Political Risk

STARR’s Political Risk Coverage helps organizations conducting global business protect assets from losses due to specified political risks.

Political Risk Insurance is designed to mitigate against the loss of assets, income, or property suffered by investors, lenders, and corporations in emerging markets due to political risk events. Foreign government actions and socioeconomic events can create a business environment that is unfavorable for foreign investors, exporters, and lenders, preventing them from taking advantage of commercial opportunities in emerging markets. These types of political risk events can be impossible to predict, and the consequential loss of assets and income that follows is often irreversible.

In order to address these risks, Starr provides insurance solutions for single-situation or medium-to long-term exposures by relying on sound underwriting principles and in-house political and country-risk analysis provided by seasoned advisers within Starr’s Global Risk Intelligence group. Clients who partner with Starr to manage Political Risk exposures have unique access to these advisers.

Coverage Highlights:

  • Starr’s Political Risk Insurance coverage is designed to protect an insured’s assets, income, and property which may include:
    • equity investments
    • cross-border loans
    • contracts with state-owned entities
    • physical assets
  • Policies are tailored to each individual risk
  • Policy limits of up to $50,000,000 for any one risk with higher limits available through risk syndication
  • Policy tenors of up to 10 years with non-cancellable policy terms

Coverage Available:

  • Confiscation, Expropriation, Nationalization
  • Currency Inconvertibility / Exchange Transfer Risk
  • Forced Abandonment
  • Forced Divestiture
  • Selective Discrimination
  • Political Violence: War / Civil War, SRCC (Strikes, Riots, Civil Commotion), and Rebellion
  • Arbitration Award Default
  • Non-honoring of sovereign obligations
  • Contract frustration following political events
  • Wrongful Calling of on-demand contract guarantees and bonds

Target Markets:

Corporations and Investors

  • Corporations and organizations with investments in foreign subsidiaries, participation in joint ventures, or ownership of assets which are vulnerable to political risk events such as government instability, discriminatory government policies, or events which impact the repatriation of profits, fees, dividends, or intercompany loan payments
  • Corporations and organizations with physical assets being held overseas which are vulnerable to damage resulting from political violence

Financial Institutions

  • Lenders and Investors involved in financing cross-border transactions which can be impacted by the actions of foreign governments, local socioeconomic conditions, and non-state political actors

Importers and Exporters

  • Corporations involved in sale/purchase/delivery agreements with state-owned entities
  • Corporations involved in sale/purchase/delivery agreements with private counterparties that are exposed to contract frustration/non-payment/non-delivery as a result of unforeseen changes in the trading environment, such as political violence or license cancellation

Project Developers/Contractors

  • Project developers and contractors with exposure to non-payment risk arising from their service contracts with governments or state-owned enterprises
  • Project developers and contractors in sectors such as construction, engineering, mining/energy services that are involved in state-sponsored projects with performance guarantees
  • Project developers and contractors with large overseas exposures in the form of physical equipment or assets which may be damaged or become inaccessible as a result of government actions or local instability