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Interstate conflict, the failure of national governance and outbreaks of nationalism are all part of the geopolitical landscape.

Stability in a country sometimes breaks down after crumbling gradually in full view of the media, but the old order frequently collapses with little warning, leaving investors, lenders and contractors unprepared and out of pocket.

Too often, businesses find they are no longer able to operate in a market they once considered predictable. Their licences or contractual rights are being taken away from them, or their assets are damaged; they discover too late that their financial losses are not covered by standard property ‘all risks’ insurance; nor does their standalone political violence cover respond to all the circumstances that have overtaken them so quickly.

Yet it is possible to prepare for the potential impact of unforeseen political upheaval. Different political risks can be managed and transferred in a way that helps businesses feel confident about operating in diverse markets around the world.

Political Risk Insurance

Political risk insurance is specifically designed to provide businesses with the broadest cover for many of the losses that can result from government action, political unrest and economic turmoil.

Expropriation and discrimination

For political reasons, governments act suddenly to deprive companies of their shareholdings in subsidiaries, or they expropriate their assets. Even when a government doesn’t go so far as to explicitly seize an asset, its actions can restrict a company’s ability to exercise its rights in respect of that asset.

Sovereign states do have the right to expropriate property where fair compensation is paid out. But governments don’t always accept that they should pay compensation, often leaving businesses and investors powerless.

Political risk insurance is designed to protect businesses operating abroad against the risk of a range of arbitrary government actions, such as:

  • Confiscation, expropriation and nationalisation;
  • Selective discrimination;
  • Forced divestiture;
  • Licence cancellation and breach of contract.
Political violence and forced abandonment

That’s why political risk insurance from Chubb provides broad political violence cover for a world where unrest and conflict doesn’t fit neatly into boxes:

  • Damage to, or destruction of, physical assets as a result of physical violence;
  • Abandonment of the assets or the foreign enterprise, or the abandonment of the operations of the foreign enterprise, as a result of political violence.
Inability to import/export

Political risk insurance provides effective protection to importers and exporters in different exposure scenarios, including:

  • Cessation of operations where exports are crucial to the business;
  • Loss of products that are only of realisable value if exported.
Inability to convert or to transfer currency

Political risk insurance responds when restrictions on foreign exchange prevent remittances relating to:

  • Dividends;
  • Shareholder loan payments;
  • Intercompany payables;
  • Proceeds of sale.
Enduring expertise in political risk

Our regional capabilities backed by a global reach and underpinned by in-house country risk analysts have helped us to forge longterm relationships with our clients.

Contacts

LondonChubb Building100 Leadenhall StreetLondon EC3A 3BPTel: +44 (0) 20 7173 7670

New York1133 Avenue of the Americas30th FloorNew York. NY 10036Tel: +1 212 642 7889

Singapore138 Market Street#12-01 CapitaGreenSingapore 048946Tel:+65 6398 8673

HamburgSchauenburgerstraße 1020095 HamburgGermanyTel: +49 40 3003 9024

BrazilAvenida Paulista, 129416 andar Sao Paulo - SP - Brasil01310-915Tel:+55 11 4504 4334

TokyoGarden City ShinagawaGotenyama, 6-7-29 Kita-ShinagawaShinagawa-kuTokyo 141-8679 JapanTel:+ 81 50 3164 8230