Document Type
Article
Disciplines
Insurance Law
Abstract
Developed democracies in the West are facing a surge of political
risk. Democratic institutions are showing their weaknesses as polarization,
populism, and trade conflicts sweep across the developed world. Firms and
investors with multinational interests have been turning to political risk
insurance to mitigate potential losses due to adverse government action.
Once limited to emerging markets to insure against risks such as civil war
or expropriation, political risk insurance is increasingly being purchased to
protect assets from emerging risks in developed economies. While private
insurers have been able to respond to the increase in demand for coverage,
they are not as well-equipped as their public counterparts. Private insurers
lack the information back-channels that only government intelligence
networks can provide and do not have the political clout to advocate on
behalf of their insureds. Public providers of political risk insurance are
typically prohibited from offering coverage for investments outside
developing markets and are thus unable to respond appropriately to the new
political risks emerging in western democracies. This Note argues that these
restrictions should be relaxed in light of the new threats facing multinational
firms and investors that need the backing and support of their home
governments.
Recommended Citation
Brakebill, James R., "Managing the New Political Risks: Populism, Democratic Instability, and the Rise of Political Risk Insurance in Developed Democracies" (2020). Connecticut Insurance Law Journal. 375.
https://digitalcommons.lib.uconn.edu/cilj/375