Political Risk Insurance

Political Risk Insurance refers to the specialty insurance line that offers corporations bespoke contracts to mitigate their foreign political risk exposure. Because most of these agreements by their nature tend to be confidential, those interested in geopolitical analysis may overlook this industry in scoping out their careers. For players within this industry, the chief parties are in-house risk managers, brokers, and underwriters:

Risk managers are typically housed within operations or under the CFO of larger companies, who deal with a number of different responsibilities one of which may include buying insurance coverage for things like Political Risk or Kidnap & Ransom.

  • Search for companies in particular with a heavy presence overseas to align geopolitics with risk management writ large.

In a typical PRI contract, the Underwriter is the entity that assumes the political risk. While this industry began purely as a public entity through the federal agency, the Overseas Private Insurance Corporation (OPIC.gov), increasingly households names like AIG and Lloyd’s of London operate within this space. This private market sees much fragmentation, with more than two dozen firms operating chiefly out of New York, London, and Singapore.

  • Go to the Berne Union, something of a trade association for these underwriters, to start exploring specific opportunities (as in, start there, and then you will be directed to a number of (public) export credit agencies and (private) underwriters

The intermediary in this relationship is the Broker, who specializes in helping the Risk Manager to better understand how to evaluate their risk, understands the marketplace, and works to ensure the best Terms & Conditions for the corporation. While there are many insurance brokers along general insurance lines, the Political Risk insurance market is dominated by Marsh USA, Aon, and Willis. Arther Gallagher also joins this field in terms of size with its recent acquisition of Aequus Trade Credit.

If you reached this site, then more likely than not it was some variant on “political risk.” It’s no surprise that the underwriters and brokers within the PRI space are the ones populating this search query. That said, these specialty niches (alongside for example Marine Insurance or Aviation Repossession Insurance) occupy an interesting niche where there are few insurance practitioners who reach out to expand in this space, and at the same time, few political risk advocates who are even aware of this space. As such, if you are just starting to explore a career in political risk, this offers a very real way to understand how businesses try to hedge against risk, and more broadly, how companies might think about risk.

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