Increasingly Unsettled World Accelerates Need for Political Risk Insurance

Global Trade Review, Insurance 2019 reports that “With the current global trading environment more politically volatile than ever, insurance that covers political barriers is crucial for companies looking to mitigate the risks of engaging in cross border trade that may be disrupted due to government action or political unrest.” The article also highlights hotspot countries where claims have increased. These included Argentina, the United Kingdom and the Ukraine. Data also points to an increase of 50% in take up of new Political Risk insurance.

Commenting on this trend, Laura Martin, a global political risk insurance specialist with the ICBA said “Globally we have been living with a growing level of political risk for nearly a decade, but without any true international crisis. Therefore in the world of Trade Credit Insurance “Political Risk” cover has not always been top of a client’s agenda. But things are changing.  More and more economists are predicting another recession in 2020/21. With the world entering a deepening geopolitical recession, when you factor in the lack of global leadership (as a result of American unilateralism), Russia upsetting the stability of the US and its allies; an increasingly over-sanctioned China under consolidated leadership, India promoting controversial social policies, discontent in the Latin America, Turkey entering into a steep political decline; Brexit and, let’s not forget about the elephant in the room –  “Climate Change” – it’s clear this cover is going to be crucial for any business when taking out a Trade Credit Insurance policy.”