Political Risk Insurance: Where Global Uncertainty Becomes Insurable
Political risk insurance sits at the intersection of geopolitics, finance, trade, and law — a place where contracts meet coups, and where payments depend as much on stability as on creditworthiness. Few people understand that intersection better than Kit Brownlees, whose career spans international law, global export finance, and more than three decades in political risk insurance broking. His journey into insurance, like many in the industry, began not with a plan but with circumstance — yet it placed him at the very forefront of a market that would later explode in relevance and scale.
Originally, political risk insurance was narrow in scope. It focused largely on government actions — confiscation of foreign assets, nationalisation, and political interference in contracts. Over time, the product expanded dramatically to cover non-payment risk, force majeure, exchange controls, and ultimately private buyers as well as governments. What began as protection for exporters dealing with sovereign buyers evolved into a vital instrument for banks, commodity traders, project financiers, and global manufacturers navigating fragile markets.
One of the major turning points for the market came after the 2008 financial crisis. As banks pulled back from trade and export finance, the private political risk market stepped into the vacuum. Capacity widened, deal structures became more sophisticated, and political risk insurance shifted from a niche product into a core tool supporting global trade flows. The growth since then has been steady — and in many regions, explosive.
Modern political risk is also far more dynamic than many outsiders realise. While headline events like the Russia–Ukraine conflict capture public attention, smaller-scale government actions — cancelled infrastructure projects, regulatory shifts, currency controls, and localised unrest — occur far more frequently. Kit recalled early claims arising from regime changes in Eastern Europe, long before today’s 24-hour news cycle made such events instantly visible to global markets. Political risk is not just about wars; it is about how power transitions disrupt commercial certainty.
Pricing these risks remains one of the greatest challenges in insurance. Unlike property or life insurance, political risk cannot be cleanly modelled. Underwriters rely instead on country limits, deal structures, tenure, competition, and continuously shifting geopolitical intelligence. Short-term commodity trades are often preferred due to faster turnarounds, while long-term infrastructure or defence contracts can extend coverage to seven or even ten years — a long horizon in a world where political conditions can change overnight.
Despite this uncertainty, these long-term risks are typically written on a non-cancellable basis, forcing underwriters and brokers to carefully negotiate safeguards such as acceleration clauses and tailored exclusions. Here, experience becomes invaluable. As Kit explained, brokers who had worked directly in international trade were often able to contextualise risk in ways that pure models could not, giving underwriters confidence in deals that might otherwise appear uninsurable.
The market’s globalisation has also transformed how political risk is underwritten. While London remains the dominant hub, important capacity now sits in New York, Paris, Singapore, Dubai, and Bermuda. Local knowledge plays a decisive role: Southeast Asian risks are often best understood in Singapore, while Francophone African exposures are more naturally placed in Paris. Political risk is universal, but interpretation is deeply regional.
Recent developments in Africa’s so-called “coup belt” highlight just how sensitive the market remains to political contagion. When multiple neighbouring states experience military upheaval, underwriting appetite can retreat rapidly — not only for the affected countries but also for surrounding regions. In such environments, the nationality, political alignment, and commercial purpose of the insured party can materially influence whether coverage is even possible.
Unlike many other lines of insurance, political risk rarely involves traditional corporate risk managers. Instead, brokers work closely with finance directors, export teams, project managers, and commodity traders — individuals who operate directly at the coalface of international commerce. These are clients who often understand exactly what they need and apply significant pressure to secure cover in tight markets.
The role of governments in political risk is also distinctive. Export credit agencies actively compete with private insurers, particularly on long-term strategic projects such as aircraft manufacturing and defence exports. In some cases, government schemes are even reinsured by private markets, blurring the line between public backstops and commercial capacity. Political risk is therefore not just an insurance product — it is an extension of national trade policy.
Technology has so far played a limited role in fully transforming political risk insurance. While platforms and data-driven models have reshaped trade credit and cyber insurance, political risk remains resistant to full automation. As Kit noted, an attempted digital platform for political risk struggled not because the product lacked value, but because the market itself was not ready for disintermediation. Relationships, judgement, and experience still dominate in a line of business where nuance often outweighs code.
Looking ahead, however, new overlaps are beginning to emerge. The legal battles around war exclusions in cyber insurance, particularly following state-linked cyberattacks, raise important questions about where cyber ends and political risk begins. While these intersections were barely considered a decade ago, they are fast becoming central to how insurers think about systemic geopolitical threats.
Despite its complexity and volatility, political risk remains one of the most intellectually demanding — and rewarding — areas of insurance. It demands constant attention to world affairs, cultural awareness, financial acumen, and legal understanding. For Kit, it proved to be the most fulfilling decision of his professional life: a career built on global movement, commercial trust, and the perpetual challenge of turning uncertainty into something that can be priced and protected.
Listen to the full conversation on the Coverage & Coffee Podcast to explore the world of political risk in greater depth.
