Kidnapping is a severe and historic issue in countless countries across the world.1 Approximately 800,000 people in the United States2 and 100,000 people in Mexico3 go missing annually. With so many people across the world at a high and continuously growing risk, Kidnap and Ransom insurance policies have become more important than ever.
Kidnap and Ransom policies protect against financial losses that arise when an insured is threatened internationally or domestically. Cases can range from traditional kidnap-for-ransom or hostage situations to ship and aircraft hijacks, political detentions, or threats and extortions aimed at an employee in the workplace.
Approximately 60 percent of Canadians4 and 71 percent of Americans5 receive medical insurance coverage, among other benefits, through their employers. “However, Kidnap and Ransom insurance is less often offered as a benefit,” said Lalita Mohabir, National Product Leader, Personal Accident & Special Risks Manager, Burns & Wilcox Canada, Toronto, Ont.
“Every employer should consider obtaining Kidnap and Ransom insurance for their employees, as they would any other employee benefit,” said Mohabir. “It is a very valuable tool with relatively inexpensive premiums—especially if the company does not require its staff to frequently travel to high-risk countries.”
Kidnap and Ransom coverage is active on a 24-hour basis, whether for business travel or a vacation.
“When vacationing, many people travel to popular tourist locations in a variety of countries,” said Mohabir. “Mexico is one of the top spots for express kidnapping.”
During kidnap-for-ransom instances, the average ransom demand is $1.15 million, the average settlement is $355,000,6 and about 98 percent of insured criminal kidnapping victims are safely retrieved.7
Covering more than kidnapping
“Clients typically dismiss Kidnap and Ransom coverage, maintaining that their employees do not travel in high-risk areas, and therefore will not come in harm’s way,” said Mohabir.
Instead, brokers and agents should work to educate their clients that even standard Kidnap and Ransom insurance policies offer coverage beyond kidnapping, including:
- Hostage situations
- Cyber extortion
- Political expatriate evacuation
- Other ancillary benefits for employees, spouses, children, extended family members and guests visiting an employee’s household
“Traditionally, Kidnap and Ransom insurance covered basic benefits, but policies have since adapted to better serve clients’ needs with extensions of cover including additional exposures” said Alex Cassey, Special Risks Broker, Chesterfield Group in London.
Airlines, maritime companies, employers with frequent global travel, and high-net-worth individuals are obvious potential clients for brokers and agents. Additionally, organizations with high risk for threats of abduction or hostage situations, such as hospitals and credit unions, are also key targets.
“Extensions also include Express Kidnap which offers additional protection against robbery under duress for a small financial amount,” said Cassey. “Clients who are victims of armed robbery or are demanded to withdraw money from an ATM can now have coverage to recoup expenses under a kidnap clause.”
Little-known benefits and case studies
If an employee is an expatriate who has to leave the country immediately without time to gather personal belongings, Kidnap and Ransom insurance policies will reimburse a sub-limit for those expenses. Additionally, if an employee or family member has been kidnapped or held hostage while in port, during a cruise for instance, the policy covers disappearance and investigation expenses, ransom costs, and family therapy services after the traumatic event.
“Business interruption expenses resulting from instances of missing, expatriated, or politically evacuated employees are covered as well,” said Mohabir.
Accompanying Kidnap and Ransom policies is a frequently updated security intelligence portal that provides useful information for travelling employees. By cataloguing most countries it features travel advisories, illnesses in the country, political issues, areas to avoid, and much more.
Cassey adds that, even in non-hostile environments, Kidnap and Ransom insurers are increasingly offering an Active Assailant product that is often sold as a stand-alone policy. “This coverage activates during incidents similar to the unfortunate circumstances surrounding the active shooter incident at the Route 91 country music concert in Las Vegas last year,” he said.
Domestic instances may also be covered when it relates to threats at the workplace. For instance, a female employee felt unsafe in her Michigan-based workplace after her ex-husband made threats to arrive there and cause harm. Fortunately, the company had Kidnap and Ransom insurance that paid for an in-office security team to protect the woman’s entire workplace from her ex-husband, ensuring her and her co-workers safety.
Adapting to digital trends
Kidnap and Ransom policies have adapted in recent years by adding an endorsement for the digital world, including cyber extortion. Cyber extortion can take many forms. The most popular is when hackers develop and install malicious software, known as ransomware, on a victim’s computer files; encrypting the data and holding it for ransom.
Virtual kidnapping is another trend, during which random phone numbers are called to elicit a ransom under the false pretense of rescuing a seemingly missing loved one.
Kidnap and Ransom policies have the potential to save someone’s life and subsequently prevent further financial or emotional trauma to a family and employer. There are numerous ideals and practices that divide people, but one connection many share is the desire to protect and care for each other. A broker’s client can show their organization’s dedication and value to its employees through this coverage. A broker’s responsibility is to educate their clients on the value of this coverage and reason for its purchase.