{"id":1395652,"date":"2023-08-10T23:00:00","date_gmt":"2023-08-11T03:00:00","guid":{"rendered":"https:\/\/bugaluu.com\/news\/?p=1395652"},"modified":"2023-08-10T23:00:00","modified_gmt":"2023-08-11T03:00:00","slug":"dems-three-conflicting-goals-spark-surge-in-political-risk-insurance-needs","status":"publish","type":"post","link":"https:\/\/bugaluu.com\/news\/dems-three-conflicting-goals-spark-surge-in-political-risk-insurance-needs\/1395652\/","title":{"rendered":"Dems’ Three Conflicting Goals Spark Surge In Political Risk Insurance Needs"},"content":{"rendered":"

Dems’ Three Conflicting Goals Spark Surge In Political Risk Insurance Needs<\/span><\/p>\n

\n

Authored by Mike Shedlock via MishTalk.com,<\/em><\/a><\/p>\n

In a recent survey of large corporations, 100% of the companies made some enhancement to their political risk management. 54% increased political risk insurance.<\/strong><\/em><\/p>\n

<\/a><\/p>\n

Political Risk is Everyone\u2019s Risk<\/strong><\/h2>\n

Please consider\u00a0The Year Political Risk Became Everyone\u2019s Risk<\/a>.<\/p>\n

This is how an insurance broker typically describes political risk: \u201clow frequency, high severity.\u201d Political risk is, in short, a catastrophe risk, or \u201ccat risk,\u201d much like many types of natural disaster.<\/p>\n

We are going to have to rethink that description: this year, more than 9 in 10 of the companies we surveyed reported a political risk loss (up from 35% only a few years ago). This year, political risk became everyone\u2019s risk.<\/p>\n

The annual Political Risk Survey, carried out by Oxford Analytica on behalf of WTW, combines in-depth interviews with a broader survey of a larger sample of companies. There were 50 respondents to the survey; The survey sample is representative of globalized businesses, across geographic regions, industries, and company size.<\/p>\n

Key Points<\/strong><\/h2>\n

86% of Western European respondents reported a net negative financial impact of the conflict, while only 33% of North American firms did so.<\/p>\n

The shock of war on the European continent had triggered a \u201cparadigm shift\u201d said one member of our business panel; it is a \u201cwatershed moment,\u201d said another.<\/p>\n

100% of the companies we surveyed had made at least some enhancement to their political risk management capabilities since February 2022.<\/p>\n

The proportion who reported purchasing political risk insurance nearly trebled from 25% in 2019 to 68% this year.<\/p>\n

The proportion who predicted deglobalization would \u201cgreatly strengthen\u201d was 16% last year; this year it was nearly 50%.<\/p>\n

The proportion who predicted decoupling from China would \u201cgreatly strengthen\u201d was 12% in 2022, but 42% in 2023.<\/p>\n

Each year, the study study by asks the business panel about the top risks for the year ahead. This year, complications from the Ukraine conflict led the list, followed by decoupling with China. A surprise third place was taken by the European Union, which faces an energy crisis, but is also reshaping the rules and standards of global businesses with its willingness to regulate in areas such as technology, data, supply chains and climate.<\/p>\n

When you confiscate reserves and place massive tariffs and sanctions on Russia and China, political risk blowback is the result.<\/p>\n

Political risk from Ukraine was felt more heavily in Europe, but the US was not immune. 33% of North American firms reported a loss from Ukraine. Interestingly 42 percent of US companies reported a gain.<\/p>\n

Oil companies, the weapons industry, and agricultural exporters were likely the big winners from the war in Ukraine. But were there any winners with big dependence on China?<\/p>\n

You Might Not Be Able to Get Insurance<\/strong><\/h2>\n

Although the need for insurance is soaring,\u00a0Your Business i<\/a>n C<\/a>hina May Be Uninsurable<\/a><\/p>\n

Underwriters stopped writing new policies in Russia months ago, and in China they appear spooked by events ranging from raids on Western consulting firms to threats against Taiwan. Two years ago, after Chinese state media declared videogames \u201cspiritual opium,\u201d shares in the Chinese entertainment giant Tencent swiftly plunged by more than 10%. Not even food and apparel companies, which have been considered relatively safe from political risks, can now be certain they\u2019ll get such coverage.<\/p>\n

Of the 60 or so insurers that offer political-risk insurance, only four or five are still offering it for China, the insurance executive noted. Policies still being offered likely wouldn\u2019t exceed $50 million coverage, down from around $2 billion a few years ago. Most large companies with operations in China have assets far above $50 million.<\/p>\n

Political Risk Is Just Beginning<\/strong><\/h2>\n

The Biden administration has escalated sanctions and tariffs on China.<\/p>\n

In response, China placed export restrictions on rare earth minerals used in computer chips and weapons.<\/p>\n

China\u2019s Limits Germanium and Gallium Exports<\/strong><\/h2>\n

On July 5, Reuters reported\u00a0China\u2019s r<\/a>are\u00a0<\/a>earths dominance in focus after it limits germanium and gallium exports<\/a><\/p>\n

China said on Monday it will impose export restrictions on gallium and germanium products used in computer chips and other components to protect national security interests.<\/p>\n

The decision, widely seen as retaliation for U.S. curbs on sales of technologies to China, raised concerns that China might eventually limit exports of other materials, notably rare earths, whose production China dominates.<\/p>\n

Mining: China accounted for 70% of world mine production of rare earths in 2022, followed by the United States, Australia, Myanmar and Thailand, United States Geological Survey (USGS) data shows.<\/p>\n

Processing: China is home to at least 85% of the world\u2019s capacity to process rare earth ores into material manufacturers can use, according to research firm Adamas Intelligence in 2019.<\/p>\n

The chemical properties of rare earths make them difficult to separate from surrounding materials, and processing generates toxic waste.<\/p>\n

Lax environmental standards enabled China to build its dominance in rare earths in recent decades as Western producers left the industry.<\/p>\n

How China Cornered Rare Earths<\/strong><\/h2>\n

Good Grief Luke<\/p>\n

How China cornered rare earths<\/p>\n

1: China was blessed with minerals, not oil.
\n2: China doesn’t give a damn about wrecking its environment to process them<\/p>\n

You seriously need to study many things and get out of your mindset that everything will crash the dollar.<\/p>\n

\u2014 Mike “Mish” Shedlock (@MishGEA) July 30, 2023<\/a><\/p>\n

How Long Does it Take to Start a Mine?<\/strong><\/h2>\n

Any attempt to eliminate fossil fuels by 2035, as Biden nationally, and the state of California are independently trying, will massively increase costs then fail spectacularly.<\/p>\n

\u2014 Mike “Mish” Shedlock (@MishGEA) April 17, 2023<\/a><\/p>\n

The US and G-7 Allies Are Torn Over Dependence on China<\/strong><\/h2>\n

Please consider my April post\u00a0The<\/a>\u00a0U<\/a>S and G-7 Allies Are Torn Over Dependence on China<\/a><\/p>\n

Three Conflicting Goals<\/strong>\u00a0<\/h2>\n

<\/a><\/p>\n

Reduce dependence on China<\/p>\n

Avoid protectionism\u00a0<\/p>\n

Appease the Greens\u00a0<\/p>\n

Impossible Requirements\u00a0<\/strong><\/h2>\n

1 + 2 is difficult if not impossible. 2 + 3 is difficult if not impossible. 1 + 3 is difficult if not impossible.<\/p>\n

1 + 2 + 3 is 100% guaranteed impossible.\u00a0<\/strong><\/p>\n

\u00a0Damn the Inflation, Full Speed Ahead<\/strong><\/h2>\n

Biden\u2019s and California\u2019s energy policy can easily be summed up in meme phrases.<\/p>\n

Damn the Inflation, Full Speed Ahead<\/p>\n

What, Me Worry?<\/p>\n

The world will end in 12 years if we don\u2019t address climate change.<\/p>\n

On March 22, 2022, I commented\u00a0Biden Doing Everything Possible to Drive Up the Price of Oil, Some of It\u2019s Illegal<\/a><\/p>\n

On November 30, 2022, I commented\u00a0The EU is Very Worried About Biden\u2019s Inflation Reduction Act (IRA)<\/a><\/p>\n

On December 3, 2022, I commented\u00a0Damn That Wind, It\u2019s Not Listening to Biden or AOC<\/a><\/p>\n

On February 7, 2023, I commented\u00a0Biden Gives a Well-Delivered SOTU Speech Begging for More Inflation and Tax Hikes<\/a><\/p>\n

On January 16, 2023, I commented\u00a0\u201cAmerica First\u201d, Biden and Trump Both Guilty of Sponsoring Inflation<\/a><\/p>\n

Biden\u2019s Energy Policy Mandates Cause Severe Shortage of Electrical Steel and Transformers<\/strong><\/h2>\n

In case you missed it, please see\u00a0Biden\u2019s Energy Policy Mandates Cause Severe Shortage of Electrical Steel and Transformers<\/a><\/p>\n

Lesson of the Day<\/strong><\/h2>\n

Finally, please consider my July 20, 2023 post,\u00a0Less<\/a>on\u00a0<\/a>of the Day: If You Weaponize the Dollar and Confiscate Assets, Expect Retaliation<\/a><\/p>\n

Meanwhile, someone please tell me how we are going to reduce dependence on China, avoid protectionism, and appease the Greens with their untenable demands to eliminate gasoline-powered vehicles by 2035.<\/p>\n

You can\u2019t because it\u2019s impossible. So, yeah, the need for political risk insurance is soaring everywhere.<\/p>\n

*\u00a0 *\u00a0 *<\/p>\n

Subscribe to MishTalk Email Alerts.<\/em><\/a><\/p>\n<\/div>\n

Tyler Durden<\/a><\/span>
\nThu, 08\/10\/2023 – 19:00<\/span><\/p>\n

\u200bhttps:\/\/www.zerohedge.com\/political\/dems-three-conflicting-goals-spark-surge-political-risk-insurance-needs<\/a>\u00a0<\/p>\n

\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"

Dems’ Three Conflicting Goals Spark Surge In Political Risk Insurance Needs Authored by Mike Shedlock via MishTalk.com, In a recent survey of large corporations, 100%…<\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1395652","post","type-post","status-publish","format-standard","hentry","category-news","wpcat-1-id"],"_links":{"self":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1395652","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/comments?post=1395652"}],"version-history":[{"count":0,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1395652\/revisions"}],"wp:attachment":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/media?parent=1395652"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/categories?post=1395652"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/tags?post=1395652"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}