Kidnap and Ransom Insurance

We buy insurance to protect against unexpected financial loss.  But one of the most unusual forms of insurance stretches the definition into the realm of deep human anguish, political extremism, and controversy.

I’m referring to Kidnap and Ransom insurance (K&R).

We supply K&R insurance for our clients working internationally, knowing that more than 1,000 professionals and executives are kidnapped worldwide annually as a result of political extremism, the drug trade and growing ocean piracy.

K&R falls under the category of Political Risk Insurance, which usually indemnifies against political violence, civil unrest and terrorism, government confiscation of assets, government frustration of contacts, and politically-linked business interruption.

However in many ways, K & R insurance is structured so that it is in a class of its own.  Essentially the deal is that corporations and NGO’s pay a premium to have a ransom negotiated and paid by the insurer should a kidnap event occur involving an executive or employee.

The work is highly specialized: negotiating the ransom with the kidnappers and delivering the money – all the while demanding sufficient evidence proving the victim is alive and unharmed.  Concurrently, the negotiator is juggling distraught family members, welcome and unwelcome government intervention, and the journalistic glare these events often attract.

Critics oppose the process arguing that paying ransom perpetuates the “kidnap industry”; but those negotiating for insurers contend that ultimately paying a ransom is the most reliable method of getting hostages back alive.

After all, a premium has been paid (insured) and a contractual promise has been extended (insurer).

Tags: extremism, insurance, kidnap, political, political unrest, ransom, risk, safety