2026 MARKET TRENDS

Surety

Key Takeaways

The surety market is experiencing reduced competition and upward pricing pressure due to disciplined capacity allocation by carriers
There is notable growth in specialized lines like fidelity bonds and trust account insurance, driven by emerging fiduciary risks and stricter regulatory requirements
These conditions, marked by lower-than-expected renewal rates and industry consolidation, are expected to persist for 6-12 months, with rate increases likely starting in 2026
Increasing frequency and severity of claims, especially in construction and professional liability sectors, are driving demand for specialized coverage and influencing future rate adjustments
Businesses can help improve renewal outcomes by engaging closely with brokers, developing comprehensive risk management strategies and regularly reviewing their surety programs to adapt to evolving market conditions

The current surety market presents distinct impacts for buyers, primarily concerning the availability and scope of coverage.

Overview

The surety market is navigating a period of shifting dynamics marked by tightening capacity and evolving risk landscapes. Carriers are exercising discipline in their capacity allocation, which contributes to reduced competition and upward pressure on pricing for middle market buyers. Amid these constraints, there is notable growth in specialized lines, particularly fidelity bonds and trust account insurance, as businesses seek targeted coverage for emerging fiduciary risks. Additionally, stricter regulatory requirements are creating new compliance challenges and increasing the need for specialized surety solutions to help protect businesses. Carriers are also shifting their focus toward more efficient capacity allocation strategies, a move that may influence both coverage availability and cost.

Market Conditions

The surety industry is currently facing a challenging and evolving landscape influenced by multiple factors. A November 2025 report from the National Association of Surety Bond Producers (NASBP) highlights a slight year-to-date decline in new business volumes within the middle market. While renewal rates remain steady, they are underperforming expectations, signaling potential price increases in the near future. These trends, coupled with rising claims in construction and professional liability sectors, are driving rate increases across most insurance lines.

As the market adapts to these pressures, several key drivers are shaping the environment for insurance buyers. From the growing impact of catastrophic events to stricter regulatory frameworks, businesses are navigating a complex mix of challenges and opportunities.

Catastrophic events:

The increasing frequency and severity of catastrophic (CAT) events are driving demand for specialized surety insurance coverage tailored to these risks

Industry consolidation:

Ongoing consolidation within the industry is reducing competition, which can lead to higher pricing for buyers

Regulatory challenges:

Stricter regulatory frameworks, particularly around fiduciary responsibilities, are introducing new risks and raising compliance costs for businesses

Tightening credit standards:

More rigorous underwriting requirements and stricter credit standards are making it harder for some middle market buyers to secure necessary insurance coverage

Upcoming market shift:

While the surety market is currently experiencing soft conditions due to reduced competition and lower-than-expected renewal rates, a shift is anticipated in 2026 driven by rising claim frequency and severity in construction and professional liability sectors

Rate Outlook

Impacts & Considerations

The current surety market presents distinct impacts for buyers, primarily concerning the availability and scope of coverage. Industry consolidation and revised capacity allocation strategies may limit access to insurance for certain types of businesses or projects. As carriers pivot toward more specialized lines of business, such as fidelity bonds and trust account insurance, buyers may find more targeted coverage options available. This shift underscores the growing importance of specialized coverage, especially as evolving regulatory requirements demand greater compliance and adaptation in business insurance strategies.

Consider creating a detailed strategy for your surety program, addressing specific risks and outlining clear objectives.

A consistent review process helps ensure coverage remains aligned with business needs and adapts to changing market conditions and regulatory landscapes.

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