When your employees travel for business, they’re probably worried about how meetings will go and whether they’ll suffer flight delays – not if they’ll be kidnapped and held for ransom. However, in many parts of the world, kidnappings are a growing threat, with business leaders being prime targets. But, you can help protect your employees with kidnap and ransom insurance.
Kidnap and Ransom Plots Are Common
Criminal organizations sometimes kidnap businesspeople in hopes of securing a large ransom. Multiple cases have made headlines in recent years, including when:
- A Portuguese businessman was kidnapped in South Africa. The kidnappers were seeking a ransom. Thankfully, the man was rescued and reunited with his family.
- A wealthy businessman was kidnapped while playing golf in England. The kidnappers kept the victim in a cage and demanded $15 million in ransom. The victim was eventually freed.
- A British businessman was kidnapped in Ecuador. He was freed after five days.
Unfortunately, incidents like these are becoming more common. Research from Control Risks shows that kidnap-for-ransom plots have been on the rise since 2019 and are expected to continue to increase in response to socioeconomic disparities and other factors. Ransom demands are also becoming larger. In 2019, the average demand was $259,913. In 2021, the average demand increased by 42 percent to $368,90.
How does kidnap ransom insurance coverage work?
Kidnap and ransom insurance, also known as K&R insurance, can help cover the cost of the ransom payment, as well as care required after the incident. It’s important to note that coverage for ransom payments commonly works on a reimbursement basis. The victims (or their families or business associates) must pay the ransom themselves; then, the kidnap and ransom policy will provide reimbursement. In some cases, the victim’s associates may secure a loan to cover the ransom, in which case the ransom insurance policy will provide reimbursement for the loan and interest.
Although monetary reimbursement is important, it is not the only reason to secure kidnap and ransom insurance. Another reason is that the coverage typically provides access to specialists who know how to handle a kidnapping without escalating the situation. The insurer can oversee the entire process, including negotiations with the kidnappers and the delivery of the ransom. This kind of expertise is critical since kidnappers can be violent and any missteps could put the life of the victim in danger.
Insurers may also provide security advice ahead of a business trip to help reduce the risk of a kidnapping. Some K&R policies cover additional services and losses, such as coverage for lost income and business interruption, lawsuits and other related costs.
Who needs kidnap and ransom coverage?
Although kidnap-for-ransom plots can happen anywhere, they are more common in certain regions. Employees who travel to these regions have an elevated need for kidnap and ransom coverage. However, if an area is too risky, insurers might not provide coverage, and it may be best to avoid traveling there.
According to Strategic Risk, most kidnap-for-ransom plots happen in Africa, Asia and Central and South America. Counties with an increased prevalence of kidnap-for-ransom plots include Nigeria, India, Mexico, Venezuela, Afghanistan, Pakistan, Iraq, Colombia, Philippines, Yemen, Honduras and Somalia.
However, even outside of these areas, kidnapping can be a threat for high-profile or high-net-worth individuals. People who are likely to be targeted by kidnappers due to their wealth or social status may benefit from coverage, regardless of where they are located or traveling.
K&R Insurance Carriers May Not Cover Risky Regions
The U.S. Department of State (DOS) maintains travel advisories for destinations where citizens should exercise increased caution, reconsider travel or not visit. If a destination is listed as “Do Not Travel,” it is smart to heed this warning and avoid traveling there. Furthermore, insurance carriers may not cover a destination if it is on the “Do Not Travel” list.
Before planning a business trip, make sure to check the Department of State’s current travel advisories and contact your kidnap and ransom insurance company to discuss your plans.
Do you need kidnap and ransom coverage for your employees?
A kidnapping can be devasting for the victim, their family and their employer. If one of your employees is kidnapped for ransom, they could experience tremendous pain and suffering, requiring mental and physical health care. The impact on the victim’s loved ones and on company’s morale may also be devastating. All this is on top of the financial costs from the ransom payment as well as lost work, business disruption and the possibility of litigation.
Kidnap and ransom insurance helps manage these risks by covering certain financial costs (including reimbursement for the ransom) and by providing support to help increase the odds of a good outcome. For businesses with kidnapping exposures, K&R coverage is a logical way to protect critical employees while protecting the company’s bottom line and reputation.
If your organization meets any of the following criteria, you may want to consider kidnap and ransom insurance coverage.
- Your employees travel internationally for business. International travel can expose your team members to increased kidnapping risks, making K&R insurance a smart investment.
- Your employees travel to high-risk areas. Many people are surprised to learn that kidnappings are common in familiar destinations. Kidnap-for-ransom plots can occur in a variety of countries, such as Mexico and India.
- Your employees are likely targets. Kidnappers often target executives and other wealthy individuals. If your employees have earned a reputation for being successful, they could be targets.
If you’re unsure whether kidnap and ransom insurance makes sense for your company, Higginbotham’s business insurance specialists can review your risks and determine whether you need coverage. We can help protect your business and employees with commercial insurance and risk management solutions, including kidnap and ransom insurance. Talk to a member of our team to learn more.
