after a couple of lackluster years, the demand for political risk insurance is heating up again, and capacity is starting to expand. The handful of companies that dominate the marketplace - Ace Group, American International Group, Chubb Group of Insurance Cos, Zurich North America and Lloyd's - say political risk insurance is expected to grow in 2004, through both new business and new products. In the wake of Sept 11, the demand for political risk insurance dropped sharply as companies pulled back overseas investments. This past year, 2003, was probably the most difficult year that most underwriters that have been in the market for 15 to 20 years can remember, said Keith Dunford, vice president and manager of political risk for Chubb & Son's commercial insurance business. Foreign direct investments came to a screeching halt after Sept 11, and the money flowing across international borders simply slowed down. As a result of that, there was less demand for political risk insurance.

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