Discover Ebix Latin America’s Innovative Solutions
In an increasingly complex and dynamic business environment, the search for solutions that ensure regulatory compliance and the fulfillment of contractual obligations has become a top priority for both the public and private sectors.
In this context, surety bonds stand out as an indispensable tool — guaranteeing that the commitments established in contracts are effectively honored. With the ongoing digital transformation and the evolution of regulations, such as Brazil’s new Public Procurement Law, surety bonds have gained even greater relevance, providing confidence and transparency in high-value and complex negotiations.
This article highlights how surety bonds and Ebix’s technology solutions are shaping the future of the insurance market — simplifying the acquisition and management of life and pension insurance policies.
How Surety Bonds Work
A surety bond involves three parties: the obligee (beneficiary), the principal (contracted party), and the surety (insurer). The Surety Company acts as a third party that guarantees the principal’s fulfillment of contractual obligations. This structure provides additional security to the obligee, ensuring that the agreed terms are effectively met.
In a global and fast-moving market, efficiency and speed in contract execution are essential. Surety bonds play a key role in mitigating risk and ensuring the continuity of projects, especially in critical sectors such as infrastructure and construction. The confidence generated by this type of insurance enables companies to participate in large-scale tenders, fostering a more competitive and secure business environment.
Specificities and Limits of Surety Bonds
It is important to understand that each surety bond contract has its own specific characteristics, differing from traditional insurance contracts. Historically, Brazilian Law No. 8,666/1993, Article 56, §2, established that the insured amount could be limited to 5% of the contract’s total value — with the possibility of increasing it to 10% for large and complex projects.
With the expansion of infrastructure projects in Brazil and growing public investments, the discussion around surety bond limits has become even more relevant. The ability to provide adequate coverage for large-scale projects is crucial to attract investors and ensuring efficient contract execution. Insurers, in turn, must be prepared to assess and assume these risks strategically.
The New Public Procurement Law: More Clarity and Security
The enactment of the new Public Procurement Law (Law No. 14,133/2021) brought significant changes. Article 98 maintained the limits of 5% and 10% but provided greater clarity by removing the expression “large scale” when referring to the 10% limit. Additionally, the law set a 30% cap on the contract value for large-scale engineering works and services, particularly those exceeding BRL 200 million.
This legislative change reflects the need to adapt regulations to the realities of today’s market. With clearer and more proportional limits, parties involved in major contracts can plan their obligations with greater precision and confidence. The new law also promotes stronger risk management practices, aligning Brazil’s framework with international standards.
Step-in Clause: Ensuring Contract Execution
A key feature in large-scale contracts is the inclusion of a step-in clause within the surety bond. This clause establishes that, in the event of default by the principal, the surety company assumes responsibility for completing the contracted work or compensating the obligee accordingly.
This mechanism not only protects the obligee’s interests but also ensures project continuity — preventing costly delays and disruptions. In a scenario where efficiency and timeliness are critical, the step-in clause enables projects to be completed on schedule while maintaining quality and compliance.
Ebix’s Digital Platform for Surety Bond Underwriting
Ebix, a global leader in insurance technology solutions, offers an innovative digital platform for underwriting surety bonds related to contracts and public tenders. This fully integrated, online platform enables policy issuance in just minutes — quickly, securely, and efficiently.
With Ebix’s Digital Platform for Surety Bonds, insurers and brokers can boost their performance by streamlining workflows, reducing turnaround times, and enhancing customer experience. Moreover, process digitalization supports regulatory compliance and transparency across all operations.
In today’s digital-first environment, automation and system integration are vital for improving efficiency and competitiveness. Ebix’s platform empowers insurers and brokers to manage their operations with agility, reliability, and confidence.
Conclusion
Surety bonds have proven to be an essential instrument for ensuring contractual compliance and operational efficiency — particularly in public procurement and large-scale projects.
With its advanced technology and deep industry expertise, Ebix Latin America stands as a market leader, offering digital platforms that enable fast issuance and management of surety bond policies. By adopting Ebix’s solutions, insurers, brokers, and corporate clients achieve not only legal compliance but also a more agile, secure, and transparent operation — consolidating themselves as strategic partners in the success of major infrastructure initiatives.
If you would like to learn more or speak with one of our experts, our commercial team will be pleased to assist you. Contact us at contato@ebix.com or through any of our digital channels.
About Ebix Latin America: The Leading Insurtech in the Region
Learn more: https://www.ebixlatinamerica.com.br
Ebix Latin America is a global insurtech specialized in developing innovative technology solutions for insurers and brokers. As a reference in insurance technology, Ebix offers the most comprehensive digital stack in the market — ensuring efficiency, automation, and integration across every business area of the global insurance industry.
With nearly 400 employees and offices in São Paulo, Rio de Janeiro, and Curitiba, Ebix serves clients throughout Latin America and is the largest company in Brazil dedicated exclusively to insurance technology.
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