Political risk insurance
What is it?
Political risk insurance provides financial protection to investors, financial institutions and business subjects who are at risk of losing money due to political events. This prohibition protects against danger in the event that the government takes some action that could cause the insured to suffer significant financial losses.
What is insured?
- The object of insurance is the loss of a business entity caused by customer’s partial non-fulfillment of his obligations resulted from political reasons (in the case of export insurance);
- Losses from investment activities resulted from political reasons (in the case of investment insurance).
In which cases this insurance is required?
Political risk insurance reduces political risk of exports and investments when exposed in politically unstable countries:
- war, civil war, revolution, insurrection, rebellion, civil unrest, mass strikes, change of power, leading to major policy changes;
- unforeseen government actions are launched, including official announcement that the state will not fulfill its obligations, freeze deposits, nationalization, expropriation and other political measures; as well as a moratorium on foreign currency settlements (ban);
- unforeseen events occur in third countries through which goods or funds are transported, including embargoes and other transport restrictions on goods that impede the execution of contracts.
Who is this insurance made for?
- to entities exporting their products and services;
- for operators who invest abroad.