The economic crisis has a dark side for insurance companies. On the one hand, the business, like all the economic activities of the country are downwards. Not many insurances are hired as before and this is reflected in a fall in premiums issued (the policies bought by citizens or business owners) of $ 21 million until June this year (nearly -3% versus the accumulated in the first half of 2015).
But companies that are also dedicated to insure public works are beaten by the two sides. The law forces contractors that implement the projects of public agencies to take out insurance to guarantee that the work will be accomplished on time and with good materials and that the advance payed by the public agency is properly used. If this is not met, the insurer pays the State, municipality, public enterprise, etc.
Professor in Insurance Law and author of the Manual on this subject, Eduardo Pena, explains what is the problem of insurance bonds: their nature. By law_ this is a policy that is unconditionally active, is irrevocable and of immediate collection. That means that if the state for any reason considers that the contractor is not complying with the agreement -whether it has state debts with suppliers, for example- it can activate the policy. And the insurer is obligated to pay immediately.