In fact, many feel the current period of expansion may be unprecedented. The expanding economy has resulted in growth, and construction has been generally profitable. When construction is profitable, and work abundant, surety losses tend to be less severe and less common. As a result, the surety industry has enjoyed several years of generally favorable results. At the same time, the insurance industry as a whole continues to suffer from excess capacity, resulting in eight years of declining premiums.
Supply again exceeds demand.
With standard insurance product rates sliding, many insurance companies are looking at the surety market as a niche to deploy excess capital. In short, long time players have seen favorable returns of late, and newcomers hope to gain some market share. Competition in a relatively fixed market has done the rest. The surety market in the United States is dominated by construction bonds. The risk associated with this industry has not gone away.