Page 19 - Insurance Times November 2019

POLITICAL RISK

INSURANCE IN

INDIA - DIRE NEED

IN THE GLOBAL

CONTEXT

Prologue: abroad. Precisely that aspect prompted me to come for-
The Indian financial market witnessed exciting twists and ward to start a discussion on various facets of Political risks.
turns throughout 2019 due to events from all fronts, po-
litical, economic, social and corporate, both global and What is Political Risk?
domestic. Indian market started the year with high hopes Basically the political risks are the inherent, intangible risks
then saw really miserable levels in middle of the year as being faced by the firms who are doing business interna-
economic growth fell to new lows. But at the same time in tionally, arising from the action(s), or inaction(s), of:
the current results during the Q1 & 2 of FY2019-20, on 1. The Insured's Government; or,
consolidated basis, we find that the key growth came from
2. A foreign Government or Government entity; or,
the export-driven industries such as information technol-
ogy, pharmaceuticals, although there is tremendous reces- 3. A third party country which deprive a company of all
sion in automobiles and metals but obviously there is a or part of its assets; or prevent or restrict the perfor-
definite growing global presence of India in the interna- mance of any contract.
tional market - that brings the danger of a greater expo-
sure to political risk by the Indian Companies working War, riots, coups, embargoes-the sort of political upheaval
that once occupied statesmen, mercenaries and spies is
About the author these days also the concern of less swashbuckling figures
in the world of finance. A band of corporate-risk officers,
Anabil Bhattacharya export managers and international bankers are looking to
B.M.E. (Honours), F.I.I.I., Risk Inspecting insurers to shield them from the financial consequences of
Engineer & Insurance Counselor, political turmoil around the world. Political risk cover would
Retired Chief Manager, H.O., National once have appealed only to the most intrepid enterprises:
Insurance Co. Ltd., Kolkata. oil firms prospecting in the Niger Delta, or mining opera-
tions in dodgy corners of central Asia.

The Insurance Times, November 2019 19