A political risk policy insures an investment, that is property, shares and flows. It does not insure people, and that sentence looks obvious until the day an expatriate team must leave a country within forty eight hours and somebody asks what the insurance covers. The answer is almost nothing, and it surprises all the more because the subject is by then occupying all of management's attention. This module draws that boundary and above all says where the handover lies, because that is the question left unanswered at three in the morning.
What the political risk policy does take must be stated precisely so as not to promise more. Evacuation costs may be recoverable, not because they protect people but because they limit covered physical damage: evacuating allows an installation to be mothballed, stock to be secured, a heavier loss to be avoided. They are mitigation costs in the sense seen earlier, and they follow the salvage regime. Some wordings add a named extension for repatriation costs, with a sub limit. None of that is cover for people, and presenting the first as the second is an error a professional must not make in front of a family.
What it does not take can be listed without qualification: bodily injury, death, medical costs, ransom, negotiator's fees, a detained employee's lost income, psychological support and the employer's liability to its employee. Each of those heads belongs to another contract, and the absence of one of them from a group's programme is rarely a decision: it is an oversight arising because the person who buys political risk and the person who buys people covers are not the same, do not sit in the same place and never compare their two lists.
The contract taking over goes by various names and one common feature that complicates everything: it is confidential. So called special risks policies, covering kidnap, ransom and extortion, almost always stipulate that their existence must not be disclosed, including within the company, because knowledge of their existence increases the risk they cover. The consequence is structural: the person handling a political risk claim often does not know such a policy exists, and the person triggering the second is not permitted to tell them.
Then comes the zone the brief points at, covered by nobody if it was not thought of: detention by an administration. A special risks policy targets criminal acts, kidnap, unlawful confinement, extortion, and a holding by a public authority is not one. A political risk policy targets property, and a person is not property. An employee held three weeks by a local administration therefore falls between the two, unless the contract carries a named extension, often called arbitrary or wrongful detention, which exists, which can be bought, and which does not appear by default.
A point of conduct must be added which is not an insurance point and which outranks everything else in the first hours. Detention by a public authority is handled first through consular channels and by people who know the country, not by calling a broker. Insurance comes afterwards, to fund what has been incurred and to make available responders it has experience of. An executive who starts by working out which policy responds loses the hours that count, and an adviser who encourages that is in the wrong trade.
One last difficulty deserves stating because it cuts across all the others. Costs incurred in these situations attach to three families an accounting department will inevitably mix: mitigation costs relating to the installation, which belong to the political risk policy; costs relating to people, which belong to the other contract; and operating charges for the period, which belong where applicable to business interruption cover. Claiming them together weakens all three, as was seen in relation to mitigation, and the separation is made from day one or never.
This module closes on a one page document almost no group holds and everyone believes it has. The list of policies carrying an exposure in that country, each with its insurer, its number, its trigger, the person in the group who holds it and the number to call at night. It is put together in a morning, it costs nothing, and it is the only thing that is any use in the first two hours of an event where nobody reads contracts any more.
A European engineering group runs a water treatment site in a Sahel country, with nineteen expatriates on site. On 3 May 2026, after an attack on a garrison sixty kilometres away, the group decides to evacuate by chartered flight: cost 480,000 euros, plus 210,000 euros of site securing and reinforced guarding. On 5 May, at boarding, the project director is held by the border police on the ground of an irregular work visa; he is released on 26 May after three weeks of extended custody, no charge being brought. The group has incurred 95,000 euros of local lawyers' and specialist advisers' fees. It holds a political risk policy on the site and, at holding level, a special risks policy whose existence the country risk director did not know of. What covers what?
The three heads must be sorted before any policy is discussed, because claiming them together would weaken all three. The 210,000 euros of site securing and guarding are mitigation costs in the classic sense: they prevent covered physical damage, they attach to the political risk policy, and they are claimed on that basis with the chronology of decisions. The 480,000 euros of evacuation call for a finer discussion not to be settled too quickly: they are claimed on the political risk policy to the extent the evacuation allowed the site to be secured, which is demonstrable here since the two operations are concurrent, and they would fall under a named repatriation extension if the policy carries one. Both wordings must be read before choosing the basis, because one amount is claimed once. The 95,000 euros linked to the project director's detention pose the file's real problem. It is not a kidnapping: the holding comes from the border police, that is a public authority acting on an administrative ground. A special risks policy targets criminal acts and therefore probably does not respond, unless it carries an arbitrary detention extension, which must be checked in the text at once rather than assumed. The political risk policy does not respond either, since it insures property. Absent a named extension, those 95,000 euros stay with the group, and that is a real gap in cover to be named as such rather than argued over. Two methodological findings finally impose themselves and they are worth more than the sum at stake. The country risk director did not know the special risks policy existed, which is normal since such contracts are confidential by construction, and that is precisely why a one page list must exist at group level, with triggers and night numbers. And the order of the steps on 5 May mattered more than the insurance: a holding by a public authority is handled first through consular channels, and insurance funds afterwards what has been incurred.
- 01A political risk policy insures property, shares and flows: evacuation costs enter it only as salvage of physical damage, never as cover for people.
- 02Special risks policies are confidential by construction: whoever handles a political risk claim often does not know they exist, and whoever triggers them may not say so.
- 03Detention by a PUBLIC AUTHORITY falls between the two contracts: it is not a criminal act and a person is not property, absent a named arbitrary detention extension.
- 04In the first hours the consular route outranks insurance: working out which policy responds loses the hours that count.
- 05Three families of costs get mixed and weaken one another if claimed together: mitigation on the installation, people related, and operating charges.