Economic Trends and the Surety Underwriting Mindset
Surety underwriting does not react to economic trends at the speed of capital markets, but it is shaped by many of the same pressures. These include rising interest rates, liquidity constraints, backlog volatility, and shifting project demand.
1. In Expanding Markets, Bonding Must Keep Pace With Growth
What We See: During periods of economic growth, contractors often pursue larger projects, expand into new regions, or build their backlog aggressively. That growth introduces new risk and new opportunity.
How We Respond: We work with agents to help contractors grow strategically, ensuring that working capital scales with backlogs.
2. In Downturns, Underwriting Tightens but Opportunities Remain
What We See: When the economy contracts, surety places a greater emphasis on liquidity, backlog quality, and exposure.
How We Respond: Proactive communication with agents becomes even more important during downturns. We evaluate more than just the numbers; we consider the full story.
3. Recovery Cycles Demand Caution and Discipline
What We See: As the construction economy begins to recover, contractors often rush to take on new work. That can lead to underbidding, labor and material shortfalls, or overcommitment, all of which raise underwriting concerns.
How We Respond: Underwriters should collaborate with agents to promote responsible growth.
Let’s Get to Yes
In every economic cycle, there are opportunities for contractors to grow and for agents to lead. At Gray Surety, we partner with agents who are committed to helping emerging and midsized contractors thrive through uncertainty. Let’s work together to deliver smart, flexible surety solutions that help your clients succeed and help you stand out.
