It’s tough to tell how many people have kidnap & ransom insurance, partly because a lot of them aren’t allowed to talk about it.
Liberty Mutual, for instance, will deny your ransom reimbursement claim if you blab about your policy. How does the company find out if you told? Well, your kidnapper is likely to mention it during negotiations – that’s kind of a giveaway, says Jane McCarthy, vice president of Liberty Mutual’s specialty lines business, Liberty International Underwriters.
Whether to talk about one’s kidnapping insurance is not a decision most people think they’ll have to make. The very idea of buying in-surance that covers kidnapping and ransom (K&R) might seem unthinkable, but it’s a growing niche within the industry.
Kidnappings are on the rise worldwide, security experts say. And insurers are seeing new customers buy such policies, largely be-cause companies are sending employees farther afield than they used to.
“As the economy goes global, you’re sending salesmen to places you didn’t think you’d send them before,” McCarthy said, such as Latin American and Southeast Asian countries. A number of different companies have new interest in such policies, she said, but McCarthy declined to detail how often Liberty Mutual sold these policies.
Big Bucks In Kidnap Coverage
Liberty Mutual is one of only a handful of property/casualty insurers that carry kidnap & ransom coverage; the company resumed cov-erage in their insurance offerings last month after leaving if off since 2006.
Greg Bangs, vice president with K&R carrier Chubb Group, said the niche brings in an estimated $250 million in premiums, although other estimates put the premium number far higher.
Carriers like Liberty Mutual pay for ransom, as well as provide access to security consultants who swoop in to aid negotiations during the ordeal.
McCarthy emphasized the purpose of the policy is to be as safe as possible – part of that requires policyholders not to publicize that they have the coverage. Of course, McCarthy said, the company and consultants keep working to get the victim home safe, regardless of whether the ransom claims get approved after the fact.
But ransom is only part of it: Travelers’ K&R offerings include a bevy of extras, covering victim injury and rehabilitation costs, as well as expense like lost salary, psychiatric care, plastic surgery and public relations consultants.
Jennifer Bagdade, a Travelers spokeswoman, said her company has seen a spike in interest from different potential customers, such as smaller, support companies that travel abroad to serve larger corporate contracts.
Bangs said about three-fourths of Fortune 500 companies have this insurance, and often get insured for about $15 million to $25 mil-lion worth of ransom reimbursement on the cheap – about $100,000 and up, depending on the company’s risk.
For those smaller companies, the cost is obviously much less: many can buy policies for about $1,000 with Chubb, he said. Travelers’ typical low-risk exposure premium starts at $800 per $1 million.
It’s also tough to get reliable numbers on how many ransom kidnappings happen every year, since insurance and security experts es-timate the majority of kidnappings go unreported. California-based risk consultant business The World Protection Group reported that Mexico – the top-ranked country for kidnappings – has an estimated 3,000 a year, although far fewer are reported.
But by most measures, the kidnapping of foreigners is getting more common; it’s a large trade in places like Mexico and Colombia, but it’s a relatively young growth industry in places like Iraq and Afghanistan, Bangs said.
That’s why it’s important to get a policy that includes security consultants who are familiar with the specific country, he said: “These things, they don’t happen in Hoboken, New Jersey.”
