Globally, surety bonds are an essential tool for managing risk in various industries, including construction, import/export, manufacturing, etc. but traditionally, the global surety bond market has been dominated by a few large players and has faced challenges such as lack of standardization and transparency. However, the surety bond industry in India would transform the global surety market with its digital-first strategy, given the recent use of technology in surety bonds and technological breakthroughs. Surety Seven is leading the way with its technology supporting Surety Bond Insurance in India.
Digital platform : Increased transparency and standardization
Surety Seven’s proposed digital platform for surety bonds in India will increase transparency and standardization in the market. The platform provides a centralized database of surety bond insurance companies. This makes it easier for clients to find and compare Surety Bond providers. Additionally, it facilitates the standardization of surety bond forms and documents. This makes the surety bond application process more efficient and less prone to errors. This benefits not only the Indian market but also has a positive impact on global surety bond market. This is an important development as recently surety bonds have been introduced in India and are now being accepted by PSUs to replace bank guarantees and are issued by insurance companies under the regulation of IRDAI.
Use of technology in surety bonds benefits SMEs
Small and medium-sized enterprises (SMEs) often face challenges in applying for contracts, due to lack of capital to be blocked as collateral to obtain bank guarantees. This is where bank guarantees have been a hindrance for SMEs. The introduction of surety bonds in India solves this as it does not require collateral. The use of technology in surety bonds can further help by reducing the barriers to entry for smaller companies. Surety Seven’s Digital platform can allow SMEs to apply for and obtain surety bonds easily and at a lower cost, improving access, cost efficiency and ease of process. This will benefit SMEs as they will have better access to credit and capital while reducing their risk.
Technology aids Indian PSU in USE of surety bonds for contracting
The aim of Public Sector Undertakings (PSUs) in floating tenders is to get service or supply as per their terms & conditions at lowest rate. However, requirement of bank guarantees as performance guarantees that blocks hefty capital, hinders potential tenderers from applying. This fails the basic reason for which tender was floated. Surety bonds require NO COLLATERAL and, thus, solves this problem. Surety Seven strives to help PSUs access bond services more efficiently and at a lower cost. Use of new age tools can allow PSUs to apply for and obtain surety bonds easily by streamlining the process and enabling real-time tracking of the bond status. Additionally, automation of the underwriting process and the use of analytics can help to reduce the risk of fraud, errors and increase transparency. This will benefit PSUs in getting best rate service or supply from serious companies who are financially & technically on strong footing.
Technology streamlines the underwriting and claims process
Technology would streamline the underwriting and claims process for surety bonds. Surety Seven platform automates the underwriting process and provides real-time data and analytics to underwriters. This makes the issuance process more efficient and less prone to errors, improving the speed and accuracy of the underwriting process. Further, it reduces the risk of fraud.
A digital claims process is more efficient and accurate than traditional claims process. Surety Seven portal allows for easy submission and tracking of claims, automated decision-making, and real-time communication with customers. Additionally, a digital process can reduce the potential for errors and increase transparency, providing a better overall experience for customers. Such technology will push the level of trust that the Principal and the Contractor have in the Surety Bond Insurance product.
India’s use of technology in surety bonds has the potential to impact the global surety market. India can set an example for other countries to follow by leading the way in the use of technology in Surety Bonds. This would result in increased adoption of technology in the surety market in other countries. Eventually leading to improved efficiency and cost-effectiveness in the global surety market. Additionally, India’s use of technology in surety bonds can facilitate increased international collaboration and cooperation in the surety market. This is further facilitated by G20 meet, where India is the host.