Why Surety Bonds Matter More Than Ever in Construction

Posted by Maia Busby-Dawson, Surety Broker, Kerry London Ltd

Construction has always carried risk, but as we move further into 2026, that risk is more visible and complex than ever.

Rising project values, finer margins, supply chain pressure and increased scrutiny from project owners are changing how work is awarded and delivered. In this environment, surety bonds are often no longer optional; they are a core part of construction risk management.

At Kerry London, we work closely with contractors, developers and investors to secure surety solutions that support growth while protecting against uncertainty.

What is a surety bond?  

A surety bond serves as a financial assurance that a contractor will fulfil their contractual commitments. If issues arise, the surety steps in to safeguard the project owner.

In practice, surety bonds do more than provide protection. They build trust, strengthen credibility and help contractors access larger, more complex projects.

Why surety bonds are essential

Building trust in a more demanding market

Project owners are under pressure to deliver on time and within budget.

A surety bond provides reassurance that a contractor has the financial strength, experience and operational capability to deliver. It also acts as independent validation, which can make a real difference in competitive tenders.

For many employers, working with bonded contractors is now a requirement rather than a preference.

Protection against contractor insolvency and default – how bonds can help

Financial pressure across the construction sector remains a key concern. Insolvency, delays and performance issues can have serious consequences across the entire supply chain.

Performance bonds help to ensure projects are completed as agreed in the contract.

Encouraging stronger risk management

Surety providers carry out detailed financial and operational assessments before issuing bonds. While this can feel rigorous, it allows the surety to review the risk as a whole. In a market where delays and disputes have continued to increase, this level of discipline is useful tool for business resilience.

The surety bond market in 2026

The UK construction and surety market remains active, but more selective. Following recent years of volatility, sureties are applying greater scrutiny to the contractors and projects they decide to support. Strong financials, a positive track record and in-house risk management are all under closer review.

Key trends include:

• Tighter underwriting standards for contractors
• Greater focus on complex and high-value projects
• Ongoing impact of material and labour cost pressures
• Increased due diligence from project owners
• More selective use of surety capacity

For contractors, these trends mean that preparation matters more than before. Strong financials, clear visibility of upcoming projects and a well-structured approach to risk will improve access to bonding capacity.

Why work with Kerry London for surety bonds?

We understand the pressures facing construction businesses. Our role is to make sure your surety programme supports your growth, not limits it. We take the time to understand your business, projects and ambitions – so we can secure the right level of support when you need it. Speak to a specialist if you are reviewing your surety arrangements or planning for future projects, we can help you put the right structure in place.

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Kerry London is authorised and regulated by the Financial Conduct Authority. The company is a leading UK independent and Lloyd’s registered broker, which means that we work with a wide range of niche and major insurers.

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