Risk, also known as forbidden risk.
Forbidden risk is the basic risk insured by investment insurance institutions in the overseas investment insurance system.
It mainly refers to the risk that the investor’s principal, profits and other legitimate and lawful earnings cannot be freely converted into foreign currencies and repatriated back to the country because the investment host country is unable to conduct foreign exchange transactions due to foreign exchange shortage, restriction or cessation, or war or other accidents.
The specific content of foreign exchange insurance coverage is: the local currency obtained by the policyholder (investor) as the income or profit of the investment during the insurance period, or the local currency obtained by the sale of the property of the investment enterprise. If the host country prohibits the conversion of these into free currency, the overseas private investment insurance institution will exchange them with free currency.
The main prerequisite for covering such risks is that there is no prohibition in the laws of the host country at the time the insured person enters into the insurance contract with the insurance institution.
Issue an insurance policy, that is, in the insurance, according to the host country of the foreign exchange management regulations of investor’s investment income and other income can be exchange and transfer, on the contrary, if at the time of signing insurance contract, the host country laws existing ban against the rules, and insurance knew or ought to know, after the ban against losses, shall not be to underwriter claim for compensation.
That is, the prohibition risk must occur after the establishment of the insurance relationship.
