GCube has launched a Political Risk Insurance (PRI) offering in response to a rising number of client enquiries regarding political and credit risks.
As the international renewable energy sector expands and diversifies into new emerging markets, whilst continuing to feel the effects of a global recession, there is a general consensus amongst project developers, financiers and underwriters that political risk is increasing.
Amidst ongoing economic uncertainty, increasing regulation, fluctuating commodity prices and growing populist policies, companies and lenders have called for stronger safeguards for their renewable energy investments, thereby highlighting a growing requirement for Political Risk Insurance.
With its new PRI capabilities, GCube is seeking, in particular, to target developing markets in Latin America, Africa, Asia Pacific and Central Asia. In these markets, companies and lenders are widely recognised to be at heightened risk of losses arising from actions taken by host governments, including confiscation, expropriation, nationalization and deprivation (CEND).
Furthermore, coverage against a combination of risks including political violence, forced abandonment, currency inconvertibility, forced divestiture, selective discrimination and license or contract repudiation will increasingly become a must-have for those with renewable energy investments in the form of subsidiaries and joint ventures overseas.
Accordingly, GCube is offering up to $50,000,000 of capacity on any single project as it seeks to facilitate and promote renewable energy investment worldwide.
“As investment in developing countries has grown, so too has demand for PRI,” said Jatin Sharma, Business Development Leader at GCube Underwriting Ltd.
“In recent years volatile economic and political conditions in these markets have really highlighted the inherent risks to companies and lenders – think of the enormous impact of high-profile events in the Middle East and North Africa and expropriations in the Latin American mining sector.”
“As renewable energy takes off, particularly in the solar sector, in these complex political environments, traditional cover is no longer sufficient to fully safeguard assets and investments,” he added. “Project delay, damage and cancellation caused by unforeseen political incident or regulatory complications needs to be taken into account and addressed accordingly.”
“By expanding our range of services, we hope to continue providing the most comprehensive coverage offering available to the renewable energy sector and focus on our Insureds needs holistically.”
GCube provides underwriting services on 6 major renewable technology types worldwide, including on and offshore wind, PV and thermal solar, biomass, hydro and wave and tidal energies.
Press release, March 13, 2014; Image: BMT