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Capacity, competition and low pricing drive profitability in political risk marketplace

Marsh report details growth opportunities for carriers, especially in the multinational area.

By Melissa Hillebrand | Updated on June 17, 2015

Capacity in the political risk marketplace has grown steadily since the financial crisis, and at $2.4 billion, market capacity for a single policy of political risk insurance today is nearly twice what it was in 2009, according to Marsh’s “Political Risk Market Update.” Coupled with strong competition and all-time low pricing, market conditions are favorable toward buyers of political risk.

Increased capacity reflects a shift away from traditional P&C lines toward more profitable specialist classes, Marsh says in its report. Property and directors & officers liability have become crowded with competitors, which contributes toward soft pricing and limited underwriting profits. Specialist lines, however, generally are not affected by swings in the overall insurance market.

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