Understanding Kidnap and Ransom Cover

Understanding Kidnap and Ransom Cover

In certain parts of the world illegally detaining travellers has become a business, where the proceeds are then channelled to often more extreme activities. This is particularly true in areas where local authorities either lack the resources to tackle guerrilla activity, secretly support it or areas stricken by poverty where bribery is endemic.

In most cases kidnappers may abduct any foreigner and not just charity workers with the aim of profiting through the payment of a ransom, releasing the individual once demands have been met. Financial gain isn’t the only consideration given in some cases a foreigner could simply be someone from another ethnic group or village and so the composition of the team around your volunteer needs to be thought through.

Whilst kidnap motives may differ, a kidnapping abroad can be a terrifying concept. Victims may be bound and gagged in a dark room or the perpetrators may threaten people with torture to persuade the negotiators to comply with their demands. It is worth considering a couple of questions:

• What if the charity does not have access to the kind of money the perpetrators expected to get?
• What happens when no one knows how to help or access expertise?

The harsh reality of kidnapping is that it can happen anywhere; some areas of the world or parts of a country may be safer than others, but that does not mean safety is guaranteed. Kidnappers are usually professional groups; they know what they are doing and how to ensure money is paid.

By going as far as killing a hostage, the kidnappers get no financial benefit. So, the vast majority of kidnappings that take place everyday end with the victim being safely released when some form of ransom changes hands.

Kidnap & Ransom Insurance Policies

The extreme physical and financial risks of ransom led to the creation of kidnap insurance.

Whilst evidence indicates that kidnapping has increased all over the world as more people turn to extreme methods of getting money, there are undoubtedly some hotpots and the traveller should be familiarised with the locality in which they intend to operate.

While many charity travellers may feel they do not have enough money to be targeted by kidnappers the truth is that the majority of victims have fairly average incomes and often work or volunteer on behalf of organisations with significant resources. If a charity worker has enough money to travel or is part of a larger organisation, then they can be seen as worth kidnapping.

Kidnapping and Ransom insurance (sometimes called Special Risks) is a specifically designed policy that helps negate the potential costs to individuals and charities who are the victims of kidnapping.

Insurance can make a real difference in securing a release through practical help as well as reimbursement of any costs incurred. K&R policies tend to be purchased as long term policies and are not generally available for individual trips.

Specific cover within K&R insurance can vary but will cover a range of expenses such as the ransom itself, loss of the ransom, consultants fees and expenses to help with the negotiations, disappearance investigation expenses, time off, temporary work replacements, psychiatric therapy, and loss due to injury.

If a charity purchases an insurance policy the scope and limitations should be understood – every individual insurance company can make their own rules about how its assets are to be used. If applicable, guidelines must be set up for communicating with the insurance company’s crisis team.  

What if the local government brands the kidnappers as terrorists and refuses to negotiate? Will the kidnappers demand more money if they discover the victim has a policy? K&R insurances policies may contain exclusions that means it isn’t permitted to pay a ransom that might breach trade or sanctions in a particular country or to organisations that have aligned themselves with terrorist organisations.

Travellers should not reveal that they have K&R cover, as it potentially makes them more of a target and can increase the likelihood of an incident.

Knowing the Threat

Regardless of whether a charity has cover the travellers must know how to reduce the risk of being kidnapped. A best practice can involve training including risk assessment, situational awareness, knowledge of the area – including local arrangements, sources of tension, safe neighbourhoods, together with security protocols and predetermined plans in certain scenarios.

Some courses can substantially reduce the risk of danger to the traveller while also reducing the risk of loss for the insurer. Educating travelling charity workers on risks and foreign practices is essential to every aspect of their safety abroad and should be part of an overall risk management programme. In the event that someone is kidnapped the more they have been previously prepared for coping with their loss of liberty will improve their ability to manage the shock.

Risk Transfer Option

If an organisation has limited funds and expertise in the event of an incident, insurance can be a viable alternative and form part of a risk management plan.

We tend to think of kidnapping as the abduction of an individual but as the landscape changes and technology develops there are evolving threats such as cyber extortion, virtual kidnapping and product extortion.

Please contact us to discuss your requirements for Kidnap & Ransom insurance – as an experienced broker we can try and help find a policy that is suitable for you. The premiums are generally derived from the type and location of work being undertaken, revenue of the charity, country of residence and a travel pattern.