Insuring Against Political Risks

Coups, riots, civil wars: Companies buy huge policies covering political upheaval
By Peter Fearon,  Newser Staff
Posted Apr 6, 2007 1:45 PM CDT
Pakistani riot police beat lawyers during anti-government demonstration...    (Getty Images)
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(Newser) – Political-risk insurance has quietly become a billion-dollar industry, the Economist reports, as Western corporations doing business in the developing world crave protection against coups, embargoes and civil wars. The Berne Union, a syndicate of 30 of the field's biggest insurers, says members have $113 billion in outstanding policies in some of the most hazardous places on Earth.

Demand for the huge policies is increasing at a rate of $7 billion a year, and new coverage (against, say, politically motivated defaults on loans or currency devaluation) are imagined and drawn up frequently. Companies operating in Afghanistan and Iraq are at the top of the consumer pool, alongside Western Africa and South America.