New research suggests that 2024 will be a year of high-stakes elections around the world. With the total number of national elections worldwide increasing 14 per cent from 56 in 2023 to 64 in 2024, speciality reinsurance group Chaucer says this is driving a steady increase in demand for political risk insurance.
“Countries with elections in 2023 have a combined gross domestic product (GDP) of $9.89-trillion. This will more than fourfold increase to a combined GDP of $40.79-trillion in 2024. This increase in combined GDP represents a jump from 9.8 per cent to 40.6 per cent of the world’s GDP going to the polls next year,” they write. “When governments are struggling to pay their bills, this can increase the risk that businesses can find their public sector contracts suddenly cancelled or go unpaid. Businesses have increasingly been insuring against governments failing to pay their bills by buying contract frustration cover.”
They point out that contract cancellations spike in frequency after a change in government. “Another common fear for investors is whether a potential government may be less willing to pay its creditors. The prospect of a government open to defaulting on its debts leaves those with money at stake with little option but to secure political risk cover to protect their interests.”
