October 19, 2019

Political Risk

General areas of political risk insurance:

  • Government seizure of property
  • Buyer refusal to pay for work performed

What is political risk?
Particularly when governments become unstable as a result of popular dissatisfaction, there is a significant risk that the present or new government will seize the property of foreign interests without compensation.  There is also a more commercial type of risk that an insured may deliver a product or service for which the buyer refuses to pay, betting that the seller cannot enforce the contract. 

The perils of political risk are commonly called: contract frustration,confiscation,expropriation,nationalization, and deprivation.

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