Kidnap, Ransom & Extortion - RIMS in...
Transcript of Kidnap, Ransom & Extortion - RIMS in...
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.
Kidnap, Ransom & Extortion (KRE)
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
Kidnap, Ransom & Extortion (KRE)
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.
Kidnap, Ransom & Extortion (KRE)
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.
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•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
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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?
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• 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
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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?
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The more traditional view of Kidnap for Ransom….
1111
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Incident
Response
The correct response:
• maintains reputation
• enables business continuity
• protect assets
• harden systems to avoid future incidents
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.
Kidnap, Ransom & Extortion (KRE)
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
Kidnaps worldwide in 2013
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
Kidnaps worldwide in 2013
Victim Age
43%
8%
16%
9%
7%
17%
0 - 16
16 - 20
20 - 30
30 - 40
40 - 50
> 50
Kidnaps worldwide in 2013
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
Kidnaps worldwide in 2013
“Locals” vs Foreign Victims
88% of worldwide victims were locals
12% of worldwide victims were foreign nationals
Kidnaps worldwide in 2013
Case Duration
74%
12%
7%
7%
Less than 7 days
7 to 14 days
15 to 28 days
More than 28 days
Kidnaps worldwide in 2013
Victim Outcome
75%
18%
5% 2%Released orpresumed released
Rescued
Killed or died
Escaped
Kidnaps worldwide in 2013
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
Kidnap, Ransom & Extortion (KRE)
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.