Political Risk Insurance

Political risk insurance is a type of insurance that can be taken out by the businesses, of any size, against political turmoil - the risk that war, invasion, act of foreign enemy, hostilities or warlike operations (whether war be declared or not), civil war, mutiny, civil commotion assuming the proportions of or amounting to a popular rising, military rising, rebellion, revolution, insurrection or military or usurped power or other political conditions that will result in a loss. Political risk insurance is available covering several types of political risk, including:

• 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
• Inconvertibility 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. Big and multinational companies are drawn to expand into international markets, mainly in search of lower costs, considering the new opportunities and easier access to potential resources. When they arrive, however, they often find that the policies of foreign environments add a risk and complexity to their business performance. A question for companies operating internationally thus becomes how best to manage the political risks. Not only do political changes pose direct risks to firms/organizations, but politics is also a component of other external risks. Moreover, political risk is often perceived to be outside of management's control, making it difficult to define or predict.

While our clients are focused and committed to achieving their business targets and goals, there are certain events that one has no control over. Governments and political agendas can take serious turns exposing clients to political force majeure events, such as acts of terrorism and war and other political violence such civil unrest.

We at Prudent, are adept at understanding businesses and challenges and devise risk mitigation strategies to overcome such eventualities. We also work with the best carriers to ensure clients get the best cover at the most optimal price.