2. Have Employees or Volunteers who travel abroad?
3. Have Employees or Volunteers permanently working abroad?
4. Sponsor trips, tours or educational programs overseas?
5. Export products or sell via the internet overseas?
6. Have foreign licensees to distribute product?
7. Have international operations or offices?
8. Provide professional services outside the U.S.?
9. Work on U.S. Military bases overseas?
If you answer yes to any of these, you are uninsured if you don’t have specific coverage for Kidnap and Ransom. This applies whether you are a Manufacturer, Retailer, School, Church or some other organization. It applies even if you have policies written in the other country . If you customer answer yes, we have several markets that offer comprehensive policies at very reasonable prices that can cover everything from Foreign General Liability to Kidnap and Ransom. ============================================= Kidnap & Ransom Coverage in the Age of Abductions
By Kenneth J. St. OngeNovember 13, 2009Its name distracts both buyers and agents: Kidnap and Ransom (K&R) coverage. It's something for big companies, they think. Or it’s for the uber-rich. Well, no more, due to the slew of new and emerging dangers for businesses and other entities that work with, deal, supply, sell or otherwise interact with counterparts or subsidiaries in foreign countries.Although kidnappings and ransoms are nothing new, the tactics and boldness of today's kidnappers, pirates, extortionists and cyber-criminals have companies, executives and families that travel overseas thinking about insurance protection that seemed unnecessary a generation ago.Insurance agents needn't look far to find clients with potential risks. Consider: the manufacturing company that occasionally sends employees to Mexico; a design firm that recently set up a subsidiary in China; a school with a study abroad program; a consultant who regularly travels to parts of Central or South America or the Far East. All are potential customers, and some don't realize the risks that lurk in cyberspace or on foreign soil in today's global economy.A glance through recent headlines reinforces the maze of possible, insurable exposures. Pirate attacks are up in the Gulf of Aden and expanding into the Indian Ocean. Former President Clinton flew to North Korea to negotiate the release of two kidnapped journalists. School shootings on college campuses have become a major concern. Splashed across the front page, are real-life, scary scenarios where those involved would be well advised to have been carrying K&R. And those are just the situations that are made public.The bottom line - insurers, brokers and security experts say - is that technology and global economics are reinforcing a greater need for the types of perils covered by the K&R policy.
Perils
Kidnapping and holding someone or something for ransom is nothing new; it's gone on for centuries in one form or another. But the frequency and complexity of these crimes is changing, and K&R coverage is adapting to these changes.Traditional kidnapping - where a victim is held for ransom - is covered by a traditional policy. But over the last few years, the nature of kidnapping and ransom has evolved, according to Greg Bangs, the product manager for Chubb Corp. who oversees K&R coverage, and that is prompting changes to the policy."There have been a lot of developments, in kidnapping, new wrinkles in the landscape that companies have to watch for," he said.For instance, policies are now being designed to cover virtual kidnapping. In this scenario, a kidnapper fools colleagues or relatives of a person into thinking the person have been kidnapped. This might take place any number of ways, Bangs said, but a typical scenario might involve kidnappers obtaining personal information about a victim such as birth date and parents' names, and then waiting for a time when the victim is out of reach by phone - such as during a concert, for instance. The kidnappers will then extort money from the victims' family or company by claiming a kidnapping has taken place, even though none has. It's a trend which is common in parts of Central America, but K&R experts believe criminals will seek to expand the crime in other regions.There is also a broad and increasingly common range of K&R-covered crimes that are perpetrated against businesses. The piracy and ransom of ships that has been increasing in and around the waters of Somalia is a classic example. But there are a range of newer, technology-driven crimes that businesses should be on the watch for.Bangs said an increasingly common threat involves hackers extorting money from a company. Commonly, it involves breaking into break into a computer system and holding information hostage. "Unfortunately, it's happening a lot more, although these incidents are not being reported publicly," Bangs said. "If you're a company and you're attacked, the last thing you want to do is make it public."Another increasingly common risk - which K&R coverage is now being tailored to cover - involves a scenario known as "wrongful detention." A typical case involves officials in other countries - China, for instance - who throw executives and businesspeople in jail without charges in order to influence business negotiations. Over the last few years, as more and more businesses have become international in scope, this type of coverage has become a real need, insurers say.The demand for K&R protection is also being fueled by the threats posed by terrorists who want to sabotage food supplies, threaten contaminations and the whole host of other possible extortion schemes covered by K&R.Although the bread and butter of the K&R industry continues to be coverage for kidnapped employees and family members, the evolution of the product, and its customer base, is being reshaped by the emergence of new threats - and innovative products designed to help insured’s respond to them.
Traveling Employees
"The demand for the coverage has gone up substantially for domestic companies with employees who do a lot of foreign travel," said Philip L. Blais, president of Texas-based Blais Excess & Surplus Agency. "They're much keener on the coverage."He said he's seen a spike in demand particularly over the last two years for K&R coverage for firms with operations in the Texas-Mexico border towns like El Paso, as well as organizations that have employees traveling abroad. There's also been a corresponding spike in interest from executives who have children enrolled in study abroad programs, he said.Blais has a unique perspective on the K&R market. He began his insurance career 30 years ago working on K&R at Chubb, and later, AIG, before launching his agency - which sells K&R coverage from nearly every carrier.Part of the attraction, Blais said, is that the cost of K&R insurance - which has increased slightly - remains minimal in relation to the expanded coverage granted, limits and exposures covered, he said. The other part is that the contemporary K&R policy has become much more like a risk management plan. Those who buy the coverage are typically buying ready-made access to specialized K&R security consultants who can work with companies and clients to plan ways of avoiding potential exposures, as well as resolve those that do occur."Extra services have really proliferated over the last few years," Blais said. "Clients want to know the services they get with this and the kinds of firms they can call on in case of a problem. That is very important."Carriers are taking notice and positioning their policies as huge, value-added services - particularly for the logistics involved in thwarting potential kidnappings and extortion, as well as resolving them."Resolving these types of issues can be expensive," said Chubb's Bangs. "There is the cost of the security consultant. There may be a need for legal advice. Perhaps there's the need to hire a public relations firm to deal with related issues. Even just the cost to fly people around to deal with any problems can be expensive. But those are covered costs in a traditional policy."Many of the security consultants, which provide these services through an insurer, send frequent updates to clients about potential hotspots and practices they can take to limit risks to employees or their families.Chris Voss, a former FBI hostage negotiator who now heads the K&R practice at Insite Security, says that the kidnappers' growing sophistication and the tendency of a criminal in one area to mimic a successful crime in another create potential K&R exposures."It's the ability to get paid and the ability to get away," Voss said. "Kidnapping is like a virus that, once it gets started it flourishes out of control. For criminals, it's a great business to be in where the condition are right - lack of law enforcement and environment that allows (kidnapping)."The growth in demand for K&R in Mexico doesn't surprise Voss, he said. The area has been under siege by drug cartels over the last decade, and those same organizations have found kidnapping and extortions to be a good revenue source. It's worthwhile to note, Voss said, that Mexican kidnappers tend to avoid white Americans, and instead often focus on their ethnic Mexican business partners and employees. It's a trend that is seen in most parts of the world, where established kidnappers have become wary of taking Americans not only because it encourages intervention by U.S. law enforcement, but also because payments for victims from America, as well as from Canada and Great Britain, are often slow to arrive and difficult to obtain. A kidnapped Mexican, however, is not perceived by criminals as having access to the same type of resources.K&R insurers are betting that demand for the product will continue to rise, given the nature of extortion-related crimes, and the growing need for companies to be pro-active about avoiding potential exposures, and creating a plan to mitigate any potential losses. Hiscox, one of the largest K&R insurers in the world, launched its U.S.-based division last year in New York, hoping to expand its domestic market share. As part of its K&R package, Hiscox gives clients exclusive access to a consulting firm, Control Risks, which has worked more than 1,500 cases of kidnapping and ransom."What we see the need for is total security management," said Jeremy Lang, vice president and manager of U.S. K&R coverage for Hiscox, who is based in Manhattan. "The coverage we provide is rather extensive and expansive."He said that among the items covered are school shootings, evacuations and other risks that may not immediately spring to mind for some K&R buyers. But one of the biggest selling points is the access to the consultants, who can work with clients to find ways of lowering potential risk. The Hiscox K&R policy includes a "subvention fund," which provides payments for consultants to perform the kinds of risk assessments and planning that the client chooses, Lang said.Lang, like the others, says the coverage - given the range of potential exposures - is something worthwhile for businesses with fewer than 20 employees, as well as those with more than 200,000. But still, the coverage suffers from a perception problem among smaller, potential buyers, he said."The biggest obstacle I have is in education," Lang said. "Many don't understand what the coverage is and what it does. A lot of people think: 'K&R? We're not at risk. But in many cases they are."It's not yet a frequently sought out coverage, however, some agents think that K&R, given the range of newer exposures it guards against, is a good growth product.Daniel Wilcox, principal of Wilcox Insurance Brokers in Prairieville, Louisiana, is one. He sells K&R coverage through London-based Petersen International Underwriters. Many of his K&R clients and prospects are from religious-affiliated organizations. He recently wrote a policy to cover a college student who was going on a mission trip to Tanzania. Another recent client was an oil industry consultant who regularly travels to hotspot areas in the Middle East and Asia.Wilcox, whose main lines of business are health-related, said the K&R coverage is a P/C line he wants to expand, given what he says is an unmet and often unrealized need."It's not something that people are running to your door to buy, but people are looking into it more," Wilcox said. "For me, it's been sales that have come across our door by accident, but after I stumbled across then I began realizing that if we marketed this better, we could sell it more."
