Kidnap and Ransom Insurance

Kidnap and ransom policies ("K&R") provide coverage in the event of a kidnapping. Colombia leads the world in kidnappings. Colombian kidnappings are generally well-planned, professional jobs, often involving extensive research on the company, surveillance of the kidnapping target, and high ransom demands.    Then there is the Mexican kidnapping threat. While Colombian kidnappings are highly organized crimes, Mexico is notorious for "express kidnappings," where assailants wait roadside until a likely victim drives up. Victims of such kidnappings are robbed of their possessions and then forced to empty their accounts from ATMs.  They are forced to withdraw money, then set free.

 A typical K&R policy covers all kidnap-related costs, from ransom to travel expenses. Ransom money is also insured during transit, until it is delivered. Other potential covered costs include legal liability, fees for a professional negotiator, personal accident insurance, and travel expenses. Some security specialists take over the negotiation; others prefer to devise strategies but have them carried out by a family member or company representative, fearing that the presence of a professional negotiator might anger the kidnappers.  

A Quiet Purchase

It is common coverage, and insurance companies pay out ransoms every year.  Insurance companies decline to discuss many kidnapping details, citing client confidentiality.    Afraid publicity will lead to fraudulent claims, or even actual kidnappings if the existence of a policy is known, companies with K&R coverage keep their purchase under wraps, so it is hard to guess how many carry the coverage and how often it is put to use. There is speculation that at least two-thirds of Fortune 1000 companies purchase K&R coverage.

Two instances in particular where K&R coverage proved a worthwhile investment: A kidnapping in El Salvador where a medical-products company executive was abducted and his driver killed.   After eight weeks the executive was released, only after his insurance company paid a $7 million ransom. In Guatemala, a local businessman was abducted and released after his K&R insurance paid $4 million in ransom.

Here are some hints on how to avoid trouble:

• Maintain a low profile and don't discuss your travel plans with strangers.
• Vary your routine - If someone is watching you to figure out when you are most vulnerable, leaving the hotel at different times and taking different routes around the city can throw them off.
• Never take a taxi service that isn't approved by your security company. If you are not sure, take a franchised cab instead of an independent one. Gypsy cabs in particular can whisk jet-lagged travelers from the airport straight to the house of a kidnapper.

Kidnap & Ransom Policies

The Kidnap & Ransom policy may include coverage for the following:

Ransom reimbursement
Personal accident
Loss of ransom
Private negotiator
Travel expenses
Reward payments
Financial losses
Loss of income
Employee income protector
Asset protection
Security coverage
Funeral expenses
Child care