There is a type of insurance which, in concept, is rather bleak – kidnap and ransom – which is commonly referred to as K&R insurance. According to Clayton Consultants and International Maritime Bureau, Mexico, Venezuela, Nigeria, Somalia, Pakistan, Iraq and Afghanistan ranked as the top countries for kidnapping in 2008. Insurance companies such as Chubb, Charitis (formerly AIG), and other insurers provide K&R insurance. They contract with firms such as Clayton Consultants, G4S, Control Risks and others to provide the service of bringing the kidnapped individual back safely.
These firms use force as a last resort. According to these consultants, out of every 100 kidnappings about three or four hostages are killed (excludes Iraq numbers). Most kidnappings are essentially a form of business. For example, last year, off the coast of Somalia, the Saudi Arabian ship, Sirius Star, paid a $3 million ransom. Last week a similar situation resulted in a $7 million ransom being paid to the Somalian pirates. Insurance companies do not advertise, discuss, disclose, etc. what is paid to the kidnappers. It results in the kidnappers seeing foreigners as human ATMs (see examples in Nigeria).
Those most at risk are very wealthy families and politicians in the high risk areas. Consultants mention that high profile Americans in high risk areas (celebrities, politicians, business people or related family members) are most at risk.
Bottom line: Sometimes it pays to be a nobody. If you are thinking of purchasing or do purchase K&R insurance, DO NOT TELL ANYBODY except as instructed by the security consultants who will brief you before your departure.
Always Asking, Never Assuming™
Christopher Holtby
Tags: dallas, fee-only, financial advisor, financial planning, Insurance, investment management, K&R insurance, kidnapping, north texas, wealth management