Ransom Notes: Global Kidnapping

In many parts of the world, kidnapping has become a lucrative business, and the employees of deep-pocketed Western companies are targets. In response to this developing trend, a kidnap and ransom (K&R) insurance policy has become a common management accessory. Greg Bangs, a vice president at Chubb & Son and product manager for crime, kidnap and ransom, extortion and workplace violence, has seen a 20 percent increase in submissions in the past 18 months from companies looking to acquire this coverage.

K&R coverage has changed too, and most of today’s policies reflect both the broad risks companies can face, as well as the range of costs that can be incurred. Many K&R contracts now include coverage for ransom and extortion payments, replacement of those funds if they are stolen or lost in transit, medical costs if a kidnap victim is injured, accidental death and dismemberment, costs arising from lawsuits brought by family members of the victim, costs of employing a security specialist to handle the situation, interest fees if ransom funds have to be borrowed, and public relations costs to handle the crisis.

Bangs advises companies that are interested in this kind of coverage to take the following steps to get the most out of their K&R policy. The first is to make sure that the policy coverage is sufficiently broad. “K&R coverage is so cheap that there is no point in underinsuring. Get the maximum limits available,” Bangs suggests. For large companies with annual revenue of more than $1 billion, he suggests $25 million in coverage; for smaller companies with revenue around $250 million, he suggests a limit of up to $5 million. Premiums are calculated based on a number of variables from the industry that the company is in and the amount of overseas travel in which its employees are engaged to the company’s overall profile. Secondly, Bangs suggests that CSOs pay close attention to the security provider that their insurer works with to resolve kidnap and extortion cases. Chubb allows their customers to choose their own provider, but some companies have preselected partners. As important as the policy is, the security company will be the CSO’s first call, and they shoulder responsibility for resolving the situation. Look for companies that have 24-hour hotlines and the ability to respond to a situation in any part of the world.

Lastly, Bangs cautions security executives against trying to resolve these situations on their own or expecting local authorities to be of much assistance. “Frankly, in many cases, local law enforcement is either committing the kidnapping or abetting it,” Bangs says.

-Daintry Duffy