Political Risk Insurance

Operating in foreign countries, especially in emerging markets, can expose your company to additional risks related to unpredictable foreign government acts or political events. Securitas brokers an array of political risks coverage that can help protect your investment in foreign countries. Political Risk coverage protects you against loss in value of your foreign investments or assets resulting from specified political events during the policy period in the country where the investments or assets are held.

An investment is typically your equity investment in an overseas subsidiary/joint venture or a shareholder loan made to such entities. Assets covered include the assets owned by the foreign subsidiary/joint venture or assets you own that are on site in the foreign country. Coverage can be purchased for operations in a single country or for a portfolio of countries for any specified coverages below.

Equity investments and permanent assets
Shareholders loans
Mobile assets

Equity Investments and Permanent Assets

An equity investments policy’s core coverage includes coverage for Confiscation, Expropriation, or Nationalization of an investment or asset by a foreign government. If this core coverage is desired, coverage for other perils can be added including:

Selective Discrimination by a foreign government against your operation
Forced Abandonment of your operation or assets caused by war or political violence
A foreign government act that prevents the ability to import or export
Physical asset damage resulting from political violence. Political violence normally includes such risks as war, civil war, revolution and terrorism.
Currency inconvertibility

Shareholder Loans

We consider medium to long term shareholder loans to be an investment. The policy coverage is against specified political risks that lead to nonpayment of a shareholder loan including:

Expropriation
Currency inconvertibility
War or civil disturbances

Mobile Assets

Coverage against specified political risks is available to contractors owning and operating mobile assets on a temporary basis in foreign countries and for inventories owned and stored abroad.

Coverage can include the following:

Deprivation
Currency inconvertibility
War or civil disturbances

Political Risk Insurance Example

A major multinational company has subsidiaries with significant manufacturing operations in several emerging markets around the world. The company realizes that it is exposed to confiscation, expropriation, nationalization, or other specified perils that are excluded under its property insurance coverage. To protect company assets and shareholders’ interests, the company decides to buy a Political Risk Insurance policy that insures its equity investment in the subsidiaries and its assets against specified political risk events. The policy provides non-cancelable limits for seven years in countries where the subsidiaries are located.