What is Kidnap & Ransom Insurance?
The general purpose of kidnap and ransom insurance is to provide access to funds and professionally trained negotiators when ransom demands need to be met. However, the cover in most circumstances goes well beyond just this. It will provide help in dealing with the commercial publicity impact and the moral responsibilities of the victim. It will also pay for rest and recuperation of the victim once released including psychological counseling.
One of the less obvious covers is that it also provides transit cover for the physical loss of the ransom money – it has been known in the past for this to be stolen on route to the drop off point.
Kidnap and ransom insurance is available for both individuals and companies. This type of insurance is also provided with a very high degree of confidentiality. Brokers who specialise in kidnap & ransom insurance are expected to prepare most documentation using coding and numbers for insured names and for the files to be kept in secure conditions.
From covering the cost of kidnappings underwriters have steadily extended the risks they are prepared to insure to extortion and piracy and hijacking.
For more information please contact XactExpat.
Why Do Individuals/Companies Need K&R Insurance?
As business continues to expand globally, there has also been an increase in kidnappings globally. Kidnappings can be both short term or long term, and occur for a variety of reasons, socio, criminal or political, etc.
Because of the secrecy attached to the purchase of Kidnap and Ransom insurance it is difficult to estimate the size of the market in premium terms globally. However, it is thought to be in the region of USD$350 – 500 million annually. This covers approximately 15,000 kidnappings a year.
In view of the high risk to senior executives and workers travelling and working all over the world the cost of kidnap and ransom insurance is not as expensive as some might think. To buy cover for a multinational with a turnover of in excess of USD150 million it could cost as little as USD10,000 for a USD10 million limit. Money well spent for peace of mind when travelling to certain parts of the world.
Where does kidnapping take place globally?
The reality is it depends on the reasoning behind it – where you have a large poor population and very small elite and no, or little, middle class this tends to encourage criminal enterprise. Good examples would be some South American countries such as Colombia and Venezuela. In other parts of South America such as Peru it can be laid at the door of political differences with the groups like the Shining Path using it to not only to make political statements but as a source of funding for their political cause.
In places like Nigeria you have a mixed rationale – in some parts it is seen as criminal, in some it is political with the use of kidnapping as a means to redistribute oil wealth and the third reason is quasi religious/political reasons in trying to change the laws.
In other parts of the world it can be religious or purely political ends being used to intimidate certain sectors of the local population. The overriding factors in all of this are high levels of corruption, terrorist activity and ineffectual law enforcement.
The US Undersecretary for Terrorism and Financial Intelligence estimates USD120 million has been paid to terrorist organisations over the last 8 years globally. Current known hot spots are :Afghanistan, Iraq, Mexico, Nigeria, Syria, Somalia, Venezuela, Colombia, Peru, Yemen and Guatemala.
As a Lloyds Broker we also have access to other business solutions such as Personal Accident and Sickness for staff for either permanent or temporary disablement , Death and permanent disability, Annual Group Life and Keyman and critical illness cover. – so if you like the idea of a ‘one-stop-shop’ for you business insurance needs ask us how we can help.