Political Risk Insurance
In an era of escalating trade wars, sanctions, and geopolitical instability, businesses with foreign operations or suppliers face risks that go beyond tariffs. Political risk insurance protects your investments, contracts, and assets from government actions beyond your control.
What Is Political Risk Insurance?
Political risk insurance (PRI) protects businesses and investors from financial losses caused by political events or government actions in foreign countries. Unlike commercial risks (customer insolvency, market shifts), political risks stem from state actions that the insured has no control over.
It's used by multinationals with foreign subsidiaries, exporters selling to government buyers, businesses with suppliers in politically unstable regions, and investors with equity stakes in emerging market companies.
In the context of the 2025–2026 trade war, political risk insurance is increasingly relevant as businesses diversify supply chains into Vietnam, India, Mexico, and other countries that each carry their own geopolitical profiles.
What Political Risk Insurance Covers
Expropriation & Nationalization
Government seizure, nationalization, or confiscation of your assets, investments, or business operations in a foreign country.
Currency Inconvertibility
When a foreign government prevents you from converting local currency profits into hard currency or repatriating funds.
Contract Frustration
A government or state-owned entity fails to honor a contract or arbitration award, leaving you with unenforceable claims.
Political Violence
Physical damage to assets from war, revolution, insurrection, terrorism, or politically motivated civil unrest.
Who Needs Political Risk Insurance?
Exporters with foreign government buyers
If you sell to state-owned enterprises or government buyers, contract frustration coverage protects against non-payment or contract cancellation.
Companies with foreign manufacturing
Businesses that own or lease factories in emerging markets face expropriation risk and need coverage for physical assets.
Supply chain diversification plays
If you're moving supply chains from China to Vietnam, Indonesia, or elsewhere, PRI helps manage the new political risk profile.
International investors and private equity
Investment in emerging market businesses or infrastructure typically requires PRI as a condition of financing.
Importers with single-country concentration
Heavy reliance on suppliers in any single country creates supply chain political risk that PRI can address.
How Much Does It Cost?
Political risk insurance is highly customized. Pricing depends on:
Typical cost range: 0.5%–2% of insured value per year
Highly stable countries may see rates below 0.5%. High-risk markets or comprehensive coverage packages may exceed 2%.
Top Political Risk Insurance Providers
AIG
One of the largest political risk insurers globally. Strong capacity for large deals and complex structures. Part of AIG's trade credit & political risk division.
Lloyd's of London
The world's largest specialist insurance market. Multiple syndicates offer political risk coverage. Access through specialist brokers.
Zurich Insurance
Strong multinational capabilities. Good for businesses with operations across multiple emerging markets.
MIGA (World Bank)
Multilateral Investment Guarantee Agency — World Bank affiliate. Offers political risk guarantees for investments in developing countries.
US EXIM Bank
Government-backed export credit agency. Offers political risk coverage for US exporters and investors.
Atradius
Combines trade credit and political risk coverage. Good option for exporters wanting bundled protection.
Political risk insurance is a specialty line. Work with a broker who specializes in trade credit and political risk to access the full market.
Get a Political Risk Assessment
A specialist broker will review your foreign exposure and identify the right coverage for your operations.