Political risk insurance

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Political risk insurance

The risk associated with possible negative events such as expropriation of assets, changes in tax policy, restrictions on the exchange of foreign currency, or other changes in the business climate of a country.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Political Risk Insurance

An insurance policy protecting the policyholder from the risk that a foreign government will significantly alter its policies or other regulations so that it results in a loss for one's investment. It may also cover the risk that a nation will refuse to comply with an agreement to which it is a party, or that political violence will hurt an investment or business. For example, if one exports goods to a foreign nation, and that nation elects a new government that enacts protectionist tariffs, this will negatively impact the export business. Political risk insurance may be tailored to the policyholder's specific needs.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
References in periodicals archive ?
The fund, sponsored by the government of Japan and the Palestinian Authority, aims at encouraging investment in the West Bank and Gaza by providing political risk insurance to both local and foreign investors.
The agency has rolled out a flexible plan to target existing and inbound FDI in order to ensure that political risk insurance market capacity is maintained and to bolster the efforts of national export credit agencies.
"We have an environment which changed in a few weeks from low to high risk," said Nila Davda, senior executive officer at Sovereign Risk Insurance, an underwriter of political risk insurance. "Nobody really knows how it's going to play out."
The acquisition will provide Tawa with an access to the credit and political risk insurance market and would expand its overall business and geographical footprint.
The World Bank's political risk insurance arm saw a rise in demand for cover in the last year, it said, seeing a gradual post-crisis recovery in emerging market foreign direct investment.
Under the MoU, MIGA and DIFC will explore opportunities for co-branding of existing political risk insurance products, joint business development efforts, and development of a mutual referral process.
The Overseas Private Investment Corporation (OPIC) is a self-sustaining agency that mobilizes American private investment by providing political risk insurance and financing in support of U.S.
Addressing the members of the Muscat American Business Council, Dr Spinelli highlighted the fact that Oman and the broader region were priorities for OPIC, which currently provides nearly $1.8 billion in financing and political risk insurance to 38 projects in the area.
In these situations, political risk was a cost of doing business that sometimes occurred in limited ways but rarely proved catastrophic, and could be mitigated through political risk insurance or early identification and use of mitigation techniques.
Eksport Kredit Fonden (EKF), the official Danish Export Credit Agency, and Sovereign Risk Insurance Ltd reported on Tuesday (6 June) the completion of a political risk insurance contract supporting DKK100m of exports to Ukraine.
For example, to enhance its ability to efficiently securitize the loan in the future, the lender required political risk insurance, as Nevis does not have a sovereign rating.

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