Overview
Surety bonds have been around since ancient times, showing up in one form or another throughout history whenever people needed a trusted way to make sure something got done.
From early trade deals to construction projects, surety has always been about accountability and proper performance. Now, bonding is a critical part of countless industries and licensing processes for professionals such as public notaries, motor vehicle dealers, insurance adjusters, and much more.
The slow, paper-heavy process has been streamlined and simplified over the years. Now, getting bonded is easier than ever, with online companies giving businesses and individuals fast and easy access to the coverage they need.
Timeline
2,750 BCE: The earliest known suretyship contract was written on a Mesopotamian tablet. According to the contract, a farmer could not take care of his fields because he was drafted into the king's army, so another farmer offered to work the fields. The two agreed to split the profit evenly. A local merchant served as the world's first known surety by guaranteeing that the second farmer would keep his word.
1792-1750 BCE: Suretyship was first addressed in a written legal code - the Code of Hammurabi.
670 BCE: The oldest surviving surety contract was written.
180 BCE: Suretyship is addressed in the Bible. "An honest man is surety for his neighbour; but he that is impudent will forsake him. Forget not the friendship of thy surety, for he hath given his life for thee. A sinner will overthrow the good estate of his surety: And he that is of an unthankful mind will leave him [in danger] that delivered him. Suretiship hath undone many of good estate, and shaken them as a wave of the sea: and he that undertaketh and followeth other men's business for gain shall fall into suits." -Ecclesiasticus 29:14-19
150 CE: The Roman Empire developed its first laws about surety.
1837 CE: William L. Haskins proposed the first surety company in America - the New York Guarantee Company. (Practical Guide to Construction Contract Surety Claims)
1840: The first successful corporate surety, Guaranty Society of London, was founded. (Practical Guide to Construction Contract Surety Claims)
1853: New York enacted a law allowing corporate surety firms to be established. (Practical Guide to Construction Contract Surety Claims)
1865: Fidelity Insurance Company became the first corporate surety company in the U.S. (The New York Times)
1884: American Surety Company was incorporated in New York and became the first U.S. company committed to surety underwriting.
1894: Congress passed the Heard Act, which required surety bonds on all federally funded projects.
1898: The U.S. Supreme Court heard its first surety case: American Surety Co. v. Pauly.
1908: Fourteen corporate sureties formed the Surety Association of America. (surety.org)
1917: The victorious defendants of the Venner v. New York Central Railroad Company et al. Supreme Court case collected a $50,000 surety bond in legal fees from the plaintiff. (The New York Times)
1930: The first known surety bond against suicide was written.
1931: The Handbook of the Law of Suretyship and Guaranty was written to clarify fulfillment of sureties.
1935: The federal Miller Act was established to require the use of performance bonds for public work contracts exceeding $100,000. It also mandated payment protection for contracts exceeding $25,000.
1938: American Surety Company and New York Casualty Company developed the "Discovery Bond" to protect businesses against old acts of employee dishonesty yet to be discovered. (The New York Times)
1942: The National Association of Surety Bond Producers (NASBP) was founded to represent the needs and interests of surety agents and brokers. (nasbp.org)
1971: The Federal Trade Commission entered the insurance field for the first time by challenging the 1969 merger between the American General Insurance Company and Fidelity and Deposit Company of Baltimore. The merger made American General the leading surety bond underwriter and the largest fidelity writer in the United States.
1991: Municipal Bond Investors Assurance Corporation began offering new surety bonds that covered deposits local governments put into banks. The First National Bank of Chicago was the first bank to use the bond. (The New York Times)
1993: Westpac Derivative Products, Ltd. became the first business in its market to use a surety bond. The bond was issued for $100 million and allowed the company to earn the highest triple-A ratings. (The New York Times)
2003: Surety insurance companies, including AIG and Travelers, pay an unheard of $900 million settlement to Enron customers following the crash. (The New York Times)
2005: After years of record losses, The Surety & Fidelity Association of America (SFAA) reports that the surety bond industry returns to profitability.
2008: As the recession begins, bonding companies face a decrease in the number of bonds produced, especially those pertaining to construction. The surety industry remains strong throughout the recession despite major downturn in other industries.
2009: The SuretyBonds.com domain was purchased on March 13th 2009, and the website underwent its first overhaul. As a result, SuretyBonds.com launched its reputation as the surety industry authority.
2010: SuretyBonds.com issues its first surety bond for a client, thus becoming a fully-functioning surety agency.
2012: Bond and insurance company First Sealord experiences a steep drop in its surplus and is no longer able to fulfill policyholder obligations. As a result, First Sealord is liquidated.
The Small Business Administration (SBA) establishes QuickApp, a streamlined application process to help contractors who don’t have an established business record get easier access to bonding in amounts less than $250,000.
2014: The Surety & Fidelity Association of America (SFAA) held its first Surety Summit with a focus on building sustainable Disadvantaged/ Minority/ Small Business Enterprises (D/M/SBEs) through bonding.
SuretyBonds.com is named the small business of the year by the Columbia Chamber of Commerce and is acquired by HCC Insurance Holdings Inc.
2015: Under new regulations, all mortgage loan servicers in New York must register with the Banking Department and file both a surety bond and fidelity bond.
HCC Insurance Holdings Inc. was acquired by Tokio Marine Holdings Inc., opening more doors of opportunity for SuretyBonds.com.
2016: Instec partners with NIIT Technologies, a global IT solutions firm, to co-develop N-Surety — a subscription-based solution for the automation of surety bonds.
SuretyBonds.com becomes the first surety bond provider to offer instant issue bonds through an online purchase portal.
2017: The first cannabis industry surety bond program is approved in California to meet the needs of an emerging market.
2018: Sompo Intl. Holdings acquires Lexon Surety Group. the second largest independent surety insurer in the U.S with subsidiaries including Lexon Insurance Co., Bond Safeguard Insurance Co. and Fortress National Group.
2019: Surety Solutions joins one of the largest brokerages in the world, Arthur J. Gallagher & Co., in an acquisition.
The SuretyBonds.com staff increases to 50 employees and the company celebrates its 10 year anniversary.
2020: Due to the COVID-19 pandemic, the NASBP and SFAA, along with other industry players, start advocating for the adoption of electronic bonds.
2021: The U.S. Senate approves a surety bond amendment ensuring payment and performance security on all federally-financed infrastructure projects receiving loans and grants under the Transportation Infrastructure Finance and Innovation Act (TIFIA).
SuretyBonds.com publishes a knowledge base for frequently asked questions to help clients find quick answers.
2022: SuretyBonds.com rolls out agent-less bond quote capability, Express Leads. Internal agency underwriters can approve qualifying quotes instantly without waiting for third-party approval.
2023: SFAA and NASBP host a Legislative Fly-In to educate members of Congress and staff about the value of construction surety bonds.
2024: President Biden’s infrastructure spending bill injects new investments for bridges, airports, waterways, and public transit across the US. This drove demand for surety bonds and the market grew throughout 2024.
New Jersey implements a new law requiring all home improvement and home elevation contractors to be bonded in an effort to raise industry standards and protect consumers
2025: The SFAA reports a 24.9% direct loss ratio for contract surety bond writers in the U.S. due to inflation and labor shortages. Underwriting standards for contractors increase as a result.
What Does the Future of Surety Bonds Look Like?
Throughout history, surety bonds keep projects moving, hold people to their commitments, and give businesses a foundation of trust to build on. As digital tools and AI continue to grow, the bonding process will only get faster and simpler, making it even more accessible.
The surety bond industry has come a long way, and the future looks just as promising with innovators like SuretyBonds.com paving the way forward.
