Why you need Political Risk Insurance
Investing in or exporting to emerging markets presents great opportunities to grow your business, but can expose your company to political risks.
Creeping or outright expropriation
For no apparent reason or with no justification, foreign governments can seize, confiscate or otherwise expropriate your investment. They can even adopt a series of measures that have the effect of expropriation. In either case, the result is that you could lose your overseas investment or asset.
Political terrorism, war, civil strife or other forms of political violence can damage or destroy your assets and prevent you from conducting operations essential to your business.
During an economic crisis, foreign governments or central banks may decide to impose restrictions or prohibitions on the conversion of the local currency to hard currency.
In times of crisis, foreign governments or their central bank may prevent hard currency from leaving the country.
If a foreign government prevents you from repossessing or re-exporting physical assets brought into the country (e.g. machinery, equipment, rolling stock, an aircraft, etc.), then you would be faced with repossession risk.
Non-payment by a government
Foreign governments may refuse or be unable to make scheduled loan payments or honour a financial guarantee, exposing you to non-payment risk.