Credit & political risk insurance capacity grows despite rising risks, says Gallagher

Capacity in the credit and political risk insurance market is close to an all-time high despite rising risks across multiple emerging markets, according to a latest report by global insurance broker Gallagher.

The political risks capacity has gone up 3.1 percent to $3,189 million from January 2019 to January 2020, trade risks up 1.8 percent to $3,123 million, trade risks (commercial) up 3.9 percent to $2,475 million, and non-trade is up 11 percent to $1,752 million.

Over the past decade, market capacity for political risks has risen 137 percent, trade risk (sovereign) 175 percent, and trade and risks (commercial) 252 percent.

Gallagher pointed to the growing maturity of this insurance market as investors demonstrate increased confidence in this type of cover and the risks it can help mitigate. It said that the latest report evidenced high levels of confidence, despite challenging increased global political and economic risks.

This significant expansion of available cover means that investors are able to expand their portfolios and assets in territories where previously they may have felt unable to do so.

“The data in our latest report is encouraging and demonstrates that brokers and insurers can provide the products and solutions to enable the investment market to continue to grow. There are rapidly evolving challenges facing emerging markets, but the credit and political risks insurance market remains supportive of investors, corporates, financiers and traders across both these territories and more established markets," said Matt Solley, managing director of credit and political risks at Gallagher. "This is not the case in many other commercial insurance lines where capacity is a significant issue.

Solley added: “Over time, market innovation has both opened up and supported access into emerging markets and broader underlying asset classes, and insurance is acting as a critical enabler of enterprise – its resilience and growth during this period of heightened risk continues to provide crucial support to the global economy.”