.
Understanding Your Risks
A common and increasingly widespread alternative is to outsource the need for bonds to special insurers who – like banks – provide guarantees or bonds to contractors.
Under a bond / guarantee insurance, the insurer assumes liability for the policyholder (= client = contractor) towards third parties for a wide variety of security purposes: for example, for the contractor`s obligations under construction and supply contracts.
This offers couple of advantages:
The guarantees issued within the framework of the facility agreement imply, like bank guarantees, an abstract payment obligation on the part of the insurer. Before issuing a guarantee insurance policy, the insurer carries out a comprehensive credit assessment of the contractor, based on financial statements (balance sheets, profit & loss statements, etc.). Essential criteria for the premium calculation are the creditworthiness of the contractor, the bond credit facility and the types of the chosen bonds / guarantees.
Providing Tailored Solutions
Creating Added Value
We will be happy to advise you – personally and individually.
Our team of experts has many years of experience and offers customised solutions.
Transportation & Logistics
Pillar of Our Strategy Is Specialisation – Interview With Georg Winter
Georg Winter offers some insights into his vision for GrECo. Interview was originally published in Lockton Global Partners Magazine.
Building the GrECo Health & Benefits Business: A Catch-up With Adam Riley
In July, Adam was recruited in a newly created executive leadership role, to run, build and develop GrECo’s specialist Health & Benefits business across its 17 countries.
‘Our only focus is on our client’s and people’s needs’
Ante Banovac shares his thoughts about future risks facing the insurance industry and the state of the insurance market in Serbia, Slovenia and Croatia
Group Practice Leader Credit & Political Risk
T +43 664 883 805 12