Kidnapping and Ransom Insurance
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Kidnap and insurance policies offer coverage for individuals – corporations’ employees, athletes, business people and other high-profile individuals – while they are living in or travelling to high-risk regions abroad. This insurance coverage ensures the payment of cost of release and safe home return of an insured person kidnapped in covered territories (Crosner & Schulman, 2011). The cost includes the ransom amount paid on behalf of the person insured in exchange of his or her release. Further, depending on the individual policy terms, kidnap and ransom cover can provide protection for various other expenses associated to negotiation and transfer of a ransom payment. The policy holder may, for example, request the hiring of professional negotiators to coordinate the delivery and secure a release (Crosner & Schulman, 2011).
Other policies may include providing the services of interpreters, where necessary, and facilitating the informers by paying to them for information about the kidnapped individual whereabouts or the identity of the kidnappers. Many policies are also crafted to cover the cost of psychiatrist and doctors services for the kidnapped individual after their release. Other policies include travel coverage to facilitate the expenses for the victim and family members travelling and accommodation needs (D’Ancona & Walloga, 2010).
There also exist certain exclusions to these policies: voiding kidnapping that takes place in certain geographical regions and a kidnap facilitated by the policyholders, their relatives or employers. These elaborate kidnap insurance policies have raised the question whether they are necessary mitigating measures in the event of kidnapping or are opportunities for perpetuating organized crime. Kidnap coverage provides kidnap victims with means of secure release but has also helped make kidnapping a thriving business for criminals (Canter, 2009).
Kidnap coverage exists as part of a corporate insurance portfolio or an independent cover. In most kidnapping incidences, kidnappers demand that the victim neither notify the authorities nor the employer. On the other hand, because of the nature of the policy, insurance companies require confidentiality of the cover existence. There are several provisions and conditions which define and guide kidnap and ransom policies (Crosner & Schulman, 2011).
Kidnap and ransom coverage is a policy that covers any insured person for the cost of the kidnap ransom required for his or her safe release. This can also mean the policy that covers reimbursement to the insured of the value amount for property and other considerations submitted as a kidnapping ransom payment. The policy covers for monies or property submitted away from the premises as a result of use or threat of force in a face to face encounter with the kidnappers. The exemption to this policy states that such monies are not submitted for the purpose of turning it over to pay an extortion or demand for ransom monies communicated before to the insured person (Canter, 2009).
Ransom delivery policy covers for the safe delivery of monies or considerations used to settle a ransom or extortion demand. Other services that may be incorporated in this cover include counseling to take care of the trauma effect on the victim who suffered during the kidnapping event, and the travelling expenses after the successful release. The cover may also include assistance to the family and the business, like conducting independent investigations and negotiations. The exempt to this cover is that the existence of it should be kept confidential by the insured person at all time (Crosner & Schulman, 2011).
Wrongful detention event covers an insured person against wrongful detention from carjacking, hijacking, kidnapping and unlawful arrest. The cover can also include independent security consultant services, travel and accommodation costs, independent legal advice, and temporary-independent security measures (Crosner & Schulman, 2011).
The security measures offer protection for the individual or property in the country where the detention, kidnapping or wrongful detention occurred. The exemptions to this cover state that the detention should not have been a result of violation of laws of the given country or failure to possess and maintain statutory documents and visas (Nwanna, 2004). The insured person is supposed to show the alleged crimes were malicious, false and fraudulent leveled for the sole reason of achieving a political, misinformation, or coercive effect upon the insured person. The insured person may also lose the right to the cover if he or she fails to evacuate from a country within 10 days after an advisory warning has been issued by relevant authorities; travelling to a country after the issuance of a travel advisory or if a person is an active member of governmental organization of military force (Nwanna, 2004).
Expenses coverage offer protection for any extra expenses suffered due to the kidnapping. These include remuneration of an independent public relations agency; independent negotiator’s remuneration; interest sustained for a loan taken in order to pay a ransom; informant’s fee; kidnapped employee’s salary; salary of an employee hired temporarily to replace the abducted one; personal financiallosses resulting from the kidnapping; reasonable health, psychiatric, dental and cosmetic costs incurred upon the freeing of the kidnapped insured person. It also includes rehabilitation and rest expenses incurred after the release. The exempt to this coverage is that such expenses do not exceed the applicable liability stated in the policy. The policy limits the liability of the insurer in case there are reasons to suspect collusion between the insured, their families or workmates and the kidnappers (Dempsey, 2008).
Legal liability coverage provides legal services and protection in the event of a lawsuit declaring carelessness on the part of the kidnapped person in a hostage retrieval operation or avoidance of a kidnapping. The policy includes consultancy services to advise and help the insured reduce risk exposure. This cover is enforceable in case the incidence happened within the geographical areas covered in the policy (Dempsey, 2008). Accidental death and dismemberment policy involves a life benefit if a kidnapped individual dies during kidnapping, wrongful detention or hijacking or compensation in case of loss or mutilation of physical abilities such as hearing, sight or use of limp. Hijacking event includes hijacking of any airplane, motor vehicle or ship on which the insured is traveling. Policy holder with kidnap and ransom coverage can be a potential target for kidnappers if the cover existence is known (Dempsey, 2008).
Confidentiality clause is one the condition for kidnap and ransom coverage which prohibits the insured from disclosing their coverage with third parties. Breaching of the confidentiality provision can lead to cover forfeiture. There are other notice provisions in the policy cover, such as the requirement to notify law enforcement agencies promptly in the event of a kidnap. Failure to notify the authority promptly can lead to forfeiture of the cover depending on the surrounding circumstances (Gilliani, Rehman, & Gill, 2009). Policy holders should ensure the policy they are applying for is covered in their desired geographical locations. Some policies are global while others exempt certain geographical locations. Policy holders should also take note of the practical consequences of a stringent notice provision in the coverage. Since most kidnap policies purport to void coverage if prompt notification to law enforcement agencies is not adhered to, it can be especially hard where kidnappers demand non-communication of the kidnapped and third parties (Gilliani, Rehman & Gill, 2009).
International organizations need to develop and put in place comprehensive risk management plans for its travelling workers to mitigate the risk of kidnapping in foreign countries. Risk management plan is a holistic approach to risk predictability, impact assessment estimate of the risk and possible responses to the risk identified. An organization that has workers and assets in hot spot regions should be aware of the potential risk of criminal activities to its employees and properties (Canter, 2009). Developing risk management includes developing strategies that will minimize the risk occurrence. An organization should develop a comprehensive risk management plan and advise its employees to adhere to certain guidelines while traveling abroad. A traveling risk management program is one of such approaches which prepare employees travelling abroad for the risk and appropriate mitigation measures (Canter, 2009).
Travel evaluation process is the initial stage of traveling risk management program where the organization security function conducts a threat assessment of all high-risk l travelling itineraries. In identifying high risk spots, the security function can use internal data developed using intelligent risk systems or use external data from government agencies that monitor high risk regions (Dempsey, 2008).
Awareness training involves training an international traveler with basic training on health and safety in order to educate the international organization’s employee and assist the company in addressing potential risks. The traveler can also receive specialized training relevant to high risk environment common in a given region such as surveillance detection and kidnap avoidance. Travelers should be informed of emergency plans and provided with important contact information in the event of any problem (Dempsey, 2008).Real time employee monitoring can be employed through a designated travelling coordinator who will pass intelligence update to travelers during their stay abroad. The traveler is promptly alerted in high-risk situations, such as civil unrest, which can cause problems. The travelling coordinator should also be ready to mobilize contingency plans in the event of an emergency, such as evacuation or medical emergency (Dempsey, 2008).
Organizations that do not have any internal capacity to develop a comprehensive risk management plan can rely on information from government and international agencies on the risk threat around the world. The United States’ Bureau of Consular Affairs is an example of a source of information on high risk areas. Any organization making travelling plans for its personnel can use the Bureau’s travel advisory to plan accordingly for the safety of it staff (Nwanna, 2004).
Organizations can also apply for protection strategies for their staff operating abroad. For example, hummanitarian companies in Darfur stopped making use of white four-wheel-drive vehicles due to the threat of kidnapping and carjacking. These types of vehicles are synonymous with humanitarian organizations, which used to attract attention from kidnappers. Instead, the organizations resorted to using hired and small salon cars to keep off kidnappers (Morgan, 2010).
Many organizations are warming up to opening new branches or doing business overseas due to globalization. This opportunity has presented itself with the threat of kidnap and ransom for organizations’ employees working or residing in foreign countries. International organizations grapple with the choice of withdrawing business operations in high risk areas or paying for the high premium kidnap and ransom insurance (Le Sage, 2010). Because of the global nature of the modern business, kidnappers, hijackers, and terrorists have seized the opportunity of kidnapping foreigners working abroad in exchange for ransom for their release.
Kidnapping has been identified as one of the risk threats to international organizations under risk management. Organizations cover their assets and employees under kidnap and ransom insurance policies mitigate the effects of kidnap threat for their employees, or assets in high seas or overseas territories. This is necessitated by several factors including globalization, the rise in global terrorism and organized crime have led to greater amounts of ransoms demanded by the kidnappers (Le Sage, 2010).
Globalization has enabled and encouraged more business, and non-business organizations to operate in overseas countries. Some of the new business frontiers are in high risk territories such as Venezuela, Nigeria, Mexico, the Middle East and Eastern Europe. Cases of kidnap, hijack, and wrongful detention for extortion are prominent in such territories. Organizations having interests in such regions insure their employees and assets against potential risks of kidnapping and extortion by taking kidnap and ransom coverage (Le Sage, 2010).
Rising incidences of terrorism and organized crime globally have also necessitated kidnap and ransom policies by many firms doing business abroad. Terrorism has become a reality in our modern world, and its potential threat is global. Even organizations that do not have a direct interest in risk prone countries, such as Somalia, are directly affected by hijacking and kidnapping of cargo ships plying near high risk territories. Organizations doing business abroad and using international high seas to transit their goods are at potential risk of kidnapping and hijacking (Le Sage 2010). Further, terrorists groups have become more sophisticated in their criminal activities and have in due process raked in millions of dollars which give them more resources to carry out more elaborate criminal activities. The amount of ransom kidnappers’ demand for release of kidnapped individuals has increased over the years making the international kidnap syndicate a lucrative industry.
The amounts of ransom demanded by kidnappers for the release of their victims have also prompted many organizations to transfer this potential liability through kidnap and ransom coverage. Kidnapping and ransom require shrewd and experienced professionals for negotiating, delivery of the ransom, medical and psychiatrist services, interpreters, transport and accommodation services (Gilliani, Rehman & Gill, 2009). Most organizations would rather engage the services of a third party to handle such cases if they do occur. Insurance companies offering kidnap and ransom coverage have vast experiences on different high risk regions. They stand a better chance of negotiating in case of kidnapping occurrence.
New business opportunities in overseas territories do necessitate international organizations to open branches and send their workers in those areas. Organizations are forced to deploy their workers in high risk areas due to the business importance of the opportunities found within such regions. A company banking on the prospects of discovery of essential minerals such as oil, we have to weigh all risk factors for both its assets and workers placed in potentially dangerous regions and the benefit of the mineral discovery (Le Sage, 2010). The prospect of high business stakes and competition has forced companies to mitigate the potential of risk through kidnap and ransom coverage.
In conclusion, there is a growing potential risk of kidnapping not only of because social, economic, and political factors but also because of the amount of monies kidnappers get from these criminal activities. Many factors contributing to risky business environment are beyond organizations’ control. The external factors include political instability and failure of host countries to provide the necessary security among others. Proceeds from kidnap activities are used to fund more activities of kidnapping and terrorism around the world. The kidnap and ransom coverage has been viewed by some experts especially security and government agencies as terrorism-financing (Nwanna, 2004). While organizations have a right to protect their business interests through kidnap and ransom coverage, this will also encourage more cases of organized crime and terrorism.