Companies Offset Kidnapping Risks With Specialized Insurance | AccountingWEB

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 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.

Wait, there's more!
There's always more at AccountingWEB. We're an active community of financial professionals and journalists who strive to bring you valuable content every day. If you'd like, let us know your interests and we'll send you a few articles every week either in taxation, practice excellence, or just our most popular stories from that week. It's free to sign up and to be a part of our community.
Premium content is currently locked

Editor's Choice

WHAT KIND OF FIRM ARE YOU?
As part of our continued effort to provide valuable resources and insight to our subscribers, we're conducting this brief survey to learn more about your personal experiences in the accounting profession. We will be giving away five $50 Amazon gift cards, and a $250 Amazon gift card to one lucky participant.
This is strictly for internal use and data will not be sold
or shared with any third parties.