Which Businesses Should be Considering Kidnapping and Ransom Insurance?

Kidnapping and ransom insurance

Kidnapping and ransom insurance is often a type of protection that companies overlook – that’ll never happen to me, what are the chances? However, kidnapping and kidnap for ransom is an extremely high-risk and important issue for businesses working and interacting abroad.
There are 15,000 – 20,000 kidnappings per year, with less than 20% being reported to authorities (Bell, 2019). This is a huge number, with the prime targets being high-net-worth businesspeople and professionals travelling abroad.
Not everyone can have access to this type of insurance, but there are specific businesses and individuals that need it. With these figures in mind, which businesses should really be considering kidnapping and ransom insurance? And why?

What is kidnapping and ransom insurance?

Kidnap and ransom insurance (K&R) is a type of risk control that protects corporations and individuals against financial losses from kidnapping, extortion, and ransom demands. A basic policy will cover ransom payment, loss of income, consultants for crisis management, support services, public relations expenses, lawsuits against the company from the kidnapped employee.

What does exactly kidnapping and ransom insurance cover?

The range of cover you can get depends on different policies and circumstances (outlined above). Below are some more benefits that can come under K&R plans.
Most policies cover:

  • Ransom payments
  • Medical care
  • Interest on bank loans
  • Loss of income
  • Cost of support services
  • PR
  • Business interruption costs

Other policies also can cover:

  • Cosmetic surgery
  • Time off work
  • Travel expenses
  • Reward money
  • Funeral expenses (in worst-case scenarios)
  • Security

Policies purchased by employers, rather than by employees, can be designed to cover any lawsuits against the company if an employee sues post-kidnapping.

How does it work?

Contact to the insurer should only be made once it is clearly safe to do so. Once this has happened, specialists are then sent out to assist in releasing the person kidnapped. This can include negotiating, providing a ransom, evacuation, and then providing care.
The ransom is not directly paid for by the insurer, employers or family members can take out a loan, where the insurer will then reimburse any costs including interest. If the final costs exceed the limit outlined in the policies, these will not be covered.

In which parts of the world is kidnap and ransom insurance important?

One of the main reasons for investing in K&R depends on which part of the world you are working or travelling to.
Control Risks 2019 “Kidnapping and extortive crime trends review” shows the areas with the top percentages of kidnappings that include ransoms in the world:

  • 38% in the Americas
  • 27% in the Asia Pacific
  • 24% in Sub Saharan Africa
  • 9% in the Middle East and North Africa
  • 2% in Europe and Commonwealth of Independent States

Specific countries with the highest risk: Mexico, Venezuela, Nigeria, Pakistan, Columbia, India, Afghanistan, Syria, Libya, Iraq, Brazil, Haiti, South Africa.

Who are affected – businesses and individuals? And why?

Kidnap and ransom insurance predominantly targets top corporate businesses with large global geographic footprints, 75% of Fortune 500 companies use it. Within these organisations, insurance is often provided for top executives, field engineers and maintenance personnel.
However, there has been a rise in small-medium businesses now also investing in K&R, including manufacturing and service firms, or medium financial organisations.
Why are smaller organisations now interested in providing this type of insurance?
As the world becomes smaller and more connected, so are businesses becoming more global, extending their supply chains into further areas. Globalization has influenced organisations to expand their supply and distribution into these more dangerous locations.
Close to 80% of global economic growth is from developing economies, and 85% of worldwide growth in global consumption of consumer goods/services is in developing economies. Venturing into riskier areas gives these small-medium companies the competitive advantage as it can potentially minimize their costs on labour and materials.
Kidnap and ransom insurance is mainly employed by businesses with employees frequently travelling, but it is also used by other organisations, such as universities with international programs and nongovernmental organisations.
Individuals can also buy stand-alone policies. They are often high-profile or affluent, such as celebrities, musicians, politicians. However, between local and expat nationals, it is the local nationals that are more at risk. Control Risks 2019 review outlines it is 93% of local nationals compared with 7% foreign nationals who are kidnapped.

How can these businesses be protected?

The main goal of kidnap and ransom insurance is the protection of the individual and the business. This includes providing support to the client and victim to prevent any physical or mental harm and trauma.
Companies can implement agendas alongside K&R to ensure the greatest level of protection. Below are some suggestions.

  • Learn about the risks that certain countries pose – and how best to combat these risks
  • Resist any outside pressure to send an employee to a location that appears too dangerous – especially without any understanding of that location
  • Ensure training for senior executives, local management, Hr, PR, in kidnapping protocols
  • International security services – real-time risk management, security briefings prior to travel, employee tracking tools, securer travel
  • Offer prior specialist training to employees

Kidnap and ransom insurance can be an important tool for businesses to operate more efficiently and securely when moving into dangerous parts of the world.
The protection and wellbeing of employees in any company should be a top priority for employers. This is even more the case when businesses are responsible for the safety of travelling employees. Any supportive policies (kidnap and ransom insurance included) that is aimed at helping and protecting the wellbeing of employees is what needs to be invested in. Look here to find out more on International Employee Assistance Programmes.
Contact us through Engage Health Group for our free no-obligation advice and support and find more details on kidnapping and ransom insurance.

Eleanor Chilvers

Eleanor Chilvers

Eleanor started at Engage in 2021, and is now a Digital Content Writer after studying BA English Literature at University of Sussex for the last 3 years.

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