If you need to obtain a surety insurance policy, this article will explain how to do it, what is required, and, most importantly, why it can be useful in various contexts, especially in public tenders and certain highly specific sectors.
A surety insurance is, without a doubt, the best option to ensure your company fulfils the contractual obligations it assumes. As we’ve explained in other articles, it is a guarantee that covers the commitments undertaken, offering compensation in case of non‑compliance.
Although surety insurance is often compared to a bank guarantee and other forms of collateral, it presents significant advantages.
On the one hand, it does not appear in the Bank Report Risk; it doesn’t require a notary deed, doesn’t carry maintenance, review, or cancellation fees, and typically doesn’t require funds to be blocked. All of this enables access to other financial products like loans, credit lines, bill discounting, etc.
Moreover, the guarantee is issued by an insurance company and not a bank, allowing for a faster, more agile issuance, with more flexible terms, and the amount guaranteed does not appear as a liability, and can be deducted in the profit and loss account.
This all translates into greater ease in developing your business activity, while ensuring that all economic liabilities from non‑compliance, before public administrations or private entities, are covered, whether they relate to works, supply, services, or legal obligations.
A key point: replacing bank guarantees with surety insurance improves your cash flow and reduces bank risk, which strengthens your company’s financial solvency.
All the Steps to Obtain a Surety Insurance
The most important requirement for obtaining a surety policy is successfully passing the solvency and asset analysis that the applicant must undergo.
This is a rigorous process, as surety insurance means that the insurer assumes the responsibility in case of contract breach, and must therefore verify the financial capacity of the applicant.
To clear up a common question: any individual can apply for a surety insurance policy, being a company is not mandatory.
If you are an individual, you will need to provide:
1️⃣ Your most recent income tax return
2️⃣ Details about your professional activity
3️⃣ A list of clients
If you are a company, the minimum required documentation includes your annual accounts and VAT and corporate tax returns.
More specifically, you’ll need to present:
⏺️ Audited financial statements for the last two fiscal years (and if part of a group, consolidated statements and company structure). If audits are not legally required, the accounts filed with the companies registry and corporate tax returns will be accepted.
⏺️ Provisional results for the current fiscal year (consolidated, if applicable).
⏺️ A business activity report.
There may be other requirements, such as your company having a minimum number of years in operation, a net worth above a certain amount, annual revenue at a specific level, no recorded losses in recent years, and no incidents of non-payment.
Depending on the company’s sector and the type of surety requested, additional documentation may be requested, such as commercial references to verify service quality.
In the case of recently created companies that haven’t yet filed annual accounts, the insurer may request alternative guarantees, such as client certifications or personal income evidence.
Once the requirements are met, you can obtain the surety insurance without all the extra procedures that come with other financial products, such as a bank guarantee, which often involves locking up funds.
In addition, it helps avoid increasing your bank exposure, since surety insurance does not appear in Bank Report Risk.
Guidance for Securing This Insurance
It is clear that surety insurance plays a fundamental role for businesses of all sizes and sectors, as it reduces uncertainty and enhances financial credibility.
At Sammy Free, we are specialists in managing and analysing the process to secure surety insurance policies. With over 10 years of experience, 580 satisfied clients and more than 2,000 policies successfully processed, we offer effective and proven solutions.
We offer surety bonds across a diverse range of industries (for importers and customs, public tenders, new construction, renewable energy, environmental restoration, the gaming sector, or private security), company sizes, and sectors. Our highly experienced and skilled team is prepared to issue a wide variety of surety bonds, tailored to your project’s needs and the specific requirements requested.
Additionally, we can design custom surety bonds to meet your individual needs with flexibility and speed.
Our experts are ready to advise you on this pivotal change for your company: replacing a bank guarantee with a surety bond.
