Political Risk Insurance

Political Risk Insurance

Political Risk Insurance
Term: Up to 15 years

Protect your investment against political risks.

ECI’s Political Risk Investment shields your investment overseas from loss due to a broad range of political events.

The insurance offers coverage against loss from:

  • Confiscation, expropriation, or nationalization due to government action.
  • War, civil war, or social disturbance that causes physical damage or prohibits access for a prolonged period.
  • Currency inconvertibility.
  • Currency transfer risk.
  • Breach of contract or non-honoring of obligations by the host government.
  • Embargo or international sanctions imposed on the country where the project is located.

Key Benefits

Protect long-term investments in a fast-changing world
Protect long-term investments in a fast-changing world

If your investment is for a long-term project that may be affected by several election cycles and changes of government, ECI’s Political Risk Insurance can offer protection for your investment.

Meet stakeholder and lender requirements
Meet stakeholder and lender requirements

Your project stakeholders and lenders may require political risk insurance to mitigate the risk of the project. ECI’s Political Risk Insurance can meet these requirements.

Product Features at a Glance

Eligible Investors:
UAE registered companies.
Payment Terms:
There are no payment terms for this policy.
Risks covered:
One or more of the scenarios outlined. The insured events will be based on your need and ECI’s risk assessment.
Up to the total value of the equity investment.
Up to 10 years.
A percentage of the investment value.
Notification of Potential Claims:
The policyholder will inform ECI as soon as there are indications that a claim could arise.

How It Works

Step-by-step Guide

Political Risk Insurance is typically considered after all other parts of the project have been finalized. Assessment criteria can include:

Financial Viability

The financial viability of the project is assessed by considering all the elements that can affect the economic sustainability of the project. Investments that fail can prompt hostile reactions from the host government and communities impacted by the project. These may trigger insured events.

Licensing and Contractual Relationships

Commitments with governments and other public entities must be realistic and in accordance with best practice to avoid rejection by future governments.

Environmental and Social Impact

ECI will assess that the project balances environmental and social impact to minimize risk

Due Diligence, KYC, AML, and PEP

Due diligence, Know Your Customer (KYC), Anti Money Laundering (AML), and involvement of Politically Exposed Persons (PEP) should be in accordance with international standards for best practice.

Country Profile

The country profile of where the project will be located will be assessed based on its history and long-term trends.

ECI assesses all critical parts of the project, both stand-alone and in the context of the country where the project is located to determine risk. Assessment depends on the specificities of the particular project.

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Simplified Claims Journey
Simplified Claims Journey

The claim process requires adherence to the criteria outlined in your policy. Criteria for claim eligibility: - Compliance with the conditions and commitments stated by ECI at the inception of the policy will be monitored and must be adhered to as a condition for claim eligibility. - This includes environmental initiatives, support for local communities, employment of the local population, and other conditions in the country where the project is located. The timing for filing a claim and the duration of the waiting period before the claim is paid out depends on the insured risk or risks that initiated the claim.

Step 1
War or Civil War
War or Civil War

In this case, the condition would be the inability to access the premises of the project for an uninterrupted period of 180 days.

Step 2
Currency Transfer Issues
Currency Transfer Issues

In this case, the amount that is required to be transferred must be available in domestic currency in the local bank account.

Step 3
Arbitration Award Default
Arbitration Award Default

A claim can be triggered by an arbitration award default. Your insurance contract may specify that the policyholder must initiate arbitration against the counterparty. The claim will be paid out if the policyholder wins the case (arbitration award) and the counterparty fails to respect the award.

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