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Political Risks and Trade Credit

Political Risks and Trade Credit

Specialist insurance protection in respect of emerging markets, political violence, credit and wider political risks to a range of clients.

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.

The Beazley Difference

Integrated risk protection package that combines several coverages in just one policy
Affirmative coverage for claims made against an insured which results in bodily injury
Deep product knowledge since we pioneered Virtual Care in 2009
Knowledgeable Underwriters, Wordings Lawyers, and Claims Managers with expertise in all key areas of coverage
Dedicated Beazley Breach Response Services, including breach response management, information security insurance solutions, and risk management services

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...