Press Release
Thursday, May 22, 2008
OPIC SIGNS AGREEMENT TO PROVIDE POLITICAL RISK INSURANCE TO PALESTINIAN BUSINESSES
BETHLEHEM, Palestine – Robert Mosbacher, Jr., President and CEO of the Overseas Private Investment Corporation (OPIC), today signed an agreement enabling OPIC to support a new public-private facility that will provide political risk insurance to Palestinian export-related businesses and local and foreign investors. Mosbacher signed the agreement at the 2008 Palestinian Investment Conference in Bethlehem.
The Palestinian Political Risk Insurance Project (PPRI) will establish a facility funded by public and private capital that will include OPIC and the Middle East Investment Initiative (MEII), an independent nonprofit organization initiated by the Aspen Institute. PPRI will provide affordable political risk insurance covering trade disruptionand asset damage resulting from political violence.
Specifically, PPRI trade disruption coverage will indemnify Palestinian exporters for penalties and fees incurred in the event of an inability to deliver their products to their ultimate destination because of border or checkpoint closings or delays.Exporters will be able to purchase PPRI coverage at affordable rates to cover the cost of goods being shipped or assets at risk, enabling them to resume or expand exports, thereby generating additional business and promoting job creation.
Potentially, if exporters using the PPRI coverage grow by only ten percent annually, the program could facilitate more than $400 million in exports from Palestinian businesses.
Initially, OPIC will partner in the facility with MEII, to reinsure the Palestinian Authority's National Insurance Company (NIC) for $5 million in political risk insurance that the NIC is providing to small businesses.MEIIwill provide essential technical assistance including marketing, monitoring and underwriting guidance.Ultimately, the PPRI’s capacity is expected to grow to $20 million.
“The availability of political risk insurance, particularly for small businesses, is a critical piece in strengthening the Palestinian economy,” Mosbacher said. “OPIC is pleased to support a project that will have important developmental benefits for Palestinian entrepreneurs.”
Berl Bernhard, chairman of MEII, said, "In the Palestinian territories, risk mitigation instruments are especially importantto help encourage investment, grow the economy, and create jobs. Astronger economic base is critical for social and political stability.MEII looks forward to partnering with NIC and OPIC in developing this new risk insurance coverage, to help achieve these shared objectives."
"After 15 years of leading the insurance market in Palestine; and by joining this partnership with MEII and OPIC, NIC is pleased to have the privilegeto offer this innovative, new, and very much needed political risk insurance coverage in the market", said Mr. Aziz Abdel Jawad, General Manager, National Insurance Company.
National Insurance Company (NIC) is a Palestinian company in operation since 1993, engaged in the provision of insurance and reinsurance business, headquartered in Ramallah. The NIC was founded to provide a range of insurance coverage and seeks to act as a catalyst for a large number of new Palestinian ventures in various fields, contributing to increasing employment and contributing significantly to the Palestinian economy.
MEII, a U.S. nonprofit organization, was formed to help revitalize economies in the region, recognizing that a strong economic base is critical for social and political stability. MEII partners with public and private organizations to develop specialized financial products in the Palestinian territories and elsewhere in the Middle East in order to stimulate economic activity, create jobs and expand home ownership.
OPIC was established as an agency of the U.S. government in 1971. It helps U.S. businesses invest overseas, fosters economic development in new and emerging markets, complements the private sector in managing risks associated with foreign direct investment, and supports U.S. foreign policy. Because OPIC charges market-based fees for its products, it operates on a self-sustaining basis at no net cost to taxpayers.
OPIC’s political risk insurance and financing help U.S. businesses of all sizes invest in more than 150 emerging markets and developing nations worldwide. Over the agency’s 37-year history, OPIC has supported $177 billion worth of investments that have helped developing countries to generate over $13 billion in host-government revenues and create over 800,000 host-country jobs. OPIC projects have also generated $71 billion in U.S. exports and supported more than 271,000 American jobs.