Political Risks / Kidnap & Ransom

Reasons for coverage and sources

A firm may be exposed to loss from three broad categories of political risk: seizure of assets, currency inconvertibility, and interference with contractual performance. Through programs of political risk insurance underwritten by specialty companies, confiscation, expropriation, nationalization, deprivation and, in some cases, terrorists and war risk coverages may be written.

Companies that export can protect themselves against a range of political risks that may prevent or delay payment.  This arises when payment is not received as a direct result of a war in the buyer’s country, cancellation of a contract by the government of the buyer’s country, or when a government implements regulations which either prevent the export or import of the goods or prevent or restrict the transfer of hard currency from the buyer’s country.

Organization can also buy coverage for loss arising from confiscation or expropriation of property by a foreign government and loss due to a devaluation of currency.

Joint venture political risk insurance is available to protect a corporation participating in a joint venture in a foreign country against political risks.

Political risk insurance can be provided by private insurers or governmental agencies.

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Kidnap & Ransom

There are no standard policies. Every insurer offers different terms, with options, to meet a client’s individual needs. And, as with other insurance, policy terms, definitions and exclusions differ widely. Programs can provide coverage to include:

  1. Ransom Following Kidnap
  2. Ransom Following Threat to Kill, Injure or Abduct (Extortion)
  3. Ransom Following Property Damage Extortion
  4. Loss of Ransom in Transit
  1. Cost of Hostage Recovery
  2. Fees for Medical and Psychiatric
  3. Reward (Payment to Informants)
  4. Accidental Death and Dismemberment

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Insurance Definitions

For definitions of various forms of insurance refer to Insurance Marketplace

  • Products Extortion Protection

Insurance Sources

(General – Not necessarily accessible by TCIM)

Other Resources / Country Risk Analysis

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