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Political Risk Insurance

ABK’s Political Risk Insurance is a fundamental tool to alleviate the possible uncertainties that may arise from certain political situations for investors or banking entities that operate in markets around the world. This policy is intended to provide our clients with the security they need in times of political instability in a specific country.

Why take out Political Risk Insurance?

Confiscation or nationalization

Whether for public or national interest, confiscation or nationalization occur when property is transferred from private individuals, both domestic and foreign, engaged in relevant activities in a sector of the economy. Nationalization is the forced transfer of the right of ownership of an asset from individuals to the State, by virtue of a competent state body.

Expropriation

International expropriation is a very common political risk that implies a loss of value of an investment belonging to a foreigner as a consequence of a state action. The characteristics of expropriation depend to a large extent on what is agreed in international instruments and on the interpretation made by arbitral tribunals when their opinion is required.

Currency inconvertibility

The inconvertibility of currencies is a recurring problem, especially during financial crises, which end up leading to currency crises. The only way to deal with the inconvertibility decreed by the government of a country as a preventive measure to avoid bank failure is to have a Political Risk policy that covers this type of inconvenience under any concept.

What does Political Risk insurance protect against?

In this way, political risk insurance protects the sale of goods or services against the risk of non-payment by a buyer as a result of political risks that prevent the collection of invoices, such as currency inconvertibility or transfer risks, war, terrorism, riots and revolution, change in import and export regulations, bank failure, expropriation, nationalization or trade sanctions.

It is a fundamental coverage in exports, especially to developing or underdeveloped countries.