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A World Bank Study
of political risk investment was likely the foreseeable future. This certainly proved to be accurate.) Although general optimism about the future of the political risk i nvestment insurance industry was implicit in many papers, the focus of the 2000 symposium was on addressing immediate obstacles or problems. The sole exception was an appendix paper by Gerald T. West and Keith Martin, titled “Political Risk Investment Insurance: The Renaissance Revisited” (West and Martin 2001). Subsequent to a review of the macro factors affecting the political risk investment insurance market and the changes in the previous few years, West and Martin attempted to net out all the various driving factors to determine the magnitude and direction of the market. In this respect, they offered a number of observations (Brief reflections on and critiques of their forecasts are offered in italics): 1. Stimulated by losses to uninsured investors, and notwithstanding stagnation in investment flows, the issuance of investment insurance will rise. (From a macro perspective, this forecast proved to be inaccurate; very little growth occurred in the succeeding period.) 2. In the political risk investment insurance area, capacity will remain steady and premium rates should remain relatively stable. (In the aftermath of the events of September 11, 2001, private capacity shrank and rates tended slightly upward. Subsequently, capacity slowly increased and rates softened.) 3. There will be sharper differences in the treatment afforded uninsured investors, privately insured investors, and national or multilateral investors. The value of deterrence will be more clearly established. (There is some evidence that this has occurred, but the value of deterrence is not yet firmly established.) 4. Assembly of limited recourse debt financing for large infrastructure projects will be very difficult without long-term investment insurance. Cooperation and collaboration among insurers on these large projects should grow. (There was a dramatic falloff in the number of limited-recourse, large infrastructure projects that were undertaken in the early 2000s for reasons having nothing to do with the availability of political risk investment insurance. With respect to the projects that did go forward, there was considerable evidence of greater cooperation among insurers.) 5. After the recent dramatic increases in tenor in the private market (increasing from 1–3 years to 10–15 years), there will be no further extensions in the near future and there will be greater price variation for tenor. (Subsequent to the events of September 11, 2001, there was an actual contraction in the availability of longer-term coverages, and a decline occurred in capacity; there was greater rate variation based on tenor.) 6. As a result of significant losses in political risk investment insurance in 1999 and 2000, insurers and reinsurers will reexamine their rates, project limits,