The credit and political risk insurance market (CPRI) remains resilient with record capacity amidst global political and economic uncertainty, according to a survey by global advisory, broking, and solutions company, WTW.
Fifty-eight insurers across Lloyd’s and company markets participated in the survey titled: The Credit and Political Risk Insurance Capacity Survey and Market Update, which concluded that the CPRI market currently has access to more capacity than ever before, with notional maximum capacity increasing across the board, demonstrating its resilience and depth.
The survey found that there has been a substantial increase in total notional CPRI capacity as at 31 January 2023 with approximately $4bn contract frustration total notional capacity available per transaction, up from $3.4bn this time last year, a 20% increase.
Other findings include a 17% increase in transactional trade credit (to $3bn), a 37% increase for non-trade credit (to $2.2bn) and that overall political risk capacity was up by nearly 15%, to almost $4bn.
It also found that there was an increase in capacity across all tenors generally, but there was particular growth in contract frustration where notional capacity for 15-year tenors is $2.5bn vs $1.8bn for the previous year (37% increase).
Additionally, when participants were asked about exposures, 32 CPRI insurers detailed their top three countries by exposure, with the U.S, U.K. and Nigeria ranking first, second and third respectively.
All 49 respondents listed their top industry exposures, which were – in descending order – financial institution, sovereign, oil and gas.
Emma Coffin, Head of Broking, Global Financial Solutions at WTW, said: “The fact that we are seeing a continued and steady increase in capacity within the CPRI market denotes its stability as well as the market’s confidence in this sector.
“Each of the three main CPRI perils, contract frustration, transactional credit and political risk, have experienced growth over the past two decades through various market cycles, across the COVID-19 pandemic and the resulting lockdowns.
“Oil and gas has declined from first place to third place in respect of top industry exposures and this survey also highlights a marked rise in renewables and ESG with a positive shift in the number of markets able to support clients with challenging financing structures. We foresee all these positive trends continuing in 2023.”
