How advice before you commit differs from cover after you commit: what political risk insurance pays for, what it leaves out, who writes it in London and beyond, and how UK buyers combine the two.
Political risk consulting vs political risk insurance is a question of timing and purpose: consulting tells you, before you commit, how politics could affect a decision and how to reduce the exposure, while insurance pays for specified losses, such as expropriation or political violence, after they happen.
Consulting is advice. A consultancy gathers evidence on the country, the counterparty and the people who can change the outcome, then recommends what to do: change the partner, the structure, the timing or the contract terms, or walk away. It pays nothing if the risk materialises.
Insurance is a contract. An insurer agrees to indemnify you if a peril named in the policy wording causes a loss during the policy period. It does not tell you whether the investment is wise, and it responds only to the perils it lists.
The two answer different questions, which is why companies with large exposure abroad tend to buy both. Our pillar guide, what is political risk consulting?, covers the advisory side in more depth.
Political risk insurance (PRI) protects cross-border investors, lenders and exporters against losses caused by government action or inaction, and by political violence.
The Multilateral Investment Guarantee Agency (MIGA), part of the World Bank Group, describes PRI as a way to manage the risks that come from adverse actions, or inactions, of governments. It also warns that coverage, pricing, tenor and eligibility vary widely by provider, host country and sector, so two policies with the same name can respond very differently.
Buyers include equity investors protecting the value of an overseas stake, banks protecting loans to projects or state entities, and traders or contractors whose counterparty is a government. For the concept behind it, see what is political risk?
The core covers are expropriation, currency inconvertibility and transfer restriction, political violence, and breach of contract or non-honouring of sovereign financial obligations.
| Cover | What it responds to | Example trigger |
|---|---|---|
| Expropriation | Nationalisation or confiscation of assets, and in some wordings “creeping” expropriation through confiscatory taxes or forced renegotiation | A licence is cancelled and the asset handed to a state company |
| Currency inconvertibility and transfer restriction | Being unable to convert local currency or move it out of the country because of exchange controls or blocked repatriation | The central bank stops dividend remittances |
| Political violence | Damage and business interruption from war, revolution, civil disturbance, terrorism and sabotage | Unrest destroys a warehouse |
| Breach of contract (contract frustration) | A government or state-owned enterprise repudiates or breaches a contract | A ministry cancels a supply contract mid-term |
| Non-honouring of sovereign financial obligations | A state fails to make an unconditional payment, without the insured first needing an arbitral award | A state guarantor misses payments on a loan |
Sources: MIGA and Jones Day. Payment cover against states is a large part of the book at MIGA: non-honouring products made up 41% of its gross exposure at 30 June 2025, against 55% for traditional political risk insurance, according to its FY25 financial statements.
Common exclusions include currency devaluation, conditions that existed or were publicly known before the policy started, a government acting as an ordinary commercial party, and measures imposed by a country other than the host state.
The wording decides who pays. In June 2025 the High Court in London held that losses on aircraft leased to Russian airlines fell under the lessors' war-risks policies rather than their all-risks cover, with about $1bn due to AerCap from war-risks insurers, who then sought permission to appeal (HSF Kramer).
Three groups: private insurers, many of them in the Lloyd's and London company markets; multilateral agencies such as MIGA; and national export credit agencies such as UK Export Finance.
MIGA itself lists these three types of provider: profit-oriented private insurers covering developing and developed countries, export credit agencies that support their own country's businesses, and multilateral agencies.
London is one of the main centres for private cover. In March 2025 Commercial Risk, citing Gallagher Specialty, reported around $3.5bn of capacity for any one risk in the London structured credit and political risk market, for both political risks and contract frustration. Cover is usually arranged through a specialist broker.
MIGA issued a record $9.5bn of new guarantees for 44 projects in its 2025 financial year, and its gross exposure reached $36.8bn at 30 June 2025. Claims are rare: it has paid twelve claims on its own account, totalling $94.2m gross, ten for war and civil disturbance and two for expropriation (MIGA FY25 financial statements).
UK Export Finance withdrew its Overseas Investment Insurance on 6 May 2025. That product had covered UK-based investors against war and civil unrest, expropriation and restrictions on remittances, for up to 90% of the loss. UKEF's Export Insurance Policy remains: it covers up to 95% of losses when a UK exporter is not paid, including where political events such as new import restrictions or war prevent the contract being completed. The buyer must be in an emerging or developing market, at least 20% of the export value must come from the UK, and UKEF may ask whether you tried the private market first.
Berne Union members wrote $34.5bn of new political risk cover in 2025, down 18.4% on 2024; private insurers accounted for $7.5bn of it.
The Berne Union, the association of export credit and investment insurers, reports that the fall in 2025 was sharpest among export credit agencies, whose new political risk cover dropped 27.3% to $21.9bn. Total claims across all members' products passed $11bn, the highest on record, driven by a few large outliers including continuing sanctions-related claims involving Russian entities.
These figures cover Berne Union members only, so they understate the whole market. They do show two things a buyer should know: capacity exists, and losses arrive in large, uneven waves when a major political event hits many policies at once.
It answers whether to invest at all, with whom, on what terms and with which early-warning triggers, and it covers risks that no political risk policy is designed to pay for.
Evidence-led specialists such as Molfar Intelligence deliver this as source-referenced reports, for example a Country and Market Risk Picture and Stakeholder and Influence Mapping, so each material finding can be traced to a record.
| Political risk consulting | Political risk insurance | |
|---|---|---|
| Purpose | Understand and reduce exposure | Transfer part of a financial loss |
| When | Before and during the commitment | After the commitment, for the policy period |
| What you get | Findings, scenarios, stakeholder maps, actions, monitoring | An indemnity if a named peril causes a covered loss |
| Who provides it | Political risk consultancies and intelligence firms | Private insurers, multilaterals and export credit agencies, usually via a broker |
| How it is priced | Fee per scope, retainer or subscription | Premium that varies by country, sector, cover and tenor |
| What it cannot do | Pay for a loss | Advise on the decision, or pay for excluded or uninsured risks |
| Typical UK buyer | Boards, investors, general counsel, compliance and strategy teams | Investors, lenders, exporters and contractors with state counterparties |
Consulting fees are rarely published; our guide to political risk consulting costs sets out public price points and planning budgets.
Consulting comes first and shapes the deal; the residual risk is then insured, and the same evidence helps the broker present the risk, helps you negotiate the wording and supports any claim.
The two industries are also converging. On 6 August 2026 AXA XL agreed to buy the shares it did not already own in S-RM, about 51%, to expand its prevention offering, with completion expected by the end of September 2026. The link is old: Control Risks began in London in 1975 as an insurance-backed kidnap response service set up with Lloyd's underwriters.
Political violence cover is one strand of political risk insurance: it pays for physical damage and business interruption caused by war, revolution, civil disturbance, terrorism or sabotage, while the other strands respond to government actions such as expropriation or transfer restrictions.
The distinction matters when you buy. A company with a factory near unrest needs political violence cover and a security plan; a company whose risk is a regulator cancelling its licence needs expropriation cover and a stakeholder strategy. Some policies can be extended to evacuation and restart costs (Jones Day).
Ships and cargo are a separate case. Marine war-risk cover is written in its own market, with the Joint War Committee of the Lloyd's Market Association advising underwriters on high-risk areas, which became the centre of attention in the Gulf in 2026.
The Iran war made Gulf cover sharply dearer and subject to case-by-case review, and WTW reported political risk rates in Gulf countries up 20–30%, against 0–5% for traditional programmes.
The practical lesson for UK buyers: insurance is cheapest and broadest before a risk is visible to the market, which is also when an assessment is most useful.
Use consulting while the decision is still open, insurance once you have committed and the remaining loss would be too large to absorb, and both when the investment is large, long-dated or depends on a government counterparty.
For the advisory side, start with the London political risk consulting firms we rank, each scored on the same nine criteria with every sub-score published.
These London firms do this kind of work. Scores, strengths and watch-outs for each are in our 2026 ranking.
Builds the pre-commitment evidence an underwriter or board will ask about: source-referenced country, ownership and sanctions-exposure findings on a specific market or partner, with published turnaround of 10 business days to one month for investigative work.
Read our reviewThe London firm closest to the insurance market: AXA XL, already a c.49% owner, agreed on 6 August 2026 to acquire the rest of S-RM, which combines political risk with intelligence, cyber and crisis response.
Read our reviewChambers Band 1 for Political Risk and founded in London in 1975 with Lloyd's underwriters; pairs political analysis with security operations and crisis response for assets in unstable markets.
Read our reviewWe score ten London firms on nine weighted criteria, from evidence traceability and sanctions-exposure mapping to Chambers recognition, and show every sub-score.
Consulting is advice you pay for before deciding; insurance is a contract that pays out after a listed political event causes a loss. One lowers the chance and size of a loss, the other moves part of its cost to an insurer.
It usually covers expropriation, currency inconvertibility and transfer restriction, political violence, and a state's breach of contract or failure to pay. It usually excludes devaluation, risks known before the policy started and ordinary commercial losses.
Private insurers in the Lloyd's and London company markets, usually through a specialist broker; multilaterals such as MIGA for investments in developing countries; and, for exporters, UK Export Finance.
No. UKEF withdrew its Overseas Investment Insurance on 6 May 2025. Its Export Insurance Policy still covers UK exporters against non-payment, including where war or new import restrictions stop a contract.
Sometimes, but expect higher prices, tighter terms and exclusions for circumstances already known. WTW reported political risk rates in Gulf countries up 20–30% in spring 2026.
Not always as a formal report, but underwriters price on what they know about the country, the project and the counterparty. A documented assessment helps your broker present the risk and supports any later claim.
Rarely, but in large waves. MIGA has paid twelve claims on its own account, while Berne Union members' total claims passed $11bn in 2025, helped by sanctions-related claims involving Russian entities.
It covers physical damage and business interruption from war, unrest and terrorism, but not a government taking the plant or blocking your cash. Pair it with expropriation or transfer cover where those are the bigger risks.
S-RM, which AXA XL agreed in August 2026 to own outright, has the closest insurance links; Control Risks began in 1975 as a Lloyd's-backed kidnap response service. Compare them in our 2026 ranking.
All sources checked 1 October 2026. Company statements are first-party and not independently audited. See our editorial policy and disclosures.
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