Kidnap and Ransom

A costly risk that is on the rise

In today’s uncertain political climate, conducting business internationally, as well as within the boundaries of Canada, has become more dangerous. Some estimates suggest that more than 15,000 incidents of kidnapping occur each year and such occurrences are on the rise. While these events frequently occur outside of North America, such incidents can occur in Canada and the United States.

Consider the costs of one of these hostile events. Even an incident where no ransom demand is paid, or even made, can create unexpected costs and have a significant impact on an organization’s balance sheet. Expenses may include the fees and costs of negotiators, investigators, lawyers, public relations professionals, forensic analysts, security guards and consultants. In addition, there may be reward money, interest on loans and additional salaries to be paid, or extensive medical costs not covered by traditional insurance plans. Add that all up, and an organization may face a significant financial drain, with or without paying any ransom monies.

Crisis response support is included in our Kidnap and Ransom product

Consider where a company would turn for advice when confronted with a hostile event. A kidnap, extortion, detention or hijack situation can literally be a matter of life or death. A victimized company needs experts on its side to help navigate the difficult path to resolving such an incident. With Wrap+® Kidnap and Ransom coverage, clients automatically receive the benefit of a professional crisis response firm, Olive Group, at no additional cost.

Kidnap and Ransom coverage from Travelers and the associated crisis response services from Olive Group are designed to minimize the financial impact of a threatening incident to an organization and its employees. The coverage responds in three ways:

  • Payment of ransom monies
  • Payment of numerous specified expenses associated with the total impact of an incident
  • Payment of the fees and expenses incurred by Olive Group for its incident consultancy

Key coverages and features

  • Dedicated limits of insurance for kidnap and ransom
    •  These limits of insurance are not shared for an insured event:
      • Kidnap for ransom
      • Extortion for ransom
      • Detention and hijack
      • In transit/delivery
      • Rest and rehabilitation expenses
      • Personal accident
      • Additional expenses
      • Legal liability
  • Loss of ransom monies – reimbursement of corporate and personal asset ransom money – the perils:
    • Kidnap
    • Bodily injury extortion
    • Property damage extortion
    • Products extortion
    • Trade secrets extortion
    • E-commerce extortion (including computer virus)
    • Confiscation, destruction, disappearance or wrongful appropriation during ransom money delivery
  • Expense reimbursement associated with an insured event:
    • Fees for independent negotiators, interpreters, forensic analysts, legal services, public relations consultant
    • Rewards
    • Travel and accommodation costs
    • Salary of a kidnapped, detained or hijacked employee
    • Rest and rehabilitation expenses
    • Interest costs for ransom loans
    • Fees for security guards
    • Fees for necessary medical service
  • Special coverage features for peace-of-mind protection:
    • Personal accident coverage for loss of life and bodily accident and disablement
    • Legal liability coverage for awards, judgments and lawyer’s fees resulting from an insured event such as a hostage retrieval operation
    • Fees and expenses of the crisis response firm paid directly by Travelers with no erosion of the insuring agreement limits of insurance

Kidnap and Ransom claims examples

$675,000 – The president of a computer software company was kidnapped in the company’s parking lot and held for five days before a ransom demand was paid. The company had no insurance and incurred an interest cost of one percent over prime to secure a loan for the $650,000 ransom demand. In addition, they had to pay a $2,000 per day fee plus expenses for an independent negotiator, $500 per day for recording equipment used to obtain the president’s release and $200 per day for extra security guards hired to protect the president’s family.

$25,000 – A businessman was abducted from his home, taken to New York City, bound, gagged, beaten and terrorized while his kidnapper demanded $1 million from his employer. The perpetrator, a disgruntled former employee who was fired two years earlier, was seeking revenge. While the FBI and local authorities successfully rescued the businessman and arrested the kidnapper within 24 hours, the company incurred over $25,000 in medical costs and psychiatric care for the traumatized victim.

$4,000,000 – A media company received a series of threats, including a photocopy of a gun, notes containing threats of violence against specific employees and phone calls including recordings of gunshot sounds. Demands for as much as $50,000 had been made to stop the threats. The company brought in the police to conduct an investigation. In addition, a private security consultant was hired to analyze the notes, protect the premises and the threatened individuals, and set up a drop site for the money demanded. The threats continued for over three years without any occurrence of violence. The cost of the private security firm’s activities eventually exceeded $4 million.

For more information about our Kidnap and Ransom insurance product, please call your insurance broker or find a Travelers Canada broker near you.

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