Absicherung politischer Risiken

(Civil) war, terrorism, riots, boycott, strikes, blockades, intergovernmental license withdrawals and embargoes, sanctions imposed, … – Unfortunately, there exist many political risks today that can have a drastic impact on your export business. At the same time, the question is not just about material damages during investments. Even the temporary business interruption and its associated lost profits can threaten your company’s existence.

Furthermore, numerous other pitfalls lurk in the export business, such as:

  • Transfer risk: It becomes impossible for your debtor to transfer outstanding receivables in their national currency because the state cannot or does not want to carry out the payment transfer.
  • Conversion risk: The country you supply to does not have enough foreign currency to exchange the domestic currency into the preferred currency.
  • Risk of payment interdiction: The state prevents your debtor from fulfilling their obligations.
  • Moratorium risk: The state only allows a partial payment or imposes deferment of payment for transfers abroad.

Furthermore, in case of investments or shareholdings abroad, especially in emerging markets, there exist such threats as expropriation, seizure or nationalization of production facilities or the withdrawal of licenses.

Insurance cover in the export business

Insurance against political risks protects you from these threats. In addition to the aforementioned material damages or lost profits on investments, it also covers, in contrast to classic credit insurance,

  • Payment obligations of ministries or public companies,
  • Breach of contract by governmental agencies,
  • Default of payment after delivery by public customers or prevention of payment due to political influence on private customers,
  • Non-delivery of your public supplier (or political influence on the delivery of private suppliers) after you have made a deposit or advance payment,
  • Non-payment by the financing bank (documentary letter of credit).

In addition, new multipurpose products insure against terrorism.

A typical cover for assets and/or investments is the insurance of “CEND risks” (confiscation, expropriation, nationalization, deprivation).

Are you interested in insurance against political risks or would you like to have a comparison with the offerings of the export credit insurer? Call us simply at +43 664 468 1 456, write an » e-mail or use the contact form on the right (call-back service). We will be pleased to meet you!

PS: If you want to have your project business insured (e.g. plant construction), please send us the questionnaire for capital goods credit insurance (CGCI) in German:
QUESTIONNAIRE (CGCI)
For goods deliveries and services, please use the questionnaire on individual covers (Single Buyer policies) in German:
QUESTIONNAIRE (SBP)

If you need an English version of the questionnaires, please, send your request to  gt@cib-kreditversicherung.at.

State and private export credit insurers

Political risks can be covered both by state export credit agencies (ECAs) and by the private insurance market. While private credit insurers primarily focus on „marketable risks“ – risks in OECD countries with short payment terms – ECAs offer coverage for risks in emerging markets and developing countries with both short and long terms, as well as for project businesses.

The state’s – often very cost-effective – export promotion is based on a comprehensive guarantee system and the principle of support to Austrian economy. In addition, the governmental guarantees and avals (for domestic risks such as the exporter’s or principal bank’s insolvency) provide access to attractive financing for international businesses.

However, every ECA must comply with the requirements of the OECD consensus. Whereas, the private market, for example, can also

  • get on with already running businesses,
  • waive advance payments in machinery manufacturing,
  • offer only sectoral covers or
  • release of domestic added value as a prerequisite (only possible in the best country categories for ECAs).

Covering via the private insurance market comes in question only when ECAs do not have free capacity.

Compared to ECAs, which have to consider the maximum credit periods, private credit insurers can insure periods of up to 10 years or even longer. Also, the cover rates are between 90 and 95%. Individual syndicates / insurance companies have enormous capacities of up to € 100 million available per project. There are around 30 specialized insurers on the private insurance market Lloyd’s of London, some of whom also issue policies from the German-speaking area in German language.

Who needs such covers?

  • Companies that deliver to customers or government agencies in emerging or Third-World countries
  • Companies with investments or foreign branches
  • Raw material traders
  • Contractors / Subcontractors