Companies Offset Kidnapping Risks With Specialized Insurance

Companies that expand into foreign countries face a number of hazards, including corruption, high inflation, and riots. At the top of any list of risks for overseas operations is the threat of terrorists or guerillas kidnapping workers or their family members. In response to this danger, a growing number of companies are purchasing kidnap and ransom insurance, known in the industry as K&R, which covers the ransom amount as well as the services of consultants with experience in hostage negotiations.

In recent months the U.S. State Department has warned Americans who travel or work in foreign countries that they are at a greater risk of kidnapping because of volatile world events. The State Department is also warning travelers that because of this country’s policy not to make concessions to kidnappers, the U.S. government can only be of limited help in such cases.

K&R insurance helps companies mitigate some of the risks posed by sending workers overseas. The industry is not new; kidnap insurance started back in the 1930s with the kidnapping of Charles Lindbergh’s baby. Today, when a kidnapping occurs, K&R consultants fly to the country to act as an advisor. The consultants work behind the scenes, telling company representatives or family members how best to handle negotiations with the kidnappers. Most consultants say it’s better to pay the ransom quickly and forget about trying to rescue the hostage, as those attempts usually end tragically.

Countries posing high risks for Americans include Brazil, Colombia, Ecuador, Mexico, Nigeria, the Philippines, and the former USSR. Colombia alone accounts for 50 percent of the world’s kidnappings. A State Department travel advisory notes [1] that 26 Americans have been kidnapped in Colombia in the last three years. In most cases, they were released once the ransom was paid. Hostages have included journalists, scientists, executives, and children.