Civil unrest in nations formerly viewed as politically stable, such as Sweden and Brazil, is forcing global organizations to consider Political Risk insurance coverage. A recent paper by nationally recognized insurer called the need for Political Risk coverage a “top emerging concern” for global companies. This coverage is meant to help mitigate political exposures that are, normally, excluded from standard property policies to cover the risk to a company’s physical and financial assets. Some of the perils this policy will insure against are Terrorism, Riots, Deprivation or Confiscation of Assets, Strikes, Civil Commotion, Exchange Transfer Risk, Rebellion, and Insurrection. It is very difficult to model, price and determine the appetite for this coverage in the existing insurance marketplace. One thing that is important to note is that coverage is not guaranteed for the reason that rating basis in each country is based entirely on the underwriter’s evaluation of the risks in countries. Coverage is available in both the public market, through OPIC and Miga, as well as the private insurance market.
Businesses today face many challenges managing their risk; one area of increasing concern is the risks associated with cross-border transactions, which seem to be at an all time high. The procedures and steps organizations face when conducting business internationally are continually becoming more complex. An article by Country Risk Solutions, Managing Political Risk in the New Normal, shows how the rules of engagement for conducting international business have changed.