Charles Berry, Chairman of Lloyd’s broker BPL Global told members of the Insurance Institute of London that there was a need for underwriters to redefine their policies to make it far clearer as to what is and is not covered in order to bring greater clarity into the claims process.

Mr Berry said: “In terms of what we would define as pure political risks it accounts for around 20% of the political risk insurance (PRI) markets and you would think in the current environment such products would be selling well.

“The view which was prevalent in the 1990s that there was a new era of political harmony driven by US hegemony is well and truly over.”

He said the financial crisis and the rise of new threats had seen the creation of a new environment with a “polar world where pure PRI should be valued”.

“The fact it is not doing so is because the traditional equity product is not meeting the idea of being fair and effective in terms of claims.

“There are two types of claims the first which can come with a photograph of the physical risk. The second is more difficult because it is the coverage of the breach of rights not the seizure of property. It cannot and does not come with a picture at the front of the claims file. It is also where the current policy can fall short.”

Mr Berry added that the market could deliver the new product if it put its mind to it.

“We have all the right raw materials for reinventing the pure PRI product,” he told the meeting.”

However Mr Berry added that the market was braced for claims arising from the credit crunch and the financial crisis on its speciality credit coverage with the full extent of claims yet to become clear.

The banks continued to show an increasing interest in the products and their value in the current economy and with the impact of the Basel II rules on solvency.

“I believe that the sector had a significant opportunity working with the banking industry in future,” he added.