A kidnapping abroad is a terrifying concept. Assailants may leave you bound and gagged in a dark room or they might threaten you with torture to persuade negotiators to comply. What if you don’t have access to the kind of money they expected to get from you? What happens when no one knows how to help?
Insuring Freedom
The extreme physical and financial risks of a ransom case led to the creation of kidnapping insurance. Over the past few years, kidnapping has increased all across the world as more people turn to extreme methods of getting money. While many travelers feel they do not possess enough money to be targeted in a kidnapping, the truth is that a majority of kidnap victims have fairly average incomes. If someone is worth enough money to travel, they are worth enough to kidnap.
Kidnapping and ransom (K&R) insurance is a specifically designed policy (personal or enterprise) that helps negate huge costs to individuals and companies who are victims of kidnapping. Though expensive, this insurance can make a sizeable difference in financial loss during the recovery period. K&R policies are purchased as long-term policies for individuals, executive groups, entire companies or expatriates. K&R policies are not generally available for individual trips.
K&R does not pay for the negotiations and ransom money during the kidnapping; it simply reimburses the victim for the payment he or she made. K&R will, however, cover all the expenses related to recovery: time off, temporary work replacements, psychiatric therapy and loss due to injury.
Once obtained, K&R policy limitations must be understood. Every insurance company can make their own rules about how its assets are to be used. If applicable, guidelines must be set up for communicating with the insurance company’s crisis team. What if the local government brands the kidnappers as terrorists and refuses to negotiate? Will the kidnappers demand more money if they discover their victim has a policy?
Knowing the Threat
Regardless of whether or not a person has a K&R policy, he or she must know how to act if kidnapped. A best practice is training workers how to avoid danger in the first place. Educating traveling employees on risks and foreign practices is essential to every aspect of their safety abroad.
K&R insurance rates are based on numerous factors, but the most influential is location. The U.S. Department of State keeps an updated list of countries where American citizens are advised not to travel. While some of these countries are listed because of the near certainty of government detainment (e.g. Iran, North Korea) or civil strife, many are listed because of the consistent targeting of Americans or westerners in criminal behavior (e.g. Columbia, Nigeria). Though the countries named by the department are the most extreme examples, insurance policies can change their premiums or deny coverage based on whatever places they deem unsafe.
Common K&R Insurance Practices
K&R insurance policy coverage is typically in the millions. With such high monetary payout potential, the stakes for fraud prevention and risk management are much higher.
Many insurance companies attempt to thwart K&R fraud at its source: the dishonest policy holder. To do this, these insurers require that individuals covered by a company K&R policy do not know they have coverage. Since the insurance company provides no advanced payment, an elaborate plan to commit fraud would be an expensive gamble.
In cases where policyholders are aware of their coverage, insurers will usually attempt to provide training on how best to avoid a kidnapping. These courses can substantially reduce the risk of danger to the policyholder while also reducing the risk of loss for the insurance carrier.
Hoping for the Best
The harsh reality of kidnapping is that it can happen anywhere. Some areas of the world or parts of a country may be safer than others, but that doesn’t mean anything is guaranteed. Kidnappers are usually professional groups. They know what they are doing and how to ensure money is paid. By killing a victim they get nothing. The vast majority of kidnappings that take place every day end with the victim being safely released when some form of ransom changes hands.
Planning for the Worst
Overall, K&R insurance is a solid risk transfer option and can provide a wealth of services for employers and individuals alike. The only question anyone can raise is whether or not it is worth the cost. With individual premiums in the thousands of dollars, many individuals and small businesses simply can’t afford K&R plans. But, with the current upward trend of kidnapping, the truth may be they can’t afford not to have it.
In all difficult insurance decisions, an experienced agent can make all the difference in your peace of mind. Contact Odell Studner to discuss how to best protect your employees as they travel to crucial markets.
Content: Zywave, Inc.