Bond insurance

Public infrastructure investments generally involve large sums. Major projects such as a new subway line in São Paulo, modernisation of Bogotá’s airport, or building and operating a sewage treatment plant in Buenos Aires are normally covered by bond (or surety) insurance. Guarantees are crucial to the financing of many large projects because they give project owners, and in some case financial backers, the certainty that the various phases of the project will be completed as planned.

However, private individuals also obtain financial guarantees, generally when buying property. Finally, there is also a market for bond insurance among public-private partnerships. The common denominator is that projects backed by bonds usually serve a long-term purpose.

Due to the volumes involved, infrastructure projects tend to require the kind of capacity that can only be provided by major players, such as large reinsurance companies. Thanks to the high level of risk knowledge it has acquired over the years, Munich Re is well qualified to offer the kind of bond insurance that such highly complex undertakings demand. The precise nature of the risks involved has to be assessed in detail before coverage can be finalised. Munich Re’s expertise in the field of environmental risks is very much a part of that assessment.