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- CPRI is evolving from a reactive safeguard into a strategic balance sheet instrument that supports capital relief, liquidity planning, and portfolio management amid persistent geopolitical volatility.
- Rising global instability has driven record claims and demand, prompting insurers to adopt more selective, transaction-focused underwriting and enhanced verification methods.
- As supply chains and risks become more complex, well-structured CPRI embedded early in transactions enables corporates and financiers to maintain resilience and operational continuity.
Sweeping geopolitical disruption is making credit and political risk insurance (CPRI) ever more crucial.
CPRI is moving away from being a reactive product, evolving into a structural, balance sheet tool that corporates need to embed into their capital relief, portfolio management, and liquidity strategies.
In 2025, CPRI claims activity is reported to have reached its highest level in five years, peaking at a total of $85.4 million.
Charles Osborne, Director at Trade Finance Global (TFG), spoke to Alexander Klepp, Underwriting Manager at Credendo, Guarantees and Specialty Risks.
“Political volatility has become second nature to the international system,” said Klepp, highlighting how this shift is driving the increased demand for CPRI.
Credendo’s CPRI cover protects against non‑payment arising from both political and commercial causes.
The last year has seen mounting geopolitical shocks, from Russian sanctions and sovereign crises in Africa, to now US and Israeli operations in Iran. According to Klepp, CPRI is “no longer just protection, it’s infrastructure for global trade.”
In response to this increased demand, the CPRI market is expanding in capacity through new insurers and managing general agents (MGAs). New entrants into the supply side of the industry are also allowing for better coverage of tailor-made asset types.
Instead of treating risk assessments as country-specific, single crises-driven measures, political risk is now perceived as an ongoing state of affairs, with underwriters growing increasingly selective.
Changing political risk assessments
Corporates continue to anticipate threats to cross-border trade and insecurity. In early March, US President Donald Trump even ordered the United States Development Finance Corporation to extend political risk insurance, as transits through the Strait of Hormuz experienced a monumental slowdown.
However, according to Klepp, given that insuring against geopolitical volatility is perhaps now mainstream, CPRI is much less “defensive.”
Trump’s orders triggered a response from Lloyd’s of London, which insisted that hull and cargo continue to be insured across the Strait, with significant government co-operation.
But on 27 March, the effective closure of the Strait through the Islamic Revolutionary Guard Corps’s (IRGC) issuance of a formal shipping ban fuelled contract frustration, and war-risk pricing saw a major reassessment.
Lloyd’s List quoted high-risk vessels being insured at premiums between 7.5% and 10%, whereas pre-crisis rates were within 0.1-1%.
“Violence, sanctions, capital controls, and regulatory interventions are nowadays baked into our assumptions, much earlier than before,” noted Klepp. Yet in times of extreme volatility, underwriters prepare against cataclysmic events with a more “selective, technical, and transaction-driven” underwriting, he added.
For instance, GPS data is no longer adequate proof for maritime insurance claims across the Strait. Satellite imaging verification has effectively become the prerequisite for coverage.
Particularly when it comes to Credendo’s single-risk framework, commoditised insurance weaknesses are exposed. Instead, underwriters rely “much more on transaction architecture, where cash flows move, how contracts are enforced,” said Klepp.
Non-payment underwriting can be optimised by mapping cash flow chains to see a bigger picture beyond the buyer. An understanding of the entire payment ecosystem allows the underwriter to go beyond forecasting for one-off events, to establishing policies that are made to “hold when the environment deteriorates,” as put by Klepp.
The supply chain puzzle
As the Strait of Hormuz grew increasingly impenetrable, vessels rerouted through the Cape of Good Hope, leaving corporates and banks scrambling amid a 10-14 day delay.
In the event of supply chains becoming re-routed, “financiers are forced into new jurisdictions, new counterparties, and, consequently, new risks,” said Klepp.
As risk multiplies, insurers face brand-new sets of exposures. Klepp pointed out that underwriters now have to consider “whether political risk is isolated or contagious,” and thus have to prepare for a state of contagion.
To avoid multi-dimensional risks in the face of changing accumulation, capital allocation, and exposure, non-payment insurance, specifically, “makes it possible to finance the unfamiliar,” said Klepp. “It allows banks and traders to support diversification, without having to fully internalise sovereign or political risk.”
With transaction architecture being the focus, insurance is less systemic and is more oriented toward the private obligor.
Discipline determines stability
For CPRI to deliver its full value, it needs to “support logistics, planning, contract design, and financing strategy,” said Klepp. If non-payment insurance is to be robust in times of a geopolitical shake-up, it needs to be embedded from the inception of transactions.
Resilience in non-payment insurance trumps speculation. “The smartest traders use insurance not to chase risk, but to stay operational when others can’t,” said Klepp.
In 2025, 80% of insurance claims were new notifications, up from a five-year average of 53%.
But the CPRI industry is not infallible, especially if there is a failure of commercial discipline. “Where transparency, alignment of interests, and robust contracts are missing, insurance will eventually step back,” added Klepp.
This challenge is more likely to be realised, especially as banks and other financial institutions look towards CPRI. Export credit agencies (ECAs), export-import banks and multilateral institutions turn to the CPRI market on a case-by-case basis for the reinsurance of their own guarantees.
For selective underwriting to be mutually beneficial, a variety of interests needs to correspond with unity of ambition. As suggested by Klepp, “When risk is shared sensibly and structured properly, insurance becomes a stabiliser, not a last resort.”
As the war in the Middle East unfolds, and the Strait of Hormuz becomes a playing field for politicians, the very definition of risk is getting tested rigorously. .
In the case of single-risk underwriting, it is these voyage-by-voyage incidents that prompt selective and legally fine underwriting. As such, country-specific risk is now “less about forecasting a single election or crisis,” and is instead working with the assumption of risk within the political ecosystem.
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For Klepp and for the wider CPRI ecosystem, in 2026, “volatility is the baseline.”
Shock-driven environments mean CPRI is no longer able to be priced off traditional risk assessing anchors; instead it must be priced on the ability to stay operational in an unstable world.
