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Credit & Political Risk

Credit & Political Risk

International trade is essential to the world economy, and is growing in size and complexity. With these new opportunities come new risks, with organizations facing complex exposures related to international economic conditions.

Holman Insurance Brokers Ltd. can arrange Credit and Political Risk solutions for small, medium, and large companies in all industries.

These policies allow our customers to trade with confidence and actively pursue new opportunites and at the same time giving valuable protection against the consequences of Canadian, US or overseas customer insolvency and non-payment. In conjunction with our insurers, additional service options can further enhance customers credit management.

Insuring your accounts receivables allows you to:
  • Avoid catastrophic bad debt losses
  • More confidently achieve financial objectives
  • Safely expand sales
  • Secure better borrowing terms 
  • Reduce bad debt reserves
For more information you can download our Credit 101 document to learn more 
or watch the video below kindly provided by one of our valued partners

Coverage for Political Risks includes loss from damage to, or the destruction or disappearance of, tangible assets caused by politically motivated acts of war or civil disturbance in the host country, including revolution, insurrection, coups d'état, sabotage, and terrorism is available for any of the following:
  • Contract Frustration
  • Investment risk
  • Personnel
Contract frustration insurance protects against losses arising from the host government's breach or repudiation of a contract with the investor. In the event of an alleged breach or repudiation, the investor must be able to invoke a dispute resolution mechanism (e.g., an arbitration) in the underlying contract and obtain an award for damages.

If, after a specified period of time, the investor has not received payment or if the dispute resolution mechanism fails to function because of actions taken by the host government, the insurer will pay compensation and may make a provisional payment pending the outcome of the dispute resolution mechanism. 

Investment risk insurance protects against loss of the insured investment as a result of acts by the host government that may reduce or eliminate ownership of, control over, or rights to the insured investment. In addition to outright nationalization and confiscation, "creeping" expropriation-a series of acts that, over time, have an expropriators effect-is also covered.

Coverage is available on a limited basis for partial expropriation (e.g., confiscation of funds or tangible assets). Bona fide, non-discriminatory measures by the host government in the exercise of legitimate regulatory authority are not covered.

For total expropriation of equity investments, the insurer pays the net book value of the insured investment. For expropriation of funds, the insurer pays the insured portion of the blocked funds. For loans and loan guaranties, the insurer insures the outstanding principal and any accrued and unpaid interest.

Compensation will be paid upon assignment of the investor's interest in the expropriated investment (e.g., equity shares or interest in a loan agreement) to the insurer.

Investment Risk insurance also protects against losses arising from an investor's inability to convert local currency (capital, interest, principal, profits, royalties and other remittances) into foreign exchange for transfer outside the host country. The coverage insures against excessive delays in acquiring foreign exchange caused by host government action or failure to act, by adverse changes in exchange control laws or regulations, and by deterioration in conditions governing the conversion and transfer of local currency. Currency devaluation is not covered. 

On receipt of the blocked local currency from an investor, the insurer will pay compensation in the currency of its Contract of Guarantee. 

War and Civil Disturbance coverage also extends to events that, for a period of one year, result in an interruption of project operations essential to overall financial viability. This type of business interruption is effective when the investment is considered a total loss; at that point, the insurer will pay the book value of the total insured equity investment. For loans and loan guaranties, the insurer pays the insured portion of the principal and interest payments in default as a result of business interruption caused by covered events.


Extortion is no longer a problem confined to Africa and South America. It's increasingly prevalent in the UK, Ireland, Continental Europe and other developed markets. Extortion threats of damage to property or bodily injury are rising, while terrorism through computer viruses is a very real risk for today's businesses.

Kidnap & Ransom 
Executives traveling or working overseas are increasingly at risk from kidnap or ransom by local mafia and criminal gangs. In many countries the kidnapping of Westerners has become a business in it's own right and the demands made can be huge. Even in the UK and Ireland, there have been a number of reported kidnaps of employees or their families, often to facilitate a robbery. (For more information, please visit our Professionals section on Kidnap and Ransom)

Emergency Evacuation & Wrongful Detention 
In certain parts of the world, the political situation can deteriorate almost overnight. A Company's employees may have to take the first plane out of a country to avoid spiralling instability. Expatriates may need to sit things out for weeks or even months before it's safe to return. In some countries, businesses may find their employees are victims of wrongful detention or the threat of it, for political or commercial reasons outside of their control.


The consequences of Extortion, Kidnap or Emergency Evacuation can be financially severe for the business and extremely traumatic for the victim, family and colleagues:
  • Extortion attempts usually involve demands for substantial financial payments
  • Product contamination or just the threat of it could entail significant costs from the recall of a Company's products, business interruption and loss of reputation
  • Payment of hundreds of thousands, even millions, of pounds may need to be paid to secure the release of a kidnap victim
  • A kidnapping invariably has financial consequences way beyond what might ordinarily be expected, for example consultants fees, and medical, travel, legal and accommodation expenses
  • Death or physical injury may be inflicted on a kidnap victim
  • Emergency evacuation of expatriates can involve considerable travel and accommodation costs.
  • Companies who mishandle extortion or kidnap incidents face the prospect of expensive litigation from victims, families, customers and/or shareholders.