Picture this: You're on a business trip and just finished a long day of work. It's late evening, and you're walking to a restaurant near your hotel, when two men approach you asking for directions. As you begin to answer, they flash a gun and push you into a car that has just pulled up to the curb. They drive you to an ATM, where they force you to empty your account and call your family to deposit more money in the account. You're held for a day, and the kidnappers receive $8,000.

This increasingly common scenario is a portrait of an “express kidnapping.”

What is kidnapping? Essentially, the term refers to the abduction of a person who is held against his or her will. Each year, at least 15,000 to 20,000 kidnappings occur across the globe. That's the number of reported cases, but the real figure is likely higher. Because only 10 percent to 30 percent of all kidnappings are reported to the media or authorities, it is difficult to pinpoint an exact number.

Kidnap-for-ransom, a situation in which a person demands a sum of money for the release of an abducted person, is quickly becoming a multibillion-dollar industry. Drug cartels, terrorists, and other organized crime groups use kidnapping as a means of quick fundraising. The model has proven to be effective, especially in areas where local authorities may be less organized or more likely to turn a blind eye.

In 2012, the average demand for ransom was $2 million, and it has been estimated that between $500 million and $1 billion is actually paid each year in ransom.

Today, the top countries for kidnapping for ransom are Mexico, Haiti, Brazil, the Philippines, India, Colombia, and Venezuela. Historically, people thought of South America and Mexico when the subject of kidnappings came up. And until recently, kidnapping incidents were largely concentrated in that region. However, between 2004 and 2014 the area dropped from accounting for 55 percent of the world's kidnapping incidents to accounting for only 23 percent. During the same time, kidnappings in Africa and Asia Pacific grew from 18 percent to 50 percent of the world's total.

Unfortunately, this geographic shift does not signal an overall decrease in the number of incidents. Globally, kidnappings increased during the decade that ended in 2014.

A Significant Risk for International Travelers

One of the biggest risks associated with international travel today is the risk of kidnapping. Many people incorrectly believe only wealthy or high-profile individuals are at risk, but that is not the case. In fact, there has been a distinct shift in the kidnapping business model over the last decade. Today kidnappers tend to target upper-middle and middle class individuals in what have been called “express kidnappings.”

Express kidnappings are situations where kidnappers demand lower ransoms—almost always below $100,000, and often below $10,000. They hold their captives for a shorter period of time and demand a faster turnaround on the ransom. These kidnappings are rarely reported to the authorities, and they usually do not draw the attention of the media. Because express kidnappings attract less attention, kidnappers tend to perform these crimes in higher volume.

Kidnapping is a crucial topic for anyone traveling outside the country—and especially for business travelers. One of the best ways that business travelers can protect themselves from a potential kidnap situation is to avoid standing out as a tourist. For instance, travelers should dress in local fashion and avoid flashy, name-brand apparel, accessories, or equipment. They should also refrain from renting luxury cars or wearing expensive-looking jewelry, whether or not it is real.

Another way some travelers are choosing to protect themselves is through kidnap-and-ransom travel insurance.

What Is Kidnap-and-Ransom Insurance?

Kidnap-and-ransom insurance policies typically protect travelers against a variety of insured events that may occur while traveling, possibly including kidnapping, ransom, extortion, wrongful detention, and hijacking. They are designed to do more than just protect the insured victim financially. Most such policies provide a package of benefits and services to help the insured deal with the event, recover money spent, and handle situations and expenses that result from the crisis event.

Losses typically reimbursed by kidnap-and-ransom insurance include the following:

Ransom—money paid in a kidnap-for-ransom situation. Most policies do not directly pay ransoms on behalf of the insured, but they will reimburse the insured when a loss has been incurred. Basically, the family of the kidnapped victim supplies the ransom money, thus incurring the loss, then seeks reimbursement from the insurer under the kidnap-and-ransom policy.
Transit/delivery loss—a loss due to destruction, disappearance, confiscation, or wrongful appropriation of ransom while it is being delivered to the person who demanded it.
Accidental death or dismemberment—compensation related to an individual's death or permanent physical damage related to a kidnapping.
Legal expenses—for a group plan covering multiple people, such as employees at a company, the legal expenses provision covers a claim or suit brought by a covered employee against the company for breaching legal obligations which may have caused an insured event. The benefit covers the cost of defending the claim and any damages awarded. While less common, this benefit could also provide coverage for a similar scenario if family members were covered on a family plan.
Additional expenses—medical and psychiatric care, salary replacement, travel accommodations, interest on loans to raise money, and other costs related to a kidnapping incident.

Clearly, financial support of victims is a key element of kidnap-and-ransom insurance; however, these policies are not just about the money.

Some policies also provide victims and/or their representatives with access to a multilingual team specifically trained to handle crisis situations. These consultants provide advice on how best to respond to an incident, and they work with local law enforcement when appropriate to help ensure safe resolution of the event. They have specialized training that is invaluable in successfully handling the varied and difficult components of a kidnap-for-ransom scenario.

Businesses Can Benefit from Kidnap-and-Ransom Insurance

Because business travelers often travel alone and are typically unfamiliar with their surroundings, companies are under increasing pressure to protect their employees from kidnappings abroad. The website of the U.S. State Department provides good information about regions with high rates of kidnapping and other concerns.

Kidnap-and-ransom policies differ slightly from company to company, but it is important for a business to find a policy that is right for its employees. For instance, make sure a kidnap-and-ransom policy includes coverage for other types of crisis incidents that could affect traveling employees—incidents such as threats, extortion, disappearance, and detention.

In addition to evaluating the breadth of events that a policy covers, risk managers shopping for kidnap-and-ransom insurance should verify which destinations are covered. Many plans restrict coverage in more dangerous regions or require a rate increase for those areas. Make sure there is coverage in place for all locations that you expect employees to visit over the duration of the policy.

Corporate risk managers shopping for this coverage should also verify the experience level of the security team that will handle negotiations should an incident occur. Many carriers have an agreement with a specific firm. Take some time to research that firm to learn about the experience level of its security consultants, and about how successful they have been in handling negotiations, ransom delivery, evacuations, and other key types of incidents covered by the plan.

Finally, review wording to ensure that the policy offers leniency to its security consultants in deciding whether to advise local law enforcement if an incident occurs. In some locations, local law enforcement is well-equipped with the necessary tools and training to effect a favorable outcome for these difficult situations. But in other areas around the world, knowledge and effective tools may be lacking. There have even been situations where local law enforcement was involved in varying levels of participation with the criminal activity. It's important for kidnapping-and-ransom insurance policies to include verbiage that requires the insurer to consider the victim's safety before notifying authorities.

In addition to purchasing insurance coverage, businesses looking to protect employees who travel abroad should consider providing training. Employees should know not to tell anyone that they are covered by a kidnap-and-ransom policy; this information could make them a target for kidnappers. Likewise, they should not take their kidnap-and-ransom ID card with them. Instead, they should leave it at home, with a trusted family member or friend.

Before traveling, employees should also store pertinent contact numbers in their phone and know the name of the response team that would be involved if a situation were to occur.

While there is no way to completely eliminate the risk that a kidnapping or other crisis incident might occur, travelers should understand the risks for the location they are visiting and prepare ahead of time by purchasing a kidnap-and-ransom plan. In short, kidnap-and-ransom insurance puts more support in your court should you ever need to battle the bad guys abroad.

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Jim Krampen is the co-founder of Seven Corners, Inc., a U.S.-based provider of various types of business and consumer travel insurance. With more than 25 years of experience in the insurance industry, Krampen has extensive knowledge and expertise in the areas of benefit design, underwriting, and distribution of insurance programs. He has directed the development of Seven Corners' program management services by effectively partnering with insurance carriers and customers to design and implement customized retail insurance programs for various markets.

Instant Insights /

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