Surety bond and the role of insurance companies as regulators in the context of brazilian infrastructure projects

Abstract

Unfinished infrastructure projects are a persistent problem in Brazil and deprive the population of essential resources and services for its growth and development. Brazilian Law No. 14,133/2021 changed the legal regime for surety bonds, providing incentives for insurance companies issuing surety bonds to manage even more effectively the risks inherent to infrastructure projects, which could help reduce the number of unfinished projects. This article discusses whether it is likely that insurance companies issuing surety bonds will play a positive regulatory role in the context of public infrastructure projects and help reduce the number of unfinished projects. We conclude that unless the Brazilian government plays a strong oversight role over insurance companies that are acting as regulators, Law No. 14,133/2021 is unlikely to achieve its goals.