Belt and Road Initiative Insurance: Complete Guide for Contractors
Navigate the complex insurance landscape for BRI infrastructure projects across Asia, Africa, and beyond.
Key Takeaways
- BRI projects face unique political, construction, and cross-border risks requiring specialized coverage
- SINOSURE provides critical credit and political risk coverage for Chinese contractors
- Master program structures work best for contractors with multiple BRI projects
- Political risk insurance is essential—not optional—for most BRI corridors
- Local admitted insurance requirements vary significantly by country
Understanding BRI Insurance Challenges
The Belt and Road Initiative (BRI)—China's massive infrastructure investment program spanning Asia, Africa, Europe, and beyond—presents unique insurance challenges. Projects often operate in emerging markets with limited insurance infrastructure, significant political risk, and unfamiliar regulatory environments.
For contractors—whether Chinese state-owned enterprises, Chinese private companies, or international firms partnering on BRI projects—understanding these insurance challenges is critical to project success.
Key Risk Categories
Political Risk
Expropriation, currency inconvertibility, political violence, and contract frustration by host governments.
Construction Risks
Physical damage during construction, design defects, and natural catastrophes in unfamiliar geographies.
Cross-Border Complexity
Multiple jurisdictions, varying legal systems, admitted insurance requirements, and currency exposures.
Supply Chain Risks
Equipment transit across multiple borders, supplier insolvency, and logistics delays.
Labor and Security
Expatriate worker safety, kidnap and ransom exposure, and local labor disputes.
Natural Catastrophe
Earthquake, flood, and cyclone exposures in regions with limited loss history and modeling data.
Insurance by BRI Corridor
Risk profiles vary significantly across BRI economic corridors:
China-Pakistan Economic Corridor (CPEC)
China, Pakistan
Gwadar Port, Karakoram Highway, Power Plants
Political instability, terrorism risk, currency volatility
Strong PRI coverage, K&R insurance, local security consultants
China-Central Asia-West Asia
Kazakhstan, Uzbekistan, Turkmenistan, Iran, Turkey
Railways, pipelines, industrial zones
Sanctions exposure (Iran), admitted requirements, currency controls
Careful sanctions screening, local partnerships, currency hedging
China-Indochina Peninsula
Vietnam, Laos, Cambodia, Thailand, Myanmar, Malaysia
High-speed rail, ports, special economic zones
Varying regulatory environments, flood exposure, local content rules
Regional program structure, NAT CAT modeling, local broker relationships
Maritime Silk Road
Southeast Asia, South Asia, East Africa, Mediterranean
Ports, logistics hubs, maritime infrastructure
Piracy (historical), maritime risks, multiple jurisdictions
Marine liability expertise, port operators liability, P&I coverage
China-Africa
Kenya, Ethiopia, Djibouti, Nigeria, Egypt
Railways, power generation, telecommunications
Political risk, limited local capacity, infrastructure gaps
DFI involvement (AfDB), comprehensive PRI, expatriate medical
SINOSURE: The Critical Partner
China Export & Credit Insurance Corporation (SINOSURE) is the policy insurance company of China, providing export credit and investment insurance. For Chinese contractors on BRI projects, SINOSURE coverage is often essential—and sometimes mandated by financing arrangements.
| Product | Coverage | Limit |
|---|---|---|
| Medium and Long-term Export Credit Insurance | Non-payment risk for export contracts with 2+ year payment terms | Up to project value |
| Overseas Investment Insurance | Political risks for Chinese investments abroad—expropriation, war, transfer restrictions | Up to investment value |
| Short-term Export Credit Insurance | Commercial and political risks for exports with payment terms under 2 years | Revolving based on buyer limits |
| Bond Insurance | Unfair calling of performance bonds and advance payment guarantees | Bond amount |
| Specific Project Insurance | Comprehensive coverage for major infrastructure projects | Negotiated per project |
Working with SINOSURE
SINOSURE coverage typically requires early engagement during project development. Applications involve detailed project documentation, financial analysis, and country risk assessment. For major projects, expect 3-6 months for underwriting and approval.
Political Risk Insurance Deep Dive
Political risk insurance (PRI) is arguably the most critical coverage for BRI projects. Key perils include:
- Expropriation: Government seizure of assets or creeping expropriation through regulatory action
- Currency Inconvertibility: Inability to convert local currency to hard currency
- Political Violence: War, civil war, insurrection, terrorism
- Contract Frustration: Government breach or repudiation of contracts
- Arbitrary Conduct: Discriminatory government actions
PRI Providers for BRI Projects
- SINOSURE: Primary source for Chinese investors and contractors
- MIGA (World Bank): Multilateral guarantees, adds credibility with host governments
- Private Markets: Lloyd's, AIG, Zurich, Chubb offer commercial PRI
- OPIC/DFC (US): For US investors in BRI-adjacent projects
- Bilateral ECAs: JBIC (Japan), K-SURE (Korea), UKEF (UK)
Sanctions Considerations
Some BRI corridor countries are subject to international sanctions (Iran, Myanmar, Russia-adjacent). Carefully screen all insurance placements for sanctions compliance. Many Western insurers cannot participate in certain BRI projects due to sanctions exposure.
Program Structures
Choose the right structure based on your portfolio of BRI projects:
Project-Specific Program
Tailored coverage for each major project with dedicated policies.
- Customized to project risks
- Clear cost allocation
- Project lenders requirements met
- Higher administrative burden
- Potential coverage gaps between projects
- Less buying power
Master Program
Centralized coverage with local policies issued where required.
- Consistent terms
- Buying power leverage
- Centralized claims handling
- May not fit all local requirements
- Complex administration
- Premium allocation challenges
Consortium Approach
Joint venture partners share coverage through common program.
- Shared costs
- Aligned interests
- Single claims process
- Complex negotiations
- Joint liability concerns
- Differing risk appetites
Local Admitted Insurance
Many BRI host countries require insurance to be placed with locally admitted insurers. This creates complexity for multinational programs:
- Pakistan: All insurance must be placed locally; reinsurance can be offshore
- Indonesia: Admitted insurance required; limited foreign insurer access
- Kazakhstan: Local policies required; freedom of services limited
- Kenya: Local content requirements; developing reinsurance market
- Malaysia: Relatively open market; Labuan offshore center available
Work with brokers who understand local requirements and can structure compliant programs with appropriate master policy coordination.
Claims Management in BRI Markets
Claims handling in BRI corridors presents unique challenges:
- Documentation: Maintain meticulous records—local courts and insurers may require extensive proof
- Local adjusters: International adjusters may not have local licenses; build relationships early
- Currency: Agree upfront how claims will be settled—local currency or hard currency
- Dispute resolution: Specify arbitration venue carefully; Singapore and Hong Kong are common neutral choices
- Subrogation: Recovery from local parties may be difficult; factor this into expectations
Best Practices
- Engage early: Start insurance planning during project development, not after contracts are signed.
- Build local relationships: Identify reliable local insurers and brokers before you need them for claims.
- Layer coverage strategically: Use local policies for working layers, international markets for excess and specialty coverages.
- Monitor political developments: Political risk can change quickly; maintain ongoing country risk monitoring.
- Coordinate with lenders: Financing arrangements often have specific insurance requirements; align coverage early.
- Document everything: In emerging markets, thorough documentation is your best protection in disputes.
Planning a BRI Project?
Our advisors have extensive experience with Belt and Road Initiative insurance programs. We can help you structure coverage that meets project requirements and manages risk effectively.