Kidnap, Ransom & Extortion - RIMS in Canadarimscanada.org/clients/c/ce/ce8fb48b94af85570b01427e6ccf5ad1/File... · Kidnap, Ransom & Extortion (KRE) Insured Perils • Covered Incidents:

Kidnap, Ransom & Extortion

James Gregory, Regional Director, Aon Crisis

Management

Charlie Hanbury, Hiscox

Dwight Kartchner, Control Risks

Proudly presents…

Kidnap, Ransom & Extortion (KRE)

Key Points

• KRE policies are policies of indemnification. This means that ransom payments and

expenses incurred, except those of the insurer’s response consultants, are paid by

clients and reimbursed by insurers.

• Typically it is a subjectivity that the existence of a KRE policy be kept confidential as

far as possible.

• Key reason for purchase is not typically for the insurance component but access to

Insurer’s response consultants.

• Can provide coverage for all directors, officers and employees plus their families.

Can be extended to provide coverage for consultants/contractors and volunteers if

required.


Insured Perils

• Covered Incidents:

• Kidnap. The actual, attempted or alleged kidnap/abduction involving three

parties; the victim, the kidnappers and the party to whom a ransom is demanded

as a condition of the victims release

• Extortion. The making of illegal threats where a ransom is demanded as a

condition of not carrying out these threats

• Detention. The holding of a covered person under duress, without a ransom

demand

• Hijack. The holding of a covered person under duress whilst travelling


Insured Perils

Basic policy typically has seven components.

• Ransom

• In Transit / Delivery

• Expenses incurred by the client

• Consultant Expenses and Fees

• Judgments, Settlements and Defense Costs

• Death or Dismemberment

• Loss of earnings including contingent and Cyber attack LOE.

There are several optional endorsements:

• Threat

• Emergency Political Repatriation

• Express Kidnap

• Hostage Crisis

• Disappearance

There are others such as child abduction and tiger kidnap for example but these are the ones we see

most regularly.

These limits stack on top of

each other.


Roles of the parties to the policy

• Broker – negotiates policy and, in the event of an incident, works with the

client, insurers and response consultants.

• Insurers – Provide coverage and pay claim on presentation.

• Clients – Pay premium, expenses and ransom, work with response

consultants.

• Response Consultants – Role is to work with and for the client in the

resolution of an incident.

6

•20,000: the number of annual worldwide kidnappings

•$5,000 - 100 million: the range of ransom demands

•$500m: the estimated annual global takings of the

kidnap industry

Regardless of statistics....

The reality is that many organisations and their

people are exposed to the hazards covered by K&R

insurance

7

Kidnap Extortion

Products

Extortion

DetentionHijack

Kidnap of

business

associate on

trip to Nairobi

Hijack of aircraft,

crew and

passengers

Threat to contaminate

baby food manufactured

in Europe

Threat to damage

property and kill staff

by cartels in Mexico

Detention of journalist

by rebels in Syria

Associated

business

interruption?

Which Organisations / Individuals buy it?

8

• Multinational entities – from Fortune 500 to Small & Medium size Enterprises to Sole Trader

• Wealthy / High Profile Individuals

• Others: Mining, Charities, NGOs, Security Firms, Ship Managers

9

How does the cover work in its simplest form?

Incident occursHow do you

react?A response is

required

Immediate access to expert

advice

Negotiation process

Release of victim / safety of assets secured

The policy helps to protect holders in two ways:

• Financial assets

• Crisis assistance

Scenario: You are the CEO of a junior mining company

So that is how it works but is it really relevant?

10

The more traditional view of Kidnap for Ransom….

1111

11

Incident

Response

The correct response:

• maintains reputation

• enables business continuity

• protect assets

• harden systems to avoid future incidents

1212

12

Reputation

FinancialPeople

Often the

reality

The

perception

of K&R

response

Cornerstones of Relevance to the modern world

1313

• Duty of Care to People and Reputation / Brand;

• Liability exposure off the back of this;

• Business continuity;

• Balance sheet protection.


Role of the Response Consultant

• Deploy to client’s head office and/or region where incident has occurred.

• Work on behalf of clients, not insurers.

• Provide extensive guidance and advice to assist in the resolution of an

incident.

• Advises on managing third parties such as Government entities, police,

family and the media.

• Response consultants do not deliver ransom.

• Response consultants do not negotiate or meet directly with the kidnappers,

will help train a communicator and will work with that individual.

• Response Consultants do not mount rescue missions.

Kidnaps worldwide in 2013

Top ten countries in absolute terms

1. Mexico

2. India

3. Nigeria

4. Pakistan

5. Venezuela

6. Lebanon

7. Philippines

8. Afghanistan

9. Colombia

10. Iraq


Location of response cases (CRG only)

Mexico 56

Nigeria 22

Colombia 10

Algeria 8

Venezuela 7

India 6

China 5

Germany, Mozambique, Syria 4 each

Pakistan, US 3 each

Angola, Canada, Honduras, South Africa, UK, Yemen, Cameroon 2 each

Australia, Belgium, Brazil, Central African Republic, Egypt, El Salvador, 1 each

Greece, Guatemala, Indonesia, Iraq, Kazakhstan, Kenya, Martinique (France),

Peru, Slovenia, St. Maarten (Netherlands), Sudan, Switzerland, Togo, Zambia


Victim Age

43%

8%

16%

9%

7%

17%

0 - 16

16 - 20

20 - 30

30 - 40

40 - 50

> 50


Abduction locations

31%

21%18%

17%

9%2% 1% 1%

Inside house

Routine journey

Non routine travel

At work/school/otherroutine place

Close proximity ofhome

Fromgardens/grounds/ranch

Illegal road block

Close proximity of work


“Locals” vs Foreign Victims

88% of worldwide victims were locals

12% of worldwide victims were foreign nationals


Case Duration

74%

12%

7%

7%

Less than 7 days

7 to 14 days

15 to 28 days

More than 28 days


Victim Outcome

75%

18%

5% 2%Released orpresumed released

Rescued

Killed or died

Escaped


Demands and settlements where available

Country

Highest

demand

Median

demand

Highest

settlement

Median

settlement

Mexico 2m 78,000 170,000 12,500

India 3.2m 24,000 1.4m 9,500

Nigeria 4.5m 160,000 620,000 19,000

Pakistan 9.3m 51,000 670,000 6,000

Venezuela 2.3m 200,000 320,000 11,000

Philippines 4.9m 245,000 11,500 9,500

Lebanon 3m 500,000 250,000 62,500

Colombia 4.5m 110,000 77,000 77,000


Items for a Client to consider

• Develop a crisis management plan/team for KRE.

• Identify who would be the communicator with the kidnappers.

• Who will work with the family of the kidnapped?

• Media response.

• Access to funds/ransom.

• Safe-travel training

• Pre-travel preparation, provision of information and communication during

travel.

• Travel procedures.

Enjoy the rest of the 2014

RIMS Canada Conference!

Kidnap, Ransom & Extortion - RIMS in Canadarimscanada.org/clients/c/ce/ce8fb48b94af85570b01427e6ccf5ad1/File... · Kidnap, Ransom & Extortion (KRE) Insured Perils • Covered Incidents:

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