Political Risk, Terrorism and Kidnap & Ransom are very distinct and specific product lines? Describe key components of all three.

how do they dovetail?

how are they different?

what are the important underwriting components and does government involvement help maintain the market?

Answer:

Product lines

Step-by-step explanation

Political Risk

Political risk is when a political system within a country is not stable or the government structure is under an unstable condition that cannot allow a smooth conduct of business. A political risk is the factor affecting business generated by the manner a government is run within a state or nation.

Terrorism

Terrorism is a conduct or an act by terror groups that slow down or cause property losses to businesses through destruction. Many of the industries that use expensive products in the production or manufacture of their goods are at high risk in the event of terror attacks as they suffer big losses.

Kidnap & Ransom

The Kidnap & Ransom (K&R) is an insurance policy that protects businesses that are trading at high risks from suffering losses. Such businesses are covered on the most likely risks that they can suffer to avoid closing down or running bankruptcy in the event of any of the risks occurring.

The dovetail of Political Risk, Terrorism and Kidnap & Ransom

The political risks, terrorism, and Kidnap & Ransom join together in the form of causing damages and losses to businesses that are later compensated by insurance companies if the risks were insured. The merging of the Political Risk, Terrorism and Kidnap & Ransom is due to the same effect caused when they occur and a financial loss is suffered. However, effects of terrorism cannot be easily compensated by insurance companies due to the adverse effects and mostly target to demolish everything within the target point of the terror attack.

The differences between Political Risk, Terrorism and Kidnap & Ransom

A politically caused risk is due to the mismanagement of the government agencies and other regulators that lead to the losses suffered by business people. However, the acts of terrorism are majorly suffered when the businesses are located in the target areas of terrorists. Hence, such events cannot be linked to neither politics nor Kidnap & Ransom. On the other hand, Kidnap & Ransom is a way that insurance agencies and companies take the chance of protecting such businesses from suffering the losses caused by the risks. Hence, the Kidnap & Ransom emerges to be the savior of the listed risks in any business.

The underwriting components

The underwriting components that are available to such cases include loans offered by the banks and other financial institutions to help improve the business. Apart from the financial help gained from the financial institutions, the government offers incentives to certain industries that hold the economy of a nation to avid the collapse of them as they will affect the economy of the country.