EIA Global

Physical Assets, Loans & Investments

Political Risk Insurance

Protection for Physical Assets, Loans & Investments

When doing business in emerging markets, your assets and investments are often not covered for political risk perils by standard, off-the-shelf property and casualty insurance policies.

EIA Global are experts in this specialized insurance market. We design market-leading policies achieving optimum coverage at the lowest possible cost.

Coverage is typically available for policy periods of up to 15 years at 95% – 100% indemnity.  Limits of liability can total as high as $250MM per insurer for any single risk.

How is the product used?

 

Some industries are highly reliant on physical operations located in politically volatile countries. While political risk insurance is frequently used to mitigate threats to a company’s physical assets, the product also serves as protection for shareholders, creditors and other financial partners against unforeseen losses due to a covered event.

Example 1 Multinational corporations with foreign subsidiaries may purchase coverage to safeguard their overseas buildings and inventory from government confiscation or a terrorist attack interrupting normal business operations.

Example 2 – A project finance lender may require political risk insurance to preserve the value of the underlying loan collateral or perhaps to hedge against the risk that damage to the project’s assets may lead to production delays and an eventual default.

Example 3 – Equity investors in overseas subsidiaries or joint ventures can utilize political risk insurance to mitigate the risk of a foreign government imposing foreign exchange controls that prevent the purchase or transfer of hard currency for dividend payments, profit distributions or other remittances.

What do the policies cover?

The following is a list of perils that can be covered by our political risk insurance policies:

  • Government confiscation, expropriation and nationalization
  • Inability to transfer/convert currency
  • Breach of contract by a local government or authority
  • License cancellation and government embargoes
  • Forced abandonment/divestiture
  • Sanctions
  • Deprivation of your rights to operate normally by the local authorities
  • Non-honoring of an arbitration award

 

Exporters and contractors required to post bid, advance payment, performance, maintenance and warranty guarantees (typically in the form of standby letters of credit or surety bonds) can insure against the illegitimate calling of those bonds. Insurance is also available for legitimately called bonds, so long as the non-performance by the exporter or contractor was due to specified political perils.

Coverage is available on bonds issued in favor of both public and private sector entities.

Terrorism, War and Political Violence
 
In addition to the above, our bespoke policies cover a number of perils that are routinely excluded by traditional property insurance policies. Most currently issued “stand-alone” terrorism policies offer inadequate coverage for assets in emerging markets. Typical defects in such policies include the “war” exclusion and the requirement that there be actual physical damage to the assets.
 
Our Terrorism, War and Political Violence policies cover against:
 
  • Sabotage and Terrorism
  • Insurrection, Revolution, Rebellion and Coup d’état
  • War and Civil War
  • Strikes, Riots, Civil commotion and malicious damage
  • Looting, pillaging and theft resulting from any of the above
  • The taking of properties/assets that is a by-product of the aforementioned perils

Credit & Political Risk Insurance Can Be Complicated. We Can Help.

EIA Global works closely with our colleagues from around the globe to give our clients access to international insurance markets, including public sector export credit agencies and the Lloyd’s of London market. Access to these markets allows EIA Global to place difficult or unique risks that may not be insurable with carriers based in the United States. It also enables us to issue local policies to our clients’ foreign subsidiaries.

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