Purchasing a Political Risk Policy
The global economy is dependent on a number of factors, such as a country’s political turmoil, the value or currency, and disputes between foreign powers or trading partners. Sometimes the results of unrest or in anticipation of problems, a host country will confiscate a product or property of a foreign company or financial institution. When this happens, expropriation insurance is a way to recoup the losses that are experienced. This form of insurance is also called political risk insurance, as such host country actions are in direct response to political risks like civil unrest, war, revolution, and terrorism. The professionals at Moody Insurance Worldwide believe it is absolutely critical for a company that has offshore branches to purchase this type of insurance.
Who Should Purchase Political Risk?
There are several categories of businesses that should invest in a political risk policy. These include:
- Multinational corporations
- Financial Institutions
- Capital Markets
- Project Lenders
Because of the severe risk that can accompany financial institutions operating overseas, the reports indicate that this industry takes the most advantage of purchasing political risk insurance. However, many partnerships also keep this area of insurance in business, as a policy is often purchased under the direction of a bank or lender that has internal credit lending requirements. For the sake of keeping your international investment alive and thriving, purchasing an expropriation policy is in your best commercial interest.