Understanding your trade credit & political risk options

Our Gallagher Trade Risk team offers products to help protect your company against the perils of maintaining a global supply chain.  This includes Trade Credit Failure-To-Pay Insurance*, which many manufacturers and trading companies refer to as accounts receivable insurance. 

These types of policies can be implemented on a one-off, multi-debtor, key account or spread-of-risk basis – and be structured as straight co-insurance or excess of loss. Coverage perils could include bankruptcy, insolvency and protracted default.

Political risk insurance solutions address many unique liability issues:

  • Currency inconvertibility and non-transfer risks are the most popular perils being covered in trade transactions and can be underwritten on a stand-alone basis.

  • Contract frustration involves non-payment by sovereign and non-sovereign entities. Obligors can include the Ministry of Finance (MOF), Central bank and other state-owned financial institutions and ministries.

  • Confiscation, Expropriation, Nationalization and Deprivation (CEND) policies are designed to protect corporations and financial institutions that maintain an ownership or security interest in property abroad. Currency inconvertibility and transfer risks can also be added to CEND policies to protect against the political risks associated with inter-company loan payments and/or dividend repatriation.

  • Political violence, forced abandonment, embargo and sanctions are all perils that can be insured under Political Risk Insurance policies too.

*Financial institutions may request coverage to support the confirmation and refinancing of letters of credit, bi-lateral trade and non-trade loans, participation in international syndications, supply chain financings, pre-export financings, pre-payments of exports, etc.