Europe Surety Market is expected to reach US$ 6.53 Billion by 2031

According to our latest study on “Europe Surety Market Size and Forecast (2021–2031), Regional and Country Share, Trends, and Growth Opportunity Analysis - by Bond Type and End Users,” the Europe surety market was valued at US$ 4.13 billion in 2023 and is expected to reach US$ 6.53 billion by 2031; it is estimated to record a CAGR of 5.9% from 2023 to 2031. The report includes growth prospects in light of current Europe surety market trends and driving factors influencing the market growth.

In Europe, the aging power generation and distribution infrastructure are becoming key challenges for the utility sectors in developed countries. Hence, European countries are focused on establishing proper power generation and distribution infrastructure. For instance, according to the Power Barometer 2023 report, the power industry in Europe is expected to increase investments in aging grid infrastructure by 84% every year until 2050. The aging grid infrastructure is not suitable for accommodating decentralized renewables, electric vehicles and smart grids, and Eurelectric, which are major parts of the electricity industry. Although there was an increase of 8% in grid investments from 2021 to 2022, the report highlights the need for a boost of 84% in annual investment until 2050, indicating a rise in grid investments across Europe. However, over the past few years, several such infrastructures have been aging and require restoration. The restoration of power distribution and generation infrastructure incurs significantly massive overall costs; pertaining to this, the demand for surety bonds among the parties involved in restoration activity is growing across the region.

Europe Surety Market – by Region, 2023 and 2031

Source: The Insight Partners Analysis

Moreover, as the number of vehicles on the road is constantly increasing in European countries, governments of several developed and developing countries are investing in the development of roads. For instance, in June 2023, the European Commission selected 107 transport infrastructure projects to receive over US$ 6.3 billion in EU grants from the Connecting Europe Facility (CEF), the EU's instrument for strategic investment in transport infrastructure. The number of road construction projects is increasing across Europe, which is generating substantial demand for surety bonds between the respective government or awarding authority and contractors owing to the benefits offered by such bonds. Thus, the growing need for the restoration of aging infrastructure in European economies fuels the Europe surety market growth.

The Europe surety market is segmented into the UK, Germany, France, Spain, Italy, and the Rest of Europe. France held the largest Europe surety market share in 2023. In Europe, government bodies are making significant investments in infrastructure projects, including transportation, energy, and construction. In June 2023, the European Commission selected 107 transport infrastructure projects to receive over US$ 6,309.3 million in EU grants from the Connecting Europe Facility (CEF), thereby promoting investment in transport infrastructure. More than 80% of the funding is dedicated to support projects that deliver a highly efficient, greener, and smarter network of railways, inland waterways, and maritime routes along the trans-European transport (TEN-T) network. These projects will bolster the EU-Ukraine Solidarity Lanes that are set up to facilitate Ukraine's exports and imports. Surety bonds are mostly required for these projects to ensure completion according to contract terms. With the European Union's focus on infrastructure development, the demand for surety bonds is likely to increase in the coming years. Also, a rise in regulatory changes and initiatives, such as updates in construction regulations or requirements for public-private partnerships (PPPs) and regulatory frameworks that promote transparency and risk mitigation, are boosting the demand for surety bonds across Europe.

Housing construction in the UK is growing rapidly, giving a boost to the country's construction sector. Also, the National Infrastructure Pipeline 2024 of the UK government comprises more than 600 projects and programs valued at ~US$ 460.49 billion. The growing construction activities will further drive the Europe surety market during the forecast period. Moreover, there has been a record-breaking number of construction insolvencies in the UK in 2023. For instance, in March 2023, 38 construction companies entered administration. Furthermore, two high-profile insolvencies, Henry Construction and Buckingham Group (two large contractors turning over US$ 502 million and US$ 840.4 million, respectively), entered into administration in 2023. Thus, the increasing number of construction projects is boosting the demand for surety bonds.

Based on bond type, the market is bifurcated into contract surety bond and commercial surety bond. The contract surety bond segment held a larger Europe surety market share in 2023. A contract surety bond is also known as a contractor bond; a contract bond is a type of surety bond that investors and developers use in the construction sector as a guarantee that the terms and conditions of the contract will be fulfilled. The contract bond protects against the losses incurred due to the contractor’s failure to complete the project or meet the contract specification. Surety providers evaluate the principal builder’s financial merits and charge a premium in accordance with the likeness of the occurrence of an adverse event. Commercial bonds are general surety bonds that are required of businesses and individuals by government agencies such as state, local, or federal, along with various statutes, ordinances, regulations, or other entities. These entities can easily qualify for commercial bonds as they incur low risk.

Europe Surety Market Report Segmentation and Scope:

The “Europe surety market analysis” has been carried out by considering the following segments: bond type, end users, and geography. Based on bond type, the Europe surety market is bifurcated into contract surety bond and commercial surety bond. By end users, the market is divided into individuals and enterprises. Based on geography, the Europe surety market is segmented into the UK, Germany, France, Spain, Italy, and the Rest of Europe.   

Liberty Mutual Insurance Company, CNA FINANCIAL CORPORATION, Chubb, The Travelers Indemnity Company, Atradius N.V., Allianz SE, Arthur J. Gallagher & Co., Zurich Insurance Company Ltd, Coface, and Credendo are among the prominent players profiled in the Europe surety market report. In addition, several other players have been studied and analyzed during the study to get a holistic view of the market and its ecosystem. The Europe surety market forecast can help stakeholders plan their growth strategies.  

Europe Surety Market Recent Developments:   

Inorganic and organic strategies such as mergers and acquisitions are highly adopted by companies operating in the Europe surety market. As per the company press releases, below are a few recent key developments:

• In 2023, Arthur J. Gallagher & Co. announced the acquisition of Phoenix, Arizona-based Viking Bond Service, Inc. The terms of the transaction were not disclosed. Viking Bond Service, founded in 2002, is a surety bond agency specializing in commercial, contract, and fidelity bonds for clients across the US. Tom Buckner, Bill Belpedio, and their team will operate under the direction of Kevin Garvin, head of Affinity North America, for Gallagher's retail property/casualty brokerage operations.
• In 2021, COFACE, a credit insurer, announced the plan to expand its portfolio in the Romanian insurance market by entering the surety bonds segment. The company provided a statement on its website—"a viable alternative to the letter of credit and are dedicated to companies involved in public procurement contracts."

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