Kidnap & Ransom Insurance


The kidnap, and related attempts at extortion, of individuals, are well-established crimes; they occur on a worldwide basis and at all levels of society. They are no longer problems affecting just South America, Africa and the Middle East but have spread to many parts of Eastern Europe, Asia and the United States.

Most kidnaps are carried out to obtain financial reward and in most cases a ransom is paid. Rescue attempts are seldom made as authorities recognise that the safety of the victim would be seriously jeopardised.

Kidnap and extortion insurance provides customised coverage to suit a client’s specific requirement. Both corporate and family policies are available and typically provide benefit for the following incidents:
  • Kidnap.
  • Extortion (threat to persons or property, including the threat to introduce computer viruses or divulge trade secrets).
  • Detention, abduction and hijack
Policies are designed to provide a level of financial indemnity as well as specialist assistance and advice. The benefits available depend upon the particular circumstances and could include benefits for:
  • Ransom payments following a kidnap or an extortion.
  • Loss of a ransom in transit.
  • Unlimited expenses of specialist consultants to provide expert advice and assistance during an insured incident.
  • Reward monies paid in the conviction of those responsible for a kidnap or extortion.
  • Other associated costs and expenses, including legal, medical and psychiatric costs, salary costs of the victim and any necessary replacement, travel, accommodation, rest and rehabilitation expenses, the costs of communication and recording equipment, and security guards.
  • Death or disability.
Coverage can be extended to include further adverse financial effects such as loss of business income and product recall and replacement.


Implications of a Kidnap or Extortion
The reason for the incident may vary - terrorist, political, criminal, revenge, or by inadvertent involvement - but the ultimate outcome is always the same: a highly emotive situation where a threat is made by an external, often unknown, force. This force, be it an individual, criminal gang or terrorist group is intent on pursuing its own agenda and sees the 'target' as a tool or vehicle towards achieving that aim.


Implications to a Corporation
From a corporate perspective:
  • There is the statutory 'duty of care' to employees: if the company exposes staff to dangerous conditions as part of its business operations, it has a duty to ensure that any risk exposure is minimised.
  • It must ensure that it does its utmost to recover and rehabilitate the individual(s). Failure to do so may lead to the death or injury of employees and high-profile lawsuits, which may create extensive reputational damage - both internally and externally.
  • Extortion based on threats or actual harm to employees and products, (including IT based deliverables), is also a well-developed criminal activity. It creates disruption to personnel and normal business operations and carries the risk of adverse consumer reaction, loss of market share and heavy and unanticipated demands on finance.
  • Consideration must be given to running the business when key executives are absent or diverted to crisis management issues. This is very challenging and, unlike other crisis scenarios, dealing with a kidnap or extortion is not just a case of considering known business factors and quantitative solutions. In such cases 'life and death' questions may be very real. The board may find itself involved in a highly emotive, exhausting and unknown environment, where lives are at stake and where outcomes do not necessarily accord with probability modelling.
  • Impact on the balance sheet in paying a ransom or extortion demand.

Effects on the family
For the family of a victim this is probably the most stressful situation that they can ever live through - the life, safety and well-being of their loved one is held in the hands of a third party where moral considerations are irrelevant. They view the individual and the family as a part of the bargaining process through which their aims will be achieved.

In most cases this will be a totally alien situation to the family where they have no idea what to do, who to turn to, or how they should negotiate with the kidnappers and pay a ransom or extortion demand

Where the victim is the employee of a corporation there may be differences in the ways the two parties would like the negotiations to be handled. The family will want the ransom paid immediately to get the safe return of the victim as soon as possible. The corporation on the other hand, whilst they want the safe return of the employee, cannot be seen to be a 'soft' target or else the safety of their other employees could be put at risk.

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