Non-payment and political risks are two of the most important risks that corporates must deal with today.
Exporters must be able to offer long term credit to win business. Guarantees from export credit agencies (ECAs) are not always obtainable or are subject to conditions that are difficult to satisfy and often take a lot of time. Coverage is available in the private market, and tenors of five, seven years and even longer can be obtained.
Corporates with hundreds of domestic or foreign buyers will prefer the “Whole Turnover Market” as multi-buyers, key-buyers or whole turnover credit insurance can be bought on this market. The structure and cost of these covers will largely depend on the corporate’s own credit management and risk appetite.
Corporates operate internationally – often in high-risk countries – via local subsidiaries. Often of strategic importance, these local businesses can be impacted by political events, such as war, civil war, political violence, and terrorism, as well as expropriation, cancellation of licenses, export/import restrictions or foreign-exchange crises. Such direct investments in high-risk countries can be protected via Political Risk Insurance for Equity Investors.
International contractors who undertake contracts and maintain equipment in high-risk countries, can obtain protection from political risks via Comprehensive Contractors Plant Insurance.