Companies that offer services to public administrations face unique challenges, especially when it comes to fulfilling complex and large-scale contractual obligations. Surety insurance can be an essential tool to ensure compliance and enhance the contractual relationship.
Advantages of surety insurance
- Contract Compliance: Surety insurance guarantees the public administration that the contractual obligations will be fulfilled. In the event of non-compliance, the insurance can cover losses or finance the completion of the project, protecting both the service provider and the public entity.
- Enhanced Credibility: Taking out surety insurance improves the image of reliability with the public administration. This is vital for companies that want to establish and maintain a long-term relationship with the public sector.
- Access to Greater Projects: Some public tenders require guarantees such as surety insurance as part of their requirements. Companies that have these policies are more likely to be considered for large projects.
- Alternative to Bank Guarantees: Surety insurance is an efficient alternative to bank guarantees, which can deplete lines of credit that could be put to different use. This helps companies to improve their liquidity and general financial capacity.
- Flexibility and Customisation: Surety insurance makes it possible to adapt to the specific needs of each contract and project. This allows companies to work more in keeping with the requirements of the public administration.
Use Case A company dedicated to the development and maintenance of public infrastructure needs to secure a contract to upgrade municipal facilities. By opting for surety insurance, it:
- Complies with the bidding requirements by providing a reliable guarantee.
- Shows its seriousness and financial solvency, improving its position over the competition.
- Protects its lines of credit, keeping them available for other uses and operational needs.
- Offers additional security to the public entity regarding its ability and commitment to complete the project as agreed.
Surety insurance is a key component for companies seeking to work with the public administration, facilitating access to significant contracts and improving contractual risk management. This tool not only strengthens the competitive position of companies, but also ensures stability and trust in contractual relationships with the public sector.
