Political risk insurance – is a form of casualty insurance that can be taken out by businesses with operations in countries in which there is a risk that revolution or other political conditions will result in a loss.
Political risk insurance is available for several different types of political risk, including (among others):
- Political violence, such as revolution, insurrection, civil unrest, terrorism or war;
- Governmental expropriation or confiscation of assets;
- Governmental frustration or repudiation of contracts;
- Wrongful calling of letters of credit or similar on-demand guarantees; and
- Nonconvertible of foreign currency or the inability to repatriate funds.
As with any insurance, the precise scope of coverage is governed by the terms of the insurance policy.
The underwriting of political risk insurance is a dynamic, growing business. As globalization increases, there are more corporations doing more business in more places around the world with each passing year. Some of the changes occurring in the business are high growth, new product offerings, and a greater role for private capital.
While political risk insurance policies are sometimes manuscripted for specific situations, the major political risk insurers have standard forms for the coverages that they issue.