What are the advantages of using a broker to arrange your construction bond?
As the construction industry continues to experience challenging economic conditions, the demand for construction bonds has never been greater.
Long-term issues such as cost inflation and delays to both housebuilding and infrastructure projects have led to more insolvencies and increased financial scrutiny across the construction sector in 2023. The cost of construction materials and energy has fallen from the initial spike after the Ukraine invasion, but they’re still 42.7 per cent higher than before January 2020, according to the Office for National Statistics.
Construction bonds and new construction contracts
Construction bonds are a contractual requirement in many government infrastructure projects to protect public funding, but demand has also soared across the private sector in the last year.
The increased use of construction bonds is (unsurprisingly) due to the rise in construction sector insolvencies, which have increased by 16.5% during 2023, according to the Government’s Insolvency Service statistics. They state that 4,280 operators became insolvent in the 12 months to June.
Navigating challenging conditions with a construction bond broking specialist
Companies requiring bonds are subject to increased financial scrutiny and in some circumstances higher levels of security, such as personal guarantees or cash collateral for smaller businesses. All bonds issued are subject to an Indemnity/ Company Guarantee, including all group and related companies. Kerry London’s bonds team can help navigate the process of obtaining a bond under the current economic conditions.
Hannah Sewell-Moore, Surety Manager, Surety and Bonds, Kerry London said, “We are increasingly seeing bonds being spread over two to three providers as the Surety companies seek to spread their risk. As a result, those requesting construction bonds are subject to a more thorough level of financial scrutiny than before.
“Using a specialist insurance broker is vital to securing the best terms for construction companies, particularly during challenging economic conditions. They ensure that the bond wording protects the contractor and the employer. The team can manage the complex administrative burden on the client’s behalf and the in-house surety bond underwriter expertise means we can advise the most suitable wordings with the most appropriate surety.”
Using a construction bond broker that has access to a wide range of sureties to cover all types of bonds is vital. They can review wordings prior to the tender process and ensure construction bonds are issued in the most timely and cost-effective way.
Contact Kerry London’s Bonds experts
With extensive experience in this complex field, our specialist Bonds team will help you find the best surety to guarantee your contractual obligations, leaving you to get on with the day job.
We have both broking and underwriting experience in our team, which enables us to negotiate suitable bond wordings that suit your needs. We are professionals who get to know your specific surety needs and we have excellent relationships with all the UK surety underwriters.
