India is launching a surety bond for infrastructure projects. The insurance regulatory and development authority of India (IRDAI) will offer the new product from Monday 19th December. A surety bond involves an agreement among three parties: government, contractor and insurer. Insurance company takes a bet on the contractor and tells the government, Hey, if the contractor messes up, I'll compensate you.
In today’s episode for 15th December 2022, we offer an oversimplified explanation of surety bonds and how they could act as possible shock absorbers for public infrastructure projects.