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Political Risk Insurance (PRI) a key factor in managing business exposure

2 June 2021

The seismic impact of a world-wide pandemic and increasing geopolitical risks and crises makes Political Risk Insurance (PRI) a key factor in managing business exposure.

Post-Brexit, the political landscape of Europe continues to shift with the Czech Republic, Bulgaria, Montenegro, and Armenia predicted to face increased internal political pressures. The Dutch economy is expected to recover its pre-pandemic situation by 2022 while Slovakia is forecast to receive new investment after its power sector was recently unlocked.

Without the presence of PRI, businesses may be reluctant to take advantage of developing markets. Trade risks can be insured as part of a package covering commercial payment risks, or on a standalone basis, depending on the way trade is being conducted.

Experts have identified exchange transfer as the most common political risk-related loss with political violence and import/export embargoes also high on the list. PRI policies can provide coverage for a wide range of risks.

Payment instruments like letters of credit can help with the commercial risks, but leave businesses exposed to political risks – and by the time they become apparent, it may be too late to get the cover needed.

W Denis Europe can offer two types of PRI cover:

Protecting Overseas Assets:

· Against expropriation or confiscation by a foreign government

· Against damage due to war, riot, strikes or civil unrest

· Terrorism, Sabotage, Malicious damage

· Invasion, Civil War, Rebellion, Revolution, Coup d’état, Insurrection, Mutiny & War

Protecting against trading risks

· Contract frustration due to government embargo, war, riots, etc

· Currency transfer or inconvertibility risk

· Payment default by foreign governments

· Unfair calling of on demand bonds or other guarantees

W Denis Europe also provides a range of Political Violence perils coverage on assets and infrastructure worldwide. Suitable for large global multi-national businesses down to small medium enterprises, we offer solutions for all range of organisations which may have exposure to political instability risks.

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