How CPRI supports the critical work of MDBs
Trade and investment do not move on goods or capital alone. They move on the willingness of institutions to carry the risk that a counterparty will not pay. In a world that is more fragmented, and a trade environment that is more uncertain than it has been for a generation, the willingness of institutions to assume that risk has become an essential resource. Credit and political risk insurance (CPRI) is one of the most effective ways of doing this.
CPRI underpins trade and investment across developed and emerging markets, in good conditions and bad. In many ways, CPRI is something of a market maker: cover often comes first and makes the financing behind it possible, acting as a precursor to capital that would not otherwise be deployed. But these markets are complex and have multiple driving forces. Through this, Multilateral Development Banks (MDBs) and Development Finance Institutions (DFIs) are market makers in their own right through strategic deployment of their capital, pushing insurer appetite in their wake.
What CPRI does
At its simplest, CPRI protects a lender or investor against non-payment. The cause might be commercial, where a buyer defaults, or political, where a government blocks payment, expropriates an asset, or a conflict makes a transaction impossible. Insurers underwrite this risk and, in doing so, move it off the balance sheet of the party that would otherwise carry it.
The effect is larger than any single policy. When a bank reduces its exposure to default by purchasing a policy, it can use its capital more efficiently. This allows them to redeploy funds and distribute them more widely, as well as lend at a lower cost. Those savings can then be passed to the borrower, greasing the wheels of trade. A transaction that looked too risky to finance becomes financeable; a market that looked closed becomes open. CPRI therefore does several things at once: it protects against non-payment and political disruption, it finances the real economy by enabling trade, it unlocks private capital, it extends the reach of public financing, and it supports growth by making market entry and investment possible.
The CPRI market that supplies this cover is deep and competitive. Insurers across the globally diverse market tend to carry very strong financial-strength ratings, reflecting the robust balance sheets their counterparties require. They compete on capacity, expertise and the ability to structure cover around the specific shape of a transaction — which, as it turns out, is exactly what development finance needs. They are, in turn, backed by a deep and competitive reinsurance market that further diversifies risk and enhances capacity.
Supporting corporates and their banks
For most companies the support is invisible but decisive. CPRI lets an exporter sell into a market it would otherwise avoid, protecting against counterparty default and political risk disruptions. Through this CPRI underpins the bank financing that makes the ultimate sale of goods and services possible. For cross-border investment, political risk cover protects equity against expropriation, currency inconvertibility and political violence, improving the risk profile of a project and making it bankable. The corporate gains access to markets, a lower cost of finance, and protection against losses it could not absorb alone.
The same machinery reaches the smallest firms, often through several hands. Much MDB and bank lending flows through local and regional banks, which on-lend to the businesses that need it. Small and medium-sized enterprises, which account for the bulk of employment in emerging markets yet are most often shut out of finance, are frequently the ultimate beneficiaries: by insuring the loans behind the chain, CPRI helps capital reach firms that could not otherwise fund themselves.
Helping MDBs and DFIs do more with the same balance sheet
The scale of the need is what brings the public and private sectors together. The financing requirements for infrastructure, the energy transition and development run into the trillions of dollars a year, while the public resources available are finite. The trade finance gap is one visible part of this: the volume of trade that cannot be financed is estimated by the Asian Development Bank at around USD 2.5 trillion. But the wider point is structural. No public or private balance sheet, however large, can meet needs of this scale on its own.
This is why the G20 has called for development banks to shift their basic model away from direct lending and towards risk mitigation that mobilises private capital. CPRI is one of the most powerful ways to do exactly that. When an insurer takes a share of the credit risk on a portfolio of an MDB’s loans, it frees up the MDB’s capital, allowing it to lend more without raising new funds. The leverage is real and visible. In February 2026, IFC, the private-sector arm of the World Bank Group, signed a USD 6 billion credit insurance policy with a consortium of global insurers, expected to support up to USD 10 billion in new IFC lending — a clear illustration of how a unit of insured risk converts into a larger unit of finance.
That facility was the latest under IFC’s Managed Co-Lending Portfolio Program (MCPP), the syndication platform it launched in 2013 to co-invest in a portfolio of loans alongside institutional investors. Credit insurance is one of its structures — an unfunded route through which insurers cover IFC loans. In 2017, a facility began with two insurers and around USD 1 billion, and the approach has since been replicated and scaled across both financial-institution and real-sector assets, reaching some USD 15.5 billion in cumulative mobilisation from nineteen participating insurers, within a broader MCPP platform of around USD 25.5 billion in funds and risk capacity. In its 2025 financial year alone, IFC procured close to USD 4 billion of insurance cover on long-term assets.
IFC is not alone in its use of CPRI to distribution. ADB, EBRD, DFC and IDB Invest have all launched insurance-backed partnerships on similar logic. Insurers are well suited to this role. They actively want diversified, portfolio-level exposure, which is precisely what MDBs can offer, and they can match the unusual structuring that development transactions require. That has allowed the partnership grow and to break new ground, including in longer tenor transactions and different structures of risk transfer. Ultimately, the growth in experience together unlocks even more opportunities as each party becomes more familiar and comfortable with the other.
How MDBs make a market
MDB demand has not simply absorbed existing insurance capacity. It has expanded the frontier of what the market is willing to underwrite and moved insurer appetite by providing demand. For many risks, the involvement of an MDB in some form is now a necessary starting point. Sometimes this takes the shape of a first-loss facility; often it is simply the private market following the MDBs and the demand they create. This can be directly through their own portfolios and indirectly through the additional commercial banks they draw in.
The mechanism is a virtuous cycle. MDB portfolios have performed strongly, and that track record has encouraged insurers to stretch their appetite into longer tenors and harder markets. Good performance attracts more insurers, which grows capacity, which in turn lets MDBs mobilise more capital. The willingness of private insurers to take on a range of asset and risk types is itself evidence that those assets are less risky than is often assumed. Over time, this experience gradually shifts risk perception, demand, and appetite.
The critical move seems to have been the structural step away from one-off deals (which very much still have a place) to programmatic, portfolio-level systems. The standardisation that sits within such transactions, backed by strong due diligence on the underlying risks, is what turned a specialist tool into a repeatable, scalable platform. This is what it means to make a market and not just to buy cover. Through this kind of long-term partnership, conditions are created in which more cover can be sold.
Coordination and capital
Capital matters, but the harder part of scaling these models is coordination. Much of the innovation still lives inside the specialised dialogue between MDBs and their insurers, and turning it into common practice is sustained work in both directions.
On one side, it depends on continued effort between insurers, banks, MDBs and the government departments and regulators around them to understand CPRI — with that understanding running in both directions. There is also a contingent requirement that regulation allows all of this to happen, and to happen efficiently. This can include effective recognition of CPRI in banking rules or frameworks that enable international insurers to support local initiatives whether via licensing and arrangements or on a cross-border or subsidiary basis.
Beyond this, the success of these programs also depends on insurers themselves deepening their engagement with MDBs, and understanding how these risk portfolios actually behave. Preferred creditor status is often one such issue — the preferential treatment that MDB claims tend to receive when a sovereign comes under stress, and the question of how far that benefit extends to the insured share of the risk. Addressing these kinds of details can enhance certainty and make doing more straightforward. The broader prize of enhanced understanding is to take these proven structures beyond a niche or specialised dialogue altogether, so that they become standard practice.
That is why the industry is investing in the forums where public and private actors meet. The Trade Finance Conference of Parties (TF COP) was created to move the debate from describing the trade finance gap to executing solutions, and to coordinate public and private efforts to close it. ICISA supports TF COP – including a leading role in the Insurance Working Group – for exactly this reason. ICISA also aims to work closely with others in the sector to ensure that essential information about how protection can function best is shared and understood by all stakeholders. Forums of this kind matter because replication depends on shared standards, shared data and a culture of reporting on what works and what doesn’t. Goodwill is valuable, but is not enough by itself, requiring commercial success to trigger further growth.
There is a wider policy dimension the industry should help to shape rather than wait on. As governments adopt more geostrategic approaches to trade and investment, export finance and development finance are being pushed closer together. Both turn on risk-mitigation instruments, and in particular on the insurance the CPRI market already supplies. The guiding principle is to bridge these worlds together in a way that is beneficial for all. This ensures respect for the distinct mandates of each institution while building the joint structures that let private capital follow.
The way forward
The role of CPRI in this world is general and growing. It enables trade, protects investment, lowers the cost of finance, and reaches businesses that capital would otherwise never find — across developed and emerging markets alike. Its most consequential frontier is the partnership with MDBs, who have shown that a development bank can do more than borrow capacity from the private market: it can expand that market’s appetite, prove that perceived risk and real risk diverge, and build platforms that others can replicate.
The role of multilateral investment and guarantee provision is also growing as an answer to the complex questions countries face in defence, climate, and infrastructure spending among other areas. The recent launch and expansion of the Defence, Security and Resilience Bank aimed at financing defence needs between partner countries, led by Canada shows one such path. Similar plans for multilateral financing are also being developed between the UK, Poland, Finland and the Netherlands via the Multilateral Defence Mechanism. The EU’s proposed Industrial Decarbonisation Bank is another with the focus efforts to finance carbon abatement methods and support evolving technologies to achieve these aims.
CPRI needs to be at the heart of these initiatives to ensure their success. To realise that potential, insurers should be brought in early. Where they are part of constructing programmes and developing solutions from the outset, they can help shape structures in ways that maximise the value of their involvement. This is really an essential step rather than simply trying to shoe-horn cover into place well after the design is already fixed.
The mechanisms are proven and the capacity is ready. The next chapter will be written by those who partner deeply, share openly, and keep scaling the quiet engines that turn available billions into the finance the world actually needs.
