The credit and political risk insurance (CPRI) market remains resilient amid global uncertainty, according to a new study from WTW.
The CPRI market has access to greater capacity than ever before, with virtual maximum capacity increasing across the board, according to WTW. Survey of the ability to secure credit and political risks and update the marketreleased Thursday.
In January, the survey surveyed 58 insurers in Lloyd’s and Corporate Markets. Of those surveyed, 49 had expanded their appetites and abilities as of January 31. The survey found that there was a significant increase in total CPRI hypothetical capabilities with:
- Nearly $4 billion total nominal capacity to abort nodes available per transaction, up from $3.4 billion at the same time last year – an increase of 20%
- Trade credit for transactions increased by 17% to US$3 billion
- A 37% increase in non-commercial credit to $2.2 billion
- Total political risk capacity increased by nearly 15% to nearly $4 billion
- Capacity increase across all periods overall, with particular growth in contract frustration, with default capacity for 15 years being $2.5 billion, up from $1.8 billion in the previous year – a 37% increase
When asked about exposures, 32 CPRI insurers named the top three countries by exposure, with the United States ranked first, the United Kingdom second, and Nigeria ranked third. All of the survey respondents listed their largest industry exposures, which were, in descending order, financial institution, sovereign, and oil and gas.
“The fact that we are seeing a continued and steady increase in capacity within the CPRI market is indicative of its stability as well as market confidence in this sector,” said Emma Coffin, Head of Brokerage at Global Financial Solutions at WTW. “Each of CPRI’s three main risks – contract frustration, transaction risk and political risk – has grown over the past two decades through various market cycles, through the COVID-19 pandemic and resulting lockdowns.
“Oil and gas fell from first to third place in terms of largest 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,” Coffin said. . “We expect all of these positive trends to continue into 2023.”
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