In today's interconnected world, businesses are increasingly looking beyond their borders for growth opportunities. However, with international expansion comes a unique set of challenges, including political risks that can impact your operations and investments. Gallagher offers comprehensive political risk insurance solutions to safeguard your projects, assets and people overseas.
Political risk insurance protects businesses from financial losses due to adverse political events in countries where they operate or trade. It can manifest in various forms, from government confiscation and intervention to political violence, war and civil unrest. These risks can lead to forced abandonment of operations or currency transfer blockages, posing significant threats to your business.
Political risk solutions
We offer a suite of risk management solutions designed to protect both your people and the value of your business operations. Our tailored solutions address a variety of political risk examples, including:
- Sovereign/country risk
- Government confiscation and intervention
- Political violence
- War and civil
- Forced abandonment
- Political violence, forced abandonment, embargo and sanctions
Core protections offered by structured credit and political risk insurance
Structured credit and political insurance enable businesses to manage risks in conditions where uncertainty and instability may challenge overseas operations.
Non-payment coverage: protects policyholders from losses caused by a partner or customer's failure or refusal to honour a contractual debt obligation.
Non-delivery/pre-finance coverage: protects policyholders from losses incurred when a supplier fails to fulfill their obligations under a pre-financed supply contract, including the return of pre-financed funds.
Pre-shipment insurance: protects the policyholder when a buyer terminates an export contract before an amount owing is established or when specified political events prevent contract fulfillment.
It can be combined with post-shipment insurance to form comprehensive pre and post-shipment cover.
Post-shipment insurance: covers situations where a buyer, after an amount becomes due under an export contract, fails to pay or cannot pay due to occurrences like currency inconvertibility or exchange transfer issues.
It can also be combined with post-shipment insurance to form comprehensive pre and post shipment cover.
Political risk insurance (PRI): foreign government intervention can affect investors' liquidity, assets, ability to source materials, secure and manage contracts with manufacturers and set terms of trade.
Other risks may include forced abandonment and currency transfer blockage. Legal recourse or compensation may not be accessible.
Particularly in respect of investments in foreign projects or businesses, PRI can provide coverage against:
- expropriatory acts: when the host country's government expropriates, confiscates, nationalises and/or takes other actions (including licence cancellation) which deprive the business of all or part of its investment in that location
- selective discrimination: when the host country's government imposes a law or import/export restriction which discriminates against the Australian owned business but not similar locally owned entities
- forced abandonment: which occurs when a business is advised by their own government to abandon a project in response to political violence
- forced divestiture: when a business is required by their own government to pull out of the host country, after a breakdown in relations between Australia's government and the government of the host country
- deprivation: which refers to cessation or disruption of operations due to being unable to move inventory, equipment, assets into/out of/around the host country
- currency inconvertibility/exchange transfer embargo: when the business is prevented or restricted from converting local currency to hard currency or remitting funds outside the host country
- political violence: which refers to loss or disruption to the business's investment due to physical loss or damage resulting from acts of terrorism, sabotage, riots, strikes and/or civil unrest, malicious damage, insurrection, revolution or rebellion, mutiny and/or coup d'état, war and/or civil war
- repudiation, termination or other breaches of commercial agreements with government and public sector entities
- embargoes (import and/or export).
Tailored solutions from a political risk specialist team
Our team is dedicated to partnering with you, to protect your offshore projects, investments or funds flow and are well positioned to provide insurance solutions and advice to a broad range of organisations and industry sectors.
