Demand for political risk insurance is climbing as global instability deepens, but Canadian businesses are still slower than their international peers to integrate it into their broader risk-management strategies. That’s the view of Patrick Rengger (pictured), commercial account executive and senior advisor at HUB International’s Complex Risk Division, who says the shift in awareness has begun – though not fast enough to match the pace of change in global risk.
“People are more concerned than they have been,” Rengger told Insurance Business. “Perhaps not as concerned as they should be.”
Rengger said Canadian companies have traditionally lagged behind their European counterparts in recognizing political risk as a standard element of international operations. In Europe, assessing and pricing political risk coverage is almost routine – a built-in step when planning new projects or entering new markets.
“European businesses look at political risk insurance as an almost inevitable part of the process,” he said. “At the very least, they work with a broker to build a framework, get a quote, understand how much capacity is available and what it might cost, and then make an informed decision on whether to buy.”
In Canada, by contrast, that same process often happens only after a company has already faced disruption or uncertainty abroad. The mindset is still catching up.
According to Rengger, that gap stems partly from a perception that political risk applies only to extractive sectors, such as oil, gas, and mining – industries traditionally exposed to nationalization or expropriation. As a result, many Canadian firms in manufacturing, logistics, and consumer goods have not viewed political risk as relevant to them.
That assumption no longer holds true. Rengger noted that the scope of political risk has expanded well beyond natural-resource disputes, now touching industries as varied as manufacturing, technology, and infrastructure.
“Political risk used to be seen as a ‘resource nationalism’ issue – a government saying, ‘This is our oil, our gold, our national patrimony,’” he said. “But it’s extending far beyond that now. We’re seeing restrictions on trade and manufacturing coming under threat, as well as broader regulatory actions that affect a whole variety of sectors.”
In practice, that means any business operating across borders – not just those extracting resources – could face losses tied to government actions, trade sanctions, or contract frustration. For Canadian firms increasingly involved in foreign direct investment or complex global supply chains, the exposure has quietly grown.
While awareness may trail Europe, inquiries from Canadian clients are increasing, Rengger said. Many are now seeking to understand what coverages exist, how much capacity is available, and what such protection might cost.
The initial step, he added, doesn’t necessarily involve purchasing a policy right away. Rather, it’s about creating a framework for decision-making.
“Companies want to price it out, understand their options, and then make an informed business decision – yes or no,” he said.
That kind of structured approach, he believes, represents progress. But too often, Canadian businesses still treat political risk as a reactive purchase – something to consider after conditions deteriorate, rather than as part of proactive planning.
Rengger cautioned that such hesitation can leave companies exposed. “Political events happen fast,” he said. “Once the situation starts to deteriorate, capacity tightens and coverage becomes difficult or impossible to obtain.”
The types of organizations seeking advice are also evolving. Historically, political risk buyers were large multinationals with overseas assets or joint ventures in emerging markets. Now, mid-sized companies with growing export operations are beginning to explore coverage as well.
According to Rengger, this reflects both broader geopolitical uncertainty and the globalization of Canadian business. Supply chains, financing arrangements, and service contracts now span multiple jurisdictions, meaning that even a small firm can have significant exposure to foreign policy decisions.
The expansion of coverage options has also helped drive interest. Political risk insurance, once a niche product dominated by multilateral agencies, is now offered by private-sector insurers with greater flexibility and tailored coverage – including protection for contract frustration, arbitration default, and currency inconvertibility.
Rengger said the next step for Canadian companies is to treat political risk analysis as a strategic planning tool, not just a specialty line of insurance. Mapping potential exposures early – from currency restrictions to regulatory changes – allows firms to negotiate better contracts, diversify counterparties, and decide where insurance makes sense as part of a layered approach.
“Political risk insurance isn’t about predicting which government will fall next,” he said. “It’s about understanding that political and regulatory change can directly affect your assets and cash flow – and making sure you’ve mitigated that before it happens.”
As volatility increases, he expects political risk to become a more regular part of Canadian corporate conversations. The issue, he stressed, is no longer whether companies are exposed, but whether they recognize how exposed they already are.
For now, the demand curve is clearly upward – but so is the urgency.
Canadian firms are asking more questions, Rengger said, yet still catching up to international peers that have long treated political risk as integral to global operations.
“By and large, European businesses don’t view it as optional,” he said. “It’s simply part of doing business internationally.”
