Kidnap and ransom insurance a new reality

Kidnap and ransom insurance a new reality
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If your company or organization has executives and employees travelling to and working in potentially volatile locations around the world, managing the risk associated with making sure they don’t become a target for kidnapping may well fall under the responsibilities of the legal department.

Few in-house counsel will admit their companies plan for the possibility of kidnappings and ransom demands for fear of becoming a target, but many have become familiar over the years with the availability of kidnap, ransom, and extortion insurance products.

At a recent event held at its offices in Toronto, the Chubb Group of Insurance Companies hosted a seminar on the topic and featured Canadian journalist and philanthropist Amanda Lindhout. The Red Deer, Alta., native was abducted along with Australian photographer Nigel Brennan by Islamic insurgents in southern Somalia in August 2008. When captured Lindhout and Brennan were asked almost immediately for their parents’ phone numbers. The captors demanded $1.5 million each for her and Brennan in exchange for their release.

Lindhout endured rape, torture, starvation, and terrible conditions in a windowless room for 463 days in Somalia — “the most dangerous place on earth.” She described how her parents tried to work with Canadian officials for 10 months to get her released but since the government does not pay ransoms, it could do little to influence her release.

At one point, her captors — a criminal gang of teenage boys with little to lose — told Lindhout she would be beheaded if the ransom was not paid.

Eventually, her family, together with Brennan’s parents, gave up on government-assisted negotiations and hired AKE Group, a private U.K.-based crisis management team, to deal with the kidnappers. The families mortgaged their homes and held fundraisers to come up with the money. After three months, they managed to negotiate a deal but together with the bill for the negotiating team the cost was just over $1 million for the duo’s release.

The 32-year-old Lindhout’s freedom came 15 months after her capture. She said even as the crisis management team was working to secure an exchange for her release, she was convinced she was being “sold” to another group who would then continue to try and gain ransom money to let her go — a common practice with desperate groups.

Her book, A House in the Sky, which became a New York Times bestseller last year, details her ordeal. Since being released she has embarked on a philanthropic career which includes her Global Enrichment Foundation aimed at aiding development in Somalia.

Some may view Lindhout’s ordeal as one that might understandably befall a journalist in a war-torn country, particularly a relatively inexperienced one. But experts warn her story could just as easily be that of a business executive travelling to countries in Latin America and the Middle East, even China.

Christopher Arehart, senior product specialist with Chubb’s crime, kidnap, and ransom group, says the best risk-management strategy for those travelling to dangerous places includes a plan, created well before someone gets on a plane, to handle such incidents. As well, they might consider insurance coverage and risk-management procedures and protocols from an outside party. Chubb offers executive protection portfolio kidnap/ransom and extortion insurance.

“I hope we never have to pay out a ransom,” said Arehart, who declined to say if Chubb’s clients include Canadian organizations, for fear of making them a target for kidnappers.

As part of the package, when an organization buys kidnap and ransom insurance it gets access to crisis management services offered by people like Mike Ackerman, CEO of The Ackerman Group, an international security firm. They have been retained by Chubb to respond to emergencies on behalf of ransom insurance holders. Ackerman’s forte is recovering kidnap victims. He served in the CIA’s clandestine services for 11 years.

“Often a general counsel is part of the risk management team we deal with,” said Ackerman, whose group handles all aspects of a hostage recovery including negotiations, working with local law enforcement, dealing with family members, and even delivering the ransom.

In most cases ransoms are paid out and the individual is released. Along with the potential reimbursement for a paid ransom, policies often cover several other expense items such as a crisis response team like Ackerman provides. Acting immediately is critical for several reasons.

“When we learn about a kidnapping, we can start a dialogue about things like the state of the hostage’s health — do they have diabetes or high blood pressure and require medication? For some it can be a matter of life and death that they get care right away. You have to know about how to go about obtaining information,” said Ackerman.

Understanding what is included in a kidnap and ransom policy is crucial as there are many aspects beyond paying the captors cash.

Despite her ordeal, Lindhout still travels to dangerous spots today — including Somalia. Now, however, she purchases personal kidnap and ransom insurance, something she always travels with and advises for anyone travelling abroad even to vacation spots Canadians may take for granted, such as Mexico.

According to a September 2010 Mexican Congressional report, between 2005-10 kidnappings for ransom in that country increased by 317 per cent.

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