Prices in the political risk insurance market are weakening despite an unstable global environment that is boosting demand for cover, a Risk and Insurance Management Society (RIMS) report says.

Brokers have noted greater interest from almost every industry and organisation type operating globally, with the cover no longer the sole domain of resources companies.

But RIMS says market capacity has also ballooned, rising from about $US700 million ($900 million) in 2009 to $US2 billion ($2.6 billion) now.

“The current market for political risk insurance is attractive for buyers, with diverse offerings and flat to dropping prices,” the report says.

Underwriters and brokers have reported annual growth in political risk business of 5-8% in recent years.

RIMS says geopolitical risk experts consider the current global environment to be unusually tumultuous, while opportunities for a range of organisations to expand globally have grown and are often too valuable to be overlooked.

“A lazy understanding of the world’s geopolitical situation can result in embarrassing and costly situations,” the report says.

Risk managers interviewed for the report say definitions of political risk can range from traditional confiscation, expropriation and nationalisation of assets, to actions that create poor economic conditions.