The dangers of kidnap and ransom overseas

The perils of doing business abroad have been brought into sharp focus by media headlines of kidnappings across the globe – from Somali pirate victims to oil worker hostages in Nigeria. Willis PMI Group director Rachael Floyd examines the risks and reveals how companies can mitigate them.

Globally, kidnapping for ransom has become a daily occurrence. Economic kidnapping has been dubbed a ‘cottage industry’ in some regions, with company employees, and their families, a very real target.

Described as one of the fastest-growing industries in the world by political think-tank The Foreign Policy Centre (FPC), kidnapping is generating hundreds of millions a year in ransom payments for guerrilla and criminal groups.

According to the Foreign & Commonwealth Office’s Counter Terrorism Policy Department, some of the groups they’re up against are as organised as legitimate businesses and in many cases make much bigger profits.

The majority of FTSE 100 companies are understood to be on the books of British underwriters dealing with kidnap and ransom insurance. Outside of these, however, are a vast number of businesses sending staff oversees that are failing to adequately protect themselves, and their employees.

How genuine are the risks?

More than 12,000 kidnappings are reported each year in more than 40 countries – notably across Asia, Latin America, Africa and Russia – and business people are conspicuous targets, being regarded as symbols of wealth. Evidence suggests that while the percentage of global kidnappings has fallen in Latin America, it’s rapidly on the rise in Asia.

Worryingly, areas of the world that had previously been regarded as relatively safe are now becoming kidnapping hot spots for criminals. Mexico City still holds the title of kidnapping capital but Phoenix, Arizona has now taken second spot on the global blacklist.

According to Lloyd's insurance market, the kidnap situation worldwide could further deteriorate as the global economic woes continue to bite.

Illustrating the extent of the problem, Anglo-Dutch oil giant Shell revealed last year that 133 of its workers and contractors had been kidnapped between 2006 and 2008. Three British oil workers hit the headlines earlier this year when they were kidnapped in Nigeria.

Although the number of Britons kidnapped overseas annually hasn’t yet reached three figures, when incidents do occur, their impact is considerable.

UK government policy is not to pay ransoms, and rescue attempts are seldom made by the authorities for fear of jeopardising the safety of the victims. The onus of dealing with kidnappers' demands is left on the shoulders of employers and victims’ families. Hostages themselves are usually left psychologically, if not physically, scarred.

In addition to the ransom demands, businesses may have to contend with issues of corporate liability and business continuity.

Mitigating the risks?

The time-consuming and sensitive nature of kidnapping and extortion can never be underestimated. Businesses with exposure to such risks should take steps to mitigate them as much as possible.

Employers should seriously consider kidnap and ransom insurance cover when sending staff to volatile regions, particularly areas of Latin America, Asia and the Middle East. This gives financial peace of mind and reassurance that expert consultants are available to advise and provide practical help on the ground should a problem arise.

Employees should be made aware, however, that having cover should never be disclosed – doing so will immediately invalidate the policy.

Kidnap and ransom insurance benefits will depend upon the specific circumstances but could include:

  • Cover for ransom payments
  • Cover for the loss of a ransom payment in transit
  • Specialist consultancy expenses providing advice and assistance during an kidnap or extortion incident, including a specialist hostage negotiator to work full-time on securing someone's release
  • Cover for any financial rewards paid in the process of convicting the perpetrators a kidnap or extortion
  • Cover for associated costs and expenses, including legal, medical and psychiatric
  • Payment in the event of a death or disability

Some policies will even include specialist training for staff travelling to high risk areas to help them avoid being taken hostage.

Continuing globalisation is resulting in companies sending employees to ever more perilous regions of the world – and this trend should be accompanied with them taking sensible precautions to ensure their safe return.

If you need more information about kidnap and ransom insurance, call Willis Towers Watson Health & Benefits on 01606 353260 or complete the contact form and someone will contact you.