It’s a frightening scenario for any organization—an employee is kidnapped while traveling or working abroad and held for ransom. Faced with a potentially life-and-death situation, family members and corporate managers have little time to decide how best to respond to the kidnappers’ demands and maximize the chances of a safe return. In such situations, kidnap and ransom insurance proves its worth. Kidnap and Ransom policies provide timely access to crisis and security experts to quickly deploy the most appropriate strategies for these dangerous situations. While the policies indemnify insureds for ransom and other expenses associated with a kidnapping, the accompanying crisis management services are among the strongest reasons for purchasing the coverage.
As more companies and organizations send employees into countries where U.S. citizens may be targeted by criminals, such coverage provides crucial support should an incident occur. In addition, pre-incident training provided by the policy’s Crisis Response Firm to the affected workforce and at corporate board level can mitigate the risk of becoming a kidnap and extortion target. Kidnap and ransom insurance provides wide coverage at affordable pricing. Furthermore, the insurance forms a crucial component of a company’s Duty of Care towards its workforce, making it an attractive consideration even for organizations with more limited foreign travel.
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KIDNAPPING RISKS RISE
For many growing U.S. companies, foreign markets provide attractive opportunities, but staff often run much higher personal risks abroad. Mexico, for instance, is one of the top U.S. export markets as well as a top supplier of goods. Violent crime, however, has become part of daily life in Mexico, which experienced more than 25,000 murders in 2017 along with 1,390 officially reported kidnappings. The actual kidnapping total is likely far higher as criminals seek ransom for victims, from highly paid corporate executives to ordinary people. In 2017, the FBI investigated 116 kidnappings in Mexico, 72 percent of which were kidnap for ransom and just over 21 percent for so-called virtual kidnappings, in which criminals seek payments from relatives of someone they have not actually abducted. Express kidnappings are another growing risk. In these incidents, criminals grab people and force them to make cash withdrawals.
The deteriorating situation in Venezuela makes that country extremely dangerous and crime is on the rise, including kidnappings. Kidnappings remain a significant threat in sub-Saharan African countries such as Nigeria, where both foreigners and locals are being targeted. The risks were highlighted by a kidnapping in early April of an American woman abducted from a tourist group in a wildlife park in Uganda by kidnappers who demanded $500,000. She was released after the tour operator reportedly paid an undisclosed ransom. (Source) Many countries in the Middle East remain high risk travel destinations due to conflicts, such as in Syria, Yemen and Iraq, as well as Libya, which has seen high levels of kidnapping.
ESSENTIAL COVERAGE IN A CRISIS
The appropriate response to a kidnapping may be crucial in making sure the victim is released safely. Few people or organizations are prepared to deal with such criminals, but kidnap and ransom insurance provides immediate access to professional support provided by consultants of the policy’s contracted Crisis Response firm. The insurance generally provides coverage in the event of kidnap, extortion, hijack and illegal detention. The policies provide indemnification for expenses such as ransom payments, loss of ransom in transit, trauma counseling and medical expenses incurred by the victim(s), accidental death and dismemberment, and legal liability arising out of an incident. Typically, the policies offer broad coverage beyond immediate employees to cover temporary and part-time employees, family members, as well as other parties in the household.
All responsible organizations seek to keep their employees safe, but beyond that corporations and non-governmental organizations have a legal duty of care to protect their workers. In the event of a kidnapping, the insurance provides legal liability protection in case the victims or their families decide to bring litigation for perceived or actual negligence.
EXPERTISE COUNTS
The professional Crisis Response support provided, in conjunction with the policy, are often a major consideration for a purchaser. That expertise can be crucial in finding the right strategy for a successful outcome. The insurance provides immediate access to professional crisis response consultants with backgrounds typically in law enforcement, intelligence, and/or security. Experts advise the policyholder’s designated intermediary in the negotiations with kidnappers, support family members, liaise with law enforcement where appropriate, and provide crisis management communication support for wherever needed.
Along with personal security and business traveler awareness training to minimize the chances of an incident, clients should strongly consider pre-incident training services, such as kidnap and crisis management training, to help managers and key corporate decision makers deal with an incident should it occur. Clients may also want to take advantage of available threat monitoring and security analyses, including up-to-the minute security alerts when deciding on travel plans.
FOCUSED COVERAGE
While Kidnap and ransom coverage is offered as an extension under management liability or package policies, it is more restrictive in scope than a stand-alone policy. Stand-alone kidnap and ransom policies may also include limited coverage for workplace violence and active assailant incidents, which may be a consideration for a wider variety of organizations. While the policies have historically offered coverage for cyber extortion, insurers have recently begun restricting coverage due to the increased prevalence and high costs of cyber incidents—specifically for forensic investigation and business interruption costs. When deciding on the most appropriate coverage for perils, organizations should consult with their insurance broker and consider a stand-alone Cyber insurance.
BOTTOM LINE
Employees often run increased personal risk when they travel or work abroad. Companies and non-governmental organizations can help safeguard their employees—and their families—while protecting their finances with kidnap and ransom insurance. The coverage provides indemnification for the expenses stemming from an abduction, crisis response experts to assist in the negotiation during a kidnapping, and security training to lessen the chances of an incident. The coverage is affordable and provides crucial expertise for insureds when it matters most. To ensure you’re getting the appropriate coverage for your clients be sure to work with a specialist who can help you navigate the intricate offerings of a Kidnap and Ransom policy.
Contact your CRC Group producer for more information.
Contributors:
Fred Buck is the Office President of CRC’s Atlanta, GA office and member of the ExecPro Practice Group.
Dominick Liberty is a Broker in CRC’s Dallas office and member of the ExecPro Practice Group.
About Special Contingency Risks, Inc.
Special Contingency Risks (SCR) is the world’s leading specialist insurance broker in the field of kidnap & ransom, personal accident insurance and crisis management. With over 35 years’ experience, our full spectrum people risks approach provides an international client-base with the most comprehensive risk solutions to identify, mitigate and manage incidents in volatile overseas markets.
We combine market-leading insurance expertise with an in-house security risk and crisis management practice under the name of Alert: 24; providing intelligence, analysis, risk mitigation services and a 24-hour operations centre to assist our clients in the event of crises. We have unrivalled experience in handling incidents and claims impacting our clients in highly sensitive and complex situations.
Special Contingency Risks is a trading division of Miller Insurance Services LLP.