{"id":16927,"date":"2023-11-11T01:54:01","date_gmt":"2023-11-10T20:24:01","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=16927"},"modified":"2025-04-05T00:59:20","modified_gmt":"2025-04-04T19:29:20","slug":"insurance-surety-bond","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/insurance-surety-bond\/","title":{"rendered":"Insurance Surety Bond"},"content":{"rendered":"<h2>Why in the news?\u00a0<\/h2>\n<ul>\n<li>It is\u00a0the first time this innovative instrument (Insurance Surety Bond)\u00a0is being utilized as a Bank Guarantee (BG) in the road infrastructure sector for monetization of bids.<\/li>\n<li>NHAI has been working closely with Highway Operators Association of India (HOAI), SBI General Insurance and AON India Insurance to implement this initiative.<\/li>\n<\/ul>\n<h2>About Insurance Surety Bond<\/h2>\n<ul>\n<li>These bonds can be defined in their simplest form as\u00a0a written agreement to guarantee compliance, payment, or performance of an act.<\/li>\n<li>These are instruments where\u00a0insurance companies act as \u2018Surety\u2019 and provide the financial guarantee that the contractor will fulfil its obligation as per the agreed terms.<\/li>\n<li>Surety is a unique type of insurance because it\u00a0involves a three-party agreement.<\/li>\n<li>The three parties in a surety agreement are:\n<ul>\n<li>Principal: The party that\u00a0purchases the bond and undertakes an obligation to perform an act as promised.<\/li>\n<li>Surety: The\u00a0insurance company or surety company that guarantees the obligation will be performed. If the principal fails to perform the act as promised, the surety is contractually liable for losses sustained.<\/li>\n<li>Obligee: The party\u00a0who requires and often receives the benefit of the surety bond. For most surety bonds, the obligee is a local, state or federal government organisation.<\/li>\n<\/ul>\n<\/li>\n<li>Significance\n<ul>\n<li>It will act as a security arrangement for infrastructure projects and will insulate the contractor as well as the principal.<\/li>\n<li>The product gives the principal a contract of guarantee that contractual terms and other business deals will be concluded in accordance with the mutually agreed terms.<\/li>\n<li>In case the\u00a0contractor doesn\u2019t fulfil the contractual terms, the Principal can raise a claim on the surety bond and recover the losses they have incurred.<\/li>\n<li>Unlike a bank guarantee, the Surety Bond\u00a0Insurance does not require large collateral from the contractor, thus freeing up significant funds for the contractor, which they can utilise for the growth of the business.<\/li>\n<li>The product will also help in reducing the contractors\u2019 debts to a large extent, thus addressing their financial worries.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<hr \/>\n<h3>Q1) What are Green bonds?<\/h3>\n<p>These are a specific type of bond that is issued to raise capital for projects with environmental benefits. The proceeds from green bonds are earmarked for projects and activities that promote environmental sustainability and climate change mitigation. These projects can include renewable energy initiatives, energy efficiency projects, clean transportation, sustainable water management, and other environmentally friendly activities.<\/p>\n<p><strong>Source:<\/strong> <a href=\"https:\/\/www.wionews.com\/world\/1-in-every-3-deaths-from-nonmelanoma-skin-cancer-linked-to-working-outdoors-under-sun-who-calls-for-action-657327\" target=\"_blank\" rel=\"nofollow noopener\">1 in every 3 deaths from nonmelanoma skin cancer linked to working outdoors under sun, WHO calls for action<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Insurance Surety Bonds can be defined in their simplest form as a written agreement to guarantee compliance, payment, or performance of an act.<\/p>\n","protected":false},"author":5,"featured_media":16928,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"class_list":{"0":"post-16927","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-prelims-current-affairs","8":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/16927","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=16927"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/16927\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/16928"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=16927"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=16927"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=16927"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}