Hid­den pro­tec­tion: kid­nap and ran­som in­sur­ance

Kid­nap, ran­som and ex­tor­tion (KRE) in­sur­ance has be­come a growth in­dus­try round the world be­cause of in­creas­ing in­ci­dents re­lated to this field. RISKAFRICA takes a look at this in­tri­cate in­sur­ance pol­icy and dis­cusses the ben­e­fits it can pro­vide.

RISKAFRICA Magazine - - CONTENTS - Nick Krige

Who needs KRE?

KRE in­sur­ance is of­ten thought of as an ex­tra se­cu­rity mea­sure, re­quired only by high-pow­ered busi­ness­men and peo­ple who travel to high-risk ar­eas. This is no longer the case and com­pa­nies are see­ing it as a ne­ces­sity for all of their em­ploy­ees. “Cor­po­rates are be­gin­ning to recog­nise that kid­nap, ran­som and ex­tor­tion in­sur­ance is not a stand­alone nice-to­have cover, but a com­po­nent of their com­pre­hen­sive duty of care cor­po­rate pol­icy for em­ploy­ees,” says Dani Et­tridge, cri­sis man­age­ment, Aon South Africa. Kid­nap­pings and ex­tor­tion are not con­fined to mil­lion­aires and their fam­i­lies, busi­ness ex­ec­u­tives or celebri­ties, al­though they are of­ten tar­geted and those are the most high-pro­file cases. Some­times how­ever, it is just a case of an or­di­nary per­son be­ing in the wrong place, at the wrong time. In­creas­ing in­ci­dents of vic­tims be­ing briefly held and forced to with­draw money from an ATM, or get­ting ab­ducted by pi­rates while on a hol­i­day cruise have made kid­nap­ping a very real dan­ger for ev­ery­one. Even com­pa­nies need pro­tec­tion from ex­tor­tion. “KRE in­sur­ance ex­tends be­yond cover for in­di­vid­u­als, but also pro­tects the com­pany from threats by means of ex­tor­tion to their rep­u­ta­tion or in­tel­lec­tual cap­i­tal,” ex­plains Et­tridge. An ex­am­ple of this might be a dis­grun­tled for­mer em­ployee threat­en­ing to re­veal trade se­crets to an op­po­si­tion com­pany un­less their de­mands are met.

The para­dox

Some may have KRE in­sur­ance and not even know it; it can of­ten come as part of a cor­po­rate in­sur­ance port­fo­lio, es­pe­cially if the com­pany op­er­ates in a high-risk area or its em­ploy­ees travel ex­ten­sively. Un­for­tu­nately, a cov­ered em­ployee can­not know that the cover ex­ists for them, or the cor­po­ra­tion, or it will void the pol­icy. The rea­son for this is that al­low­ing a third party knowl­edge of such a pol­icy would open up many doors for ex­ploita­tion. “It is a firm con­di­tion of KRE poli­cies that the ex­is­tence of the pol­icy can­not be re­vealed to a third party. KRE is a re­im­bur­sive in­sur­ance pol­icy, which means the in­sur­ance com­pany will re­im­burse a pol­i­cy­holder af­ter a ran­som is paid. The in­sur­ance com­pany is not di­rectly in­volved un­til an in­sured event oc­curs, so there is no rea­son for any third party to be aware the pol­icy ex­ists,” Et­tridge ex­plains.

Some­thing else to con­sider when pre­par­ing a kid­nap and ran­som pol­icy for a client is whether the pol­icy cov­er­age will be void in cir­cum­stances in which em­ploy­ees or rep­re­sen­ta­tives of the com­pany col­lude in the kid­nap­ping, such as a driver, even if the kid­napped has no part in the col­lu­sion. So be cer­tain that any con­di­tion or ex­clu­sion in the pol­icy is clear and un­der­stood in terms of the cir­cum­stances in which col­lu­sion is ex­cluded.

There is a worry that kid­nap and ran­som in­sur­ance en­cour­ages the busi­ness of kid­nap­ping and ex­tor­tion. If a kid­nap­per finds out that a po­ten­tial tar­get is in­sured against kid­nap­ping, they will ex­pect and ask for ex­or­bi­tant ran­som fees, and the in­sured’s com­pany or fam­ily might be in­clined to pay what­ever is asked be­cause of the avail­able cover. How­ever, ac­cord­ing to Et­tridge, that is not the is­sue. “KRE in­sur­ance does not per­pet­u­ate the busi­ness of kid­nap­ping and ex­tor­tion, be­cause th­ese are crim­i­nal acts di­rected at com­pa­nies, which it is be­lieved will pay up ir­re­spec­tive of an in­sur­ance pol­icy.”

KRE in­sur­ance ex­tends be­yond cover for in­di­vid­u­als, but also pro­tects the com­pany from threats by means of ex­tor­tion to their rep­u­ta­tion or in­tel­lec­tual cap­i­tal.

Ben­e­fits

The nu­mer­ous sub­tleties of kid­nap and ran­som in­sur­ance make it an in­cred­i­bly com­plex cover to have, but the rea­son for this is that it is sus­cep­ti­ble to fraud. Imag­ine how easy a kid­nap­ping would be to pull off if the per­son be­ing kid­napped, or the com­pany they work for, is in­volved in the plot to scam the in­sur­ance com­pany.

For those who can get past all the com­plex­i­ties and find them­selves in a po­si­tion where they need KRE in­sur­ance, it can pro­vide valu­able ser­vices and guid­ance in a trou­bling time. It is im­por­tant to con­sider the in­di­vid­ual needs of the client when ne­go­ti­at­ing what to in­clude in the pol­icy. Poli­cies may in­clude the fol­low­ing cover and ben­e­fits:

Ran­som re­im­burse­ment: Ran­soms paid for the safe re­turn of a cov­ered em­ployee or fam­ily mem­ber in a cov­ered event will be re­im­bursed by the in­surer.

Per­sonal ac­ci­dent: A lump sum ben­e­fit will be paid out in the event of a loss of limbs, loss of sight, loss of ex­trem­ity, per­ma­nent to­tal dis­able­ment or death of the in­sured, solely and di­rectly as a re­sult of a cov­ered event.

Loss of ran­som dur­ing de­liv­ery: The loss in tran­sit of a ran­som by con­fis­ca­tion, de­struc­tion, dis­ap­pear­ance, seizure or theft while it is be­ing trans­ported.

Cri­sis team: Ex­penses re­lated to de­ploy­ing an in­de­pen­dent and ex­pe­ri­enced cri­sis re­sponse team to help ev­ery­one in­volved get through the or­deal. “KRE in­sur­ance pro­vides the fi­nan­cial se­cu­rity that ran­som paid fol­low­ing an in­sured event will be re­im­bursed. But the real value be­hind hav­ing KRE in­sur­ance is not the money. Most KRE in­sur­ance poli­cies pro­vide un­lim­ited fund­ing for an ex­pe­ri­enced cri­sis re­sponse team to as­sist in deal­ing with an in­sured in­ci­dent that could lead to a claim,” says Et­tridge.

Travel ex­penses: Travel and ac­com­mo­da­tion costs in­curred as a di­rect re­sult of a cov­ered in­ci­dent.

Psy­chi­atric ex­penses: Of­ten peo­ple who are kid­napped re­quire ex­ten­sive psy­chi­atric, med­i­cal and le­gal ad­vice.

Re­ward pay­ments: Re­wards can be of­fered by a pol­i­cy­holder in ex­change for in­for­ma­tion that con­trib­utes to the res­o­lu­tion of the cov­ered event. Fi­nan­cial losses: Per­sonal fi­nan­cial loss, suf­fered by an in­sured per­son as a di­rect re­sult of be­ing un­able to at­tend to fi­nan­cial mat­ters be­cause of the kid­nap­ping.

Loss of in­come: The kid­napped’s gross salary will be re­im­bursed for the du­ra­tion of cap­tiv­ity. Some poli­cies in­clude bonuses, com­mis­sions and pen­sion con­tri­bu­tions.

As­set pro­tec­tion: This ben­e­fit is to cover in­ter­est on loans taken specif­i­cally to meet a ran­som.

Se­cu­rity cov­er­age: Ex­penses for se­cu­rity guards hired for the pur­pose of pro­tect­ing mem­bers of the fam­ily and cri­sis re­sponse team that visit the lo­ca­tion of the cov­ered event.

Spe­cialised equip­ment: Costs of com­mu­ni­ca­tion equip­ment, record­ing equip­ment and ad­ver­tis­ing to help re­solve an in­sured event.

Re­ha­bil­i­ta­tion ben­e­fit: Rest and re­ha­bil­i­ta­tion ex­penses that oc­cur di­rectly fol­low­ing the re­lease of a kid­nap vic­tim.

Fu­neral ex­penses: Cost of repa­tri­a­tion of the body of the kid­nap vic­tim in the event of death dur­ing a cov­ered event. This will typ­i­cally in­clude the costs of burial or cre­ma­tion.

Most KRE in­sur­ance poli­cies pro­vide un­lim­ited fund­ing for an ex­pe­ri­enced cri­sis re­sponse team to as­sist in deal­ing with an in­sured in­ci­dent that could lead to a claim.

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