Political Risk

PRI coverage acts as a safety net against policy decisions or actions by a government or political forces. It can cover risks such as:

• Political violence, which typically includes civil war, coup d’état, insurrection, revolution, sabotage, strikes and riots, terrorism, and war that causes physical damage to, or abandonment of, assets or operations and the related loss of business income.
• Expropriation by the government of assets or operations, including prevention of repossession of assets by a creditor.
• Restrictions on the conversion of local funds to hard currency or the transfer of funds offshore as part of remitting dividends, debt service, or other cash flows generated in-country to an insured.
• Arbitration award default if a government entity breaches its contractual obligations.
• Credit risks, such as sovereign non-payment.

Any corporation (including commodity traders), bank, non-bank financial institution, or public agency with international assets or investments should consider political risk insurance. It is typically purchased in relation to project finance, asset finance, trade finance, fixed and mobile assets, and foreign direct investment, particularly in the oil and gas, mining, and infrastructure sectors. Depending on the risk, PRI coverage could involve public agency providers, private insurers, or a combination of both.

Incorporating PRI into your organization’s risk management program can help protect your contracts, investments, projects, operations, assets, equipment, and stocks of commodities in volatile markets. PRI can also facilitate debt financing, equity investing, and the backing of foreign projects or investments in higher risk countries.