Political Risks

Political Risk insurance is designed to protect your firm's balance sheet in the event of catastrophic political upheaval.

So you would not be successful in a claim for to losses brought about by looting or theft, for example unless these were manifestly politically motivated.

Key elements of a Political Risk Policy

• Confiscation, expropriation and nationalization.. such as the case in Venezuela in 2015 when Nestle had its factories seized.*
• Political Violence - such as looting and arson of pro Ukraine villagers by pro Russian separatists
• Currency Inconvertibility - such as recent moves by Argentina to impose currency controls isn a bid to stem the flow of funds being repatriated.
• Breach of Contract - Such as when a country's government breaches a contract that is fundamentals to a firm's success

Optional riders on a Political Risk Policy

• License cancellation
• Terrorism
• Arbitration Award Default
• Selective Discrimination
• Forced divesture
• Forced abandonment
• Potential Riders that you MAY be able to negotiate
• looting and theft
• land owner disputes

* A survey by the magazine 'Strategic Risk' in 2015 concluded that almost 1/3 of Asia-pacific businesses suffered financial loss due to political risk at some point during the preceding 3 years. And of these, roughly half suffered on account of adverse regulatory or legal changes.