Commercial or political risk?
With credit insurance, the insurer covers the payment default of debtors by default. With a covered cause of loss, the insured can claim compensation. There are two types of causes of loss: insolvency and presumed insolvency. We call this the commercial risk. However, non-payment may also be due to the debtor's country, and not to the debtor itself. These are specific situations or events, which are described in a separate Module or in the Country Policy. We call this the political risk.
Always up to date
One of the policy conditions is that a debtor or shareholder is not on a sanctions list. You can check this by checking the European sanctions list (freeze list) and the list of UN sanctions to view. Be aware that this list changes daily. Periodically, the status of the countries is reassessed. For each country, you can always request the political status from Xolv. In special situations, the status is also adjusted in the interim: think, for example, of the countries that were suddenly involved in the Arab Spring or the war between Ukraine and Russia.
Check Country Risk Map insurer
Suppose payment is still delayed due to a political cause, the insurance provides cover for losses on debtors. This concerns companies or organisations based in countries to which political risk cover applies according to the Country Risk Map, provided the country or debtor or person is not on the sanctions lists. You can find a Country Risk Map on your insurer's website.
Overview of political risks
The following situations or events generally fall under political risk:
- Moratorium: deferral or suspension of a payment obligation by a company or a country.
- Currency transfer risk.
- A generally binding measure taken in the country of the debtor.
- War: with the exception of the five superpowers among themselves.
- Natural disaster: a cyclone, flood, earthquake, volcanic eruption or tidal wave or other forms of natural disasters in the debtor's country.
- Impossibility of contract execution.
- Withdrawal of export licence.
- Government failure: the failure or refusal of a government debtor to perform any provision of the contract. This covered cause of loss applies only if the credit limit decision states that the debtor is a government debtor.
Changing situations require up-to-date knowledge
Figuring out what coverage you have regarding political risks is not so easy. Therefore, always check with us whether your claim is covered, as the situation is constantly changing.
