Much of the focus in late 2023 and early 2024 from PVPRTC insurers was on the historic number of elections taking place through 2024. According to the Armed Conflict Location & Event Data team (acleddata.com) there was a 63% increase in political violence events in countries hosting an election and only a 21% increase in countries without elections2. However, none of the elections appear to have triggered significant mass protests or armed violence (such as insurrection or rebellion). Rather, 2024 saw the continuation of pre-existing conflicts, notably in Ukraine, Israel and the wider Middle East and Myanmar.
Worrying trends persist in Mexico, where the new Sheinbaum administration has so far been unable to restrain cartel criminality. Trade restrictions from the new Trump administration in the US are likely to further hit both Mexico and broader Latin America, with negative implications for the whole region.
In July head of DWF's PVPRTC team, David Abbott, appeared on the DWF podcast 'Risk Matters' with Ukrainian lawyers Igor Krasovskiy and Olena Savchuk from Integrites and underwriter Nick Hedley. During the podcast David, Olena, Igor and Nick discussed the limitations for insureds of PV insurance in circumstances where insured property is on land overrun by a hostile military but not damaged in the process. After that discussion, the Commercial Court handed down judgment in Hamilton v Afghan Global Insurance4, where the court found that material held in Afghanistan and lost to the Taliban following the withdrawal of US forces in 2021 had been seized and was therefore excluded from cover under the AFB PV wording. A second topic discussed was the need for more support from the global insurance industry for PV insurance for development in Ukraine to allow investors to build with confidence. It is therefore a welcome development that broker McGill & Partners has launched a commercial property war risk reinsurance programme with cover up to USD50m5.
For Political Risk insurers in 2025, many eyes will be on the new Trump administration and its approach to Russian sanctions. Insurers have had to grapple over the last three years with an expanding web of sanctions that have restrained claim payments and hindered subrogated recoveries. For Trade Credit Insurers, the saga of Basel 3.1 implementation continues. The PRA has confirmed the UK will not deviate from Basel rules and the accompanying reduction in capital relief offered by trade credit insurance to British banks. Further, while the EU Commission has not yet taken a formal view, the EBA report from October 20246 that also recommended no deviation from Basel rules suggests Europe will follow the UK in this regard. Industry analysts are suggesting these decisions will reduce credit insurance purchases, particularly on stronger corporate debt7.
To read the full political violence, political risks & trade credit section, download the Global Risks: Horizon Scanning report.
https://www.bailii.org/ew/cases/EWHC/Comm/2024/1426.html
https://www.reuters.com/business/finance/broker-mcgill-offers-property-war-reinsurance-ukraine-2025-01-09/
https://www.eba.europa.eu/sites/default/files/2024-10/4f392d3d-289b-4286-aa78-d3ea2aca1744/Report%20
on%20credit%20insurance.pdf
https://www.gtreview.com/supplements/gtr-risk-2024/credit-insurance-market-braces-for-basel-3-1/
