Amid ongoing political upheaval in Venezuela and a volatile geopolitical landscape elsewhere, the need for political risk insurance is rising to prominence for multinational companies.
AP reports that General Motors just became the latest corporation to have a factory or asset seized by the government of Venezuela.
GM said assets such as vehicles were taken from the plant causing the company irreparable damage.
To protect themselves against loss or damage to physical assets caused by political action and instability, businesses should consider purchasing political risk insurance.
This specialty type of insurance can protect against a variety of risks, including:
- Political violence (including terrorism and war).
- Currency inconvertibility.
- Contract frustration due to political events.
Due to the accelerating pace of geopolitical uncertainty, the market for political risk insurance is pushing toward $10 billion in 2018, up from $8.1 billion in 2015, according to a KPMG LLP report published last year.
Willis Towers Watson advises multinational companies to buy political risk coverage on operations worldwide — particularly for select regions —while it is still available, Business Insurance reports.
Aon’s Political Risk Map 2017 captures changing risks for businesses and countries across emerging and frontier markets.
Last year an equal number of countries showed a reduction in political risk as showed an increase, a trend which highlights the persistence of political risk across the globe, Aon said.