Kidnap, Ransom & Extortion Insurance
What is Kidnap, Ransom & Extortion Insurance?
It is an insurance policy that protects individuals/families and corporations against kidnapping and extortion threats. A policy can cover items such as ransom payments, hostage negotiations, medical and psychiatric care, loss of income, consulting fees, family counseling, rehabilitation and many other related expenses.
Besides the insurance protection, insured’s have access to a crisis management team that focuses on assessment and prevention to ensure a skilled response to the crisis.
After Colombia reported more than 3000 kidnappings in a single year while terrorist threats increase worldwide, more multinational corporations are using K&R insurance to protect themselves, employees, and their assets against these attacks. K&R insurance will help manage the costs associated with an extortion threat, which without insurance could leave a small-medium sized company in a financial crisis.
Ransom Benefits are always on a reimbursement basis only for two reasons:
1. It is illegal to insure an unlawful event. For example, you cannot insure against an act of vandalism, but you can insure expenses incurred as a result of the act.
2. Negotiations. A person’s net worth maybe in the billions of dollars, but if the majority of the money is in real estate, then the family might have to sell off property which can take several months to raise the ransom payment. Most often negotiations are hastened by access to quick cash, even if it is less than the original demand amount. If the full ransom is paid too quickly then negotiations maybe compromised.
The core of the plan
The primary benefit of K&R insurance is the ransom payments but at the core of the plan is the Crisis Management Teams. These risk assessment professionals in most cases will advise the families or corporations during the ordeal. Crisis Management firms usually have a diverse background including military, FBI, CIA, and anti-terrorist, providing for a qualified and adept handling of a terrorist incident.
First policy issued in 1932
K&R insurance has been around since 1932. It was first offered by Lloyd’s of London, after the Lindbergh baby was kidnapped, however it was only offered to a small number of people and companies fitting a certain criteria. While no one can predict when or where a kidnapper will strike, K&R insurance is good way to protect yourself, company, and employees in the event of such a threat.
Countries with the highest frequency of Kidnap/Extortion
- Brasil
- Colombia
- Ecuador
- India
- México
- Nigeria
- Philippines
- Russia
- Venezuela
- South Africa
The Outcomes
The majority of kidnap cases end with the ransom being paid. The safety of the victim is of principal concern and authorities in most countries use the rescue as a last resort. The average percentage of deaths occurring after a kidnapping is 9%. The percentage of deaths occurring in cases involving control risk is 2%, largely because killings usually take place at the time of abduction rather than during negotiation.
The Payment
Ransom payments are usually confidential. Latin America leads the list, in terms of the largest settlements. There have been cases in Europe, where a large sum of money has been paid. There has been a rise in the average ransom payment in recent years, as the chart below shows.
How to Protect Yourself
- Avoid traveling on airlines that are known to be of high risk and relaxed in security.
- Try to avoid connecting flights, choose direct flights whenever possible.
- Do not display any identifying materials or items that link you to your Company.
- Try to avoid making airline and hotel reservations under your company name. Your corporate affiliation should not appear anywhere your itinerary.
- Try to minimize the time spent in places where foreigners or tourists might gather such as a nightclub, bars, or a well known tourist area.
- Avoid dress and behavior that might identify you as a foreigner (know what locals wear)
- Do not discuss travel plans or agenda with hotel staff, they may be criminal Informants.
- If your destination is known to be of high risk, avoid being met at the airport in a company car or by a high profile person.
- If met at the hotel by a company driver use a password or coded sign to identify yourself. The driver should never carry a sign with your name or company name.
- Avoid using the same entrance or exit while staying at a hotel. It is good to change the times you leave your hotel each day and schedule your work day accordingly so that you’re back before sun down.
- During your flight do not provide anyone with specific details about yourself.
- Prior to arrival do not put any specific company affiliation on your landing card and use general terms such as salesman or businessperson.
- Be suspicious of any chance acquaintances made in or around the hotel.
- Try to keep a low profile and never distinguish your self as a person of high class or standing.
- Be well aware of high peril places, especially while traveling outside the main city.
- Most US embassies can provide you with information.
If traveling to a destination that has a history kidnappings or terrorists attacks:
- Try to discuss plans with travel partners
- Register with the US embassy or consulate
- Do not leave personal or business oriented papers in your hotel room
- Make sure your affairs are in order before leaving home.
What to do if you are already a hostage
- Be passive and cooperative. Do not be aggressive or hostile and comply with all their instructions.
- Try to remain relaxed, prepare yourself physically and mentally for the long haul.
- Avoid direct contact with your captors and do not make your observations obvious.
- Do not resist or make threatening movements, Do not try escape unless your
- ABSOLUTELY sure your will be successful.
- Keep your answers short and do not volunteer information.
- Establish a daily program of mental and physical activities.
- Eat whatever they give regardless of taste. The loss of appetite and weight is normal.
- If involved in a lengthy situation try establish a rapport with your kidnappers, avoid political or confrontational subjects.
- Gradually increase your request for personal comfort or materials (Medicine, books, paper, etc). Make those requests in a low key manner.
- Always motivate yourself by remembering that you’re valuable to your captors so it is important that they keep you alive.
Factors that determine the cost of coverage:
- Your name and location
- Net worth
- Business activities
- Number of people to be insured and their location
- Previous threats or incidents that may give rise to a claim
- Type of Business
- Security plan currently in place
High profile individuals or companies with employees who are traveling or based overseas, particularly Latin America, Asia, Eastern Europe and Africa, should consider kidnap, ransom and extortion insurance.
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