Treasury Adds Renewal Fees for Surety Companies (December 2024)

What fee changes did the U.S. Treasury implement for surety companies in December 2024?

U.S. Treasury Implements Renewal Fees for Surety and Reinsuring Companies

On December 9, 2024, the U.S. Department of the Treasury published a Federal Register notice implementing application and renewal fee increases for surety companies and reinsuring companies seeking to write federal bonds.

What Changed

New Fee Structure: The Treasury now charges both:

1. Application fees (existing, but increased)
2. Renewal fees (new requirement)

These fees apply to:

• Surety companies seeking admission to Treasury Circular 570
• Reinsuring companies providing reinsurance for federal bonds
• Companies seeking to maintain their approved status

What is Treasury Circular 570?

Treasury Circular 570 is the official list of companies approved to:

• Issue surety bonds for federal obligations
• Write performance and payment bonds for federal construction
• Provide bonds for federal licenses, permits, and court proceedings
• Serve as sureties on any bond required by federal law

Without Circular 570 certification, a surety company cannot write bonds for federal projects or obligations.

Purpose of the Fees

The fees support Treasury's costs for:

• Reviewing financial statements of surety companies
• Monitoring ongoing financial solvency
• Maintaining the Circular 570 list
• Ensuring taxpayer protection
• Administering the certification program

Impact on Surety Companies

Direct Impact:

• Increased operating costs for companies on Circular 570
• Annual renewal fees in addition to initial application fees
• Ongoing compliance and monitoring expenses

Indirect Impact:

• Some smaller sureties may exit the federal bond market due to costs
• Larger sureties may adjust pricing to recover fee increases
• Market concentration may increase if smaller players exit

Impact on Bond Premiums

While the fee increases affect sureties directly, potential impacts on bond buyers include:

• Modest premium increases as sureties recover costs
• Reduced competition if smaller sureties leave the market
• No immediate significant impact for most bonds

The fees are relatively small compared to overall surety company operations, so dramatic premium changes are unlikely.

Related Changes

This fee increase is part of the broader Treasury modernization including:

• New reinsurer categories (reciprocal jurisdiction, alien reinsurers)
• Letter of credit acceptance for excess risk
• August 1 annual publication schedule for Circular 570

What Federal Bond Buyers Should Know

No direct impact on most buyers:

• You still work with the same approved sureties
• Bond requirements remain unchanged
• Application processes remain the same

Monitor your surety's status:

• Verify your surety remains on Circular 570
• Check the annual August 1 publication
• Ensure bonds are issued by approved companies

Federal agencies will not accept bonds from:

• Companies not listed on Circular 570
• Companies whose certification has lapsed
• Companies that fail to pay required fees

Compliance Timeline

• Published: December 9, 2024 (Federal Register)
• Effective: Immediately upon publication
• Ongoing: Annual renewal fees required to maintain certification

Surety companies must budget for these ongoing costs as part of maintaining their federal bonding authority. Contractors and businesses requiring federal bonds should ensure their surety partners remain in good standing on the Circular 570 list.