Political Risks and Trade Credit

What we offer

Named Perils Cover
Political Risk Insurance - cover against loss from named political risk perils.
Four ‘heads of cover’

Government Actions - This covers discriminatory actions taken by a host government against foreign owned assets or businesses located in that country, leading to a permanent loss or cessation of activities. Perils include expropriatory acts, licence cancellation or embargo. Also covered are the insured’s government’s actions leading to the forced divesture or abandonment of the insured interest.
Political Violence - Property damage due to events such as war or terrorism.
Currency Inconvertibility - An inability to convert local currency held within a host country into hard currency and transfer it out of the country due to a government moratorium.
Arbitration Award Default - A dispute with a host government over a key concession or contractual arrangement resulting in an arbitral award that is subsequently not honoured.

What we insure

Stock, plant or equipment held in a foreign country (mobile asset cover)
The equity interest held in a foreign enterprise (fixed asset/equity interest cover)
A loan made to a borrower in a foreign country (lenders interest cover)
A contract with a privately owned company in a foreign country (private buyer/supplier – political perils only cover)
A mortgagee’s interest should there be a need to repossess an asset located in a foreign country (non-repossession/mortgagee’s rights cover)

Comprehensive Cover / Non-payment

Contract Frustration Insurance – cover against default by a government owned counterparty (a “Public Obligor”) under a contract for the sale or lease of goods or services, or a loan.
Credit Insurance – cover against default by a counterparty not owned or controlled by a government (a Private Obligor) under a contract for the sale or lease of goods or services, or a loan.

What we insure

Contracts for sale/purchase/lease of goods or services on open account terms*
Prepayments made for goods to be delivered in the future
Loans made to finance identifiable trade flows or specific projects
Loans secured against trade receivables and/or tangible assets of the Obligor
Loans not linked to, or secured over, specific contracts but made to Public Obligors whose sole responsibility is infrastructure spending or the financing of trade activities

*The cover can include provision to indemnify clients for one or more of the below items:

Pre-shipment cover - the costs directly associated with the contract incurred before an invoice is issued.
Post-shipment cover - the amounts not paid following an invoice being issued
Contract bond cover - if contract bonds are required to be posted by the Insured we can cover the loss due to the calling of these bonds where the Obligor has no right to do so, or they are called because the contract is frustrated due to a political peril.

Limits

Political Risks US$50 million per risk
Contract Frustration US$50 million per buyer
Trade Credit US$30 million per buyer

Policy

Up to a maximum of 15 years

How can we help

Beazley provides specialist insurance protection in respect of emerging markets, political violence, credit and wider political risks to a range of clients including commodity traders; foreign investors; banks and financial institutions; project financiers and sponsors; forfaiting companies; and exporters and importers of goods and services.

We have a track record stretching over twenty years of insuring our clients’ businesses against political and commercial risks. The experience and expertise that has been generated over this time supports an appetite to cover risk in most jurisdictions worldwide and helped us to become specialist in trade and investment flows in frontier markets.
We can provide cover for particularly complex transactions reflecting the rapidly evolving sources of finance available to our clients and their emerging market counterparts.
We have also expanded our project finance, government non-payment and multilateral & ECA offerings to increase scope and flexibility for our clients.

The Beazley Difference

BEING BOLD

Freedom lies in being bold. We dare to be different and seek bold possibilities to create more innovative, fair and satisfying outcomes for our clients, brokers and employees. From insuring the highest building in the world, to the first commercial lunar vehicle to operate on the moon - we boldly go where others won’t.

STRIVING FOR BETTER

Good is a start, but we go all-out for better. A driven community of individuals relentlessly push the needle and creating value. From launching the market’s first dedicated ESG syndicate to the establishment of our business unit focusing on designing digital insurance solutions, we pride ourselves on always going above and beyond. Simply put, at Beazley we go to 11.

DOING THE RIGHT THING

Acting with integrity in a straightforward, decent way is instinctive. Open and honest with others, we show respect and empathy however challenging the situation – demonstrated by our multi-award winning claims team. Doing the right thing makes for a fair-minded, rewarding environment and makes work and life better for all.

Examples or Scenarios

We, via a coverholder, insured a company that supplied marine fuels through their buyer for onward supply to ship owners. With no prior warning, the buyer filed for court protection and subsequently entered bankruptcy proceedings leaving an multimillion USD amount owing to the insured.

Upon notification of the claim, we immediately investigated the circumstances and initiated a plan to look at recovery options including the legal position of the various claims in the bankruptcy proceedings.

Given the size of the loss and the position of the buyer in the market, any delays could have caused significant cash flow issues to the insured. The claim was reserved in full within 21 days and we, the lead insurer, paid its share of the loss within 27 days.