Credit & Political Risks: Don’t Just Buy Insurance, Structure It to Perform – Q2/25
In an era where geopolitics now ranks alongside creditworthiness in investment committee debates, the demand for Credit and Political Risk Insurance (CPRI) has surged. Whether driven by sovereign instability, sanctions regimes, trade restrictions, or political violence, the market for insuring cross-border exposures has rarely been more active.
But while demand for coverage is rising, so too is the complexity of securing meaningful protection. Insurers are increasingly tightening terms, applying broader exclusions, and showing more caution when underwriting in politically exposed jurisdictions. For investors, lenders, and corporates operating internationally, this means that how insurance is structured is just as important as the coverage itself.
At Matrix, we believe that insurance is no longer a commodity product—it’s a strategic instrument. And in volatile times, programme structure becomes the linchpin that determines whether risk is transferred effectively or merely documented in name.
The Insurance You Buy Is Only as Good as How It’s Built
While the market headlines often focus on capacity or premium movements, the real edge lies in structural innovation. Off-the-shelf policies may satisfy compliance checkboxes but fail in claims scenarios due to ambiguous triggers or poorly aligned policy terms. The devil, as ever, is in the detail.
Matrix specialises in structuring bespoke insurance solutions that address the client’s specific exposures, investment horizons, and jurisdictional risks. This means going beyond template wordings to construct layered, responsive programmes that can stand up to real-world volatility.
Case Study 1: Structuring Political Risk Cover for a Family Office’s Direct Investments
A prominent European family office with a growing portfolio of direct investments in Latin America was seeking to safeguard capital deployed into a local agritech venture. While returns were promising, the country’s volatile political climate posed a threat of expropriation, currency inconvertibility, and regulatory interference—risks that would be difficult, if not impossible, to unwind through local legal processes. Initial off-the-shelf insurance solutions offered limited comfort:
- Exclusions for “creeping expropriation” meant that gradual interference (e.g., licence suspensions or price controls) would not trigger a claim.
- Coverage tenors were too short, misaligned with the family office’s 7–10 year investment horizon.
- Insurers were reluctant to issue policies to an SPV structure commonly used for tax efficiency.
Matrix was engaged to re-engineer the programme, aligning it with the investment’s legal and operational framework. The solution included:
- A bespoke policy recognising both direct and indirect expropriation, with tailored definitions linked to performance thresholds.
- A non-cancellable 10-year term, negotiated by leveraging Matrix’s access to Lloyd’s syndicates with deep regional expertise.
- Structuring the insured party as a parent-level entity with contingent interest, satisfying both tax structuring needs and insurer risk appetite.
This strategic structuring ensured that the family office could confidently commit capital with a clear path to recovery if political conditions deteriorated—transforming an investment impediment into a competitive advantage.
Case Study 2: Structuring for Political Risk in a Syndicated Loan
Matrix engaged early with the lead underwriter to tailor a policy that:
- Clearly defined what constituted a regulatory vs. political act.
- Secured non-cancellable terms for a 10-year horizon.
- Structured a claims payment obligation directly to the fund, not through the borrower.
When a sudden change in ministerial leadership led to a halt in project disbursements, the fund had a clear path to recovery—because the programme was structured to respond to those very nuances.
Case Study 3: Managing Sanctions Risk in African Export Finance
A European exporter involved in long-term equipment sales across West Africa needed protection against non-payment risks—particularly in jurisdictions exposed to shifting EU and US sanctions regimes. Standard trade credit insurance carried blanket exclusions for “any sanctions event”, rendering the coverage toothless in high-risk jurisdictions.
Matrix restructured the programme to:
- Separate political and commercial risk into different layers of coverage.
- Carve out tailored definitions of sanctions exclusions, focusing on changes in law post-contract.
- Introduce a “materiality threshold” before exclusion clauses could be activated.
When a sudden change in ministerial leadership led to a halt in project disbursements, the fund had a clear path to recovery—because the programme was structured to respond to those very nuances.
The result was a workable solution that enabled continued trade into strategically important markets—with the confidence that cover wouldn’t vanish at the first sign of political turbulence.
The Matrix Edge: Sophistication in Programme Design
Our value is not in merely accessing capacity—it’s in shaping it. Matrix brings a specialist lens to every client brief, blending underwriting expertise, jurisdictional insight, and legal nuance to build insurance solutions that hold water in volatile and complex settings.
As geopolitical risk continues to drive demand, exclusions will only grow more prominent. But that doesn’t mean protection is impossible. It simply means that programme architecture must evolve, and clients need partners who can navigate both the market and the map.
Conclusion: Don’t Just Buy Insurance—Structure It to Perform
In today’s geopolitical climate, a poorly structured policy can give a false sense of security—and potentially catastrophic financial exposure. At Matrix, we believe that strategic insurance is less about price and more about precision.
When the stakes are high, policy structure is not a detail. It’s the difference between cover and denial. Let’s talk about how Matrix can help structure your next programme—for certainty when it matters most.
” In today’s geopolitical climate, a poorly structured policy can give a false sense of security—and potentially catastrophic financial exposure. At Matrix, we believe that strategic insurance is less about price and more about precision. “
Would you like to explore how Credit and Political Risk Insurance (CPRI) can support your business objectives? Contact us at Matrix Global to learn more.
Matrix are authorised and regulated by the Financial Conduct Authority.
