Kidnap and Ransom: A Growing Global Threat
Recently, Firestorm CEO Harry Rhulen appeared in a cover article on Crisis as a Peril (Part III) for The Letter from the Insurance Service Network.
In that same issue, we read with interest, an article by Scott Lockman for Clements Worldwide, and reprint the article here with their permission and the permission of The Letter.
KIDNAP & RANSOM: A GROWING GLOBAL THREAT
Most organizations doing business in Syria, Afghanistan and Iraq understand the dangers involved with running operations and sending staff to work in such high-risk environments, where political unrest and military action are the norm. One of those risks is that employees are vulnerable to kidnappings, and it’s become a greater concern to many.
But kidnappings can occur anywhere in the world. Besides the Middle East countries most in the news, areas such as Honduras, El Salvador, Mexico and many others throughout Asia, Africa and South America all have companies that have experienced work-related kidnappings in recent years.
Kidnappings can be characterized by their sectarian and political natures as much as financial gain. While foreigner kidnappings typically get all the press, both foreigners and national staff are at risk in these types of attacks. According to NYA International’s Crisis Prevention and Response Report, foreign nationals only accounted for 13 percent of overall kidnap victims in 2015. Often being less protected, it is likely that throughout 2016 domestic nationals will continue to face a higher threat of kidnapping.
That’s something that multinational companies are keeping an eye on. In fact, in the most recent Clements Worldwide Risk Index, nearly 20 percent of respondents listed kidnapping as their greatest concern, and another 24.5 percent listed it as very important.
For those sending employees to some of these higher-risk environments, organizations need to consider the business cost to the organization as well. Ransom could run hundreds of thousands of dollars or even more. In most parts of the world, kidnap is still a low risk event. But the costs associated with one can be catastrophic.
What’s increasingly more likely in some countries are express kidnappings, where the employee is picked up by what they believe to be a taxi and then forcefully taken to multiple ATMs at gunpoint to withdraw funds. Anyone whose career involves international travel should be aware of express kidnapping while taking steps to protect themselves from the dangers of the crime. Of course, employers need to put in place plans to minimize risk as well.
Both of these types of kidnap are covered by sound Kidnap and Ransom (K&R) insurance coverage. Many corporations have the misconception that K&R is merely about funding a ransom payment. It is much more than that. K&R insurance is a full policy that provides tools and services for dealing with the situation before, during, and after something happens.
K&R policies also provide access to crisis response specialists to help deal with the event in a comprehensive manner. These specialists, usually former military or FBI professionals, not only manage a kidnapping situation, usually on-site. They can also provide employees with training and advice on developing an educational program to enhance personal safety.
Evacuation Protection
The average cost of evacuating an employee from a country that is experiencing political upheaval can be as much as $50,000. Too many companies don’t think about such emergencies when sending employees into possible volatile situations.
Multinational organizations and their staff members can often be vulnerable to the unknown; perils such as unforeseen political action, terrorist activity or a military event that can interrupt work. That’s the reason a policy similar to K&R, Political Evacuation Insurance, is vital to any company that does business outside the US.
For example, when Gaddafi was ousted from power in the wake of the fall of Tripoli to the rebel forces in 2011, Libya became a country where companies doing business instantly became worried about their expat staff. More recently, ISIS movements into Northern Iraq have put companies there on high alert, and many are considering evacuating their workers. When a country is in the height of a crisis, and every multinational is looking for evacuation options, the costs of moving large numbers of employees can be astronomical.
Political Evacuation Insurance can cover all types of events in which an entire staff needs to be evacuated. Like K&R, coverage comes with access to experts with a military background and the knowledge to assist employees when other companies are struggling to react. In addition, it need not be ordered evacuation by the U.S. State Department or British government in order for coverage to be in effect. The insured organization in partnership with the response team can make the evacuation decision.
While these policies may be titled Political Evacuation policies, their applicability could be broader based on how the policy is written. Pandemics like Ebola or natural disasters like the earthquake in Nepal may be other reasons that a multinational company may want to remove staff from a situation.
The fact is that the globalization of the economy makes any number of potential threats a risk factor for which a good risk manager should create contingencies. Capacity at carriers for both traditional K&R policies as well as Political Evacuation policies is strong, making policies affordable to businesses of all sizes. Brokers experienced in international operations in high-risk markets are active in tailoring solutions for the needs of particular organizations.
Scott Lockman, Director of Commercial Insurance at Clements Worldwide
Scott Lockman has more than 30 years of experience in the commercial insurance industry, working across a wide array of industries. A cyber-liability expert, Lockman worked for Wells Fargo Insurance Services and Marsh USA for 20 years prior to joining Clements Worldwide. For more information, email this article’s author.
Clements Worldwide has 68 years of experience providing international coverage to expats and global organizations. The company created the first expatriate program exclusively for the U.S. Foreign Service and now insures expatriates in over 170 countries.
With headquarters in Washington, D.C., Clements’ policies are written in English and policy valuation is based on the U.S. dollar. Their remarkable growth since 1947 is a testament to their longstanding reputation for integrity, experience and service.
“What should we do now?” “What should we say?”