While demand for private Political Risk Insurance had been dominated by a handful of large international commodity traders, in the 1990’s, a number of leading commodity finance banks in Europe stepped in and began buying insurance to cover government borrowers in structured commodity finance transactions. Although the purpose at the time was internal (credit risk management, line overages, etc.) the adoption of the Basel II framework in 2004 changed things radically.
By recognizing a wider range of credit risk mitigation techniques for the purpose of calculating the regulatory capital requirements of banks, Basel II triggered a market-wide revision of policy wordings across the insurance market to allow insurance policies to qualify as Credit Risk Mitigant (CRM) and provide capital relief.
IRIA is a political and credit risk broker for some of the leading trade and commodity finance banks globally. IRIA has brokered billions of dollars of insurance facilities for its Trade Finance, Commodity Finance and Structured Commodity Finance banking clients.