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  • Writer's picturePauline Handy

"Do I Need Kidnap & Ransom Insurance for My Business?"

business executive bound and gagged in a trunk

Business executives beware, kidnapping for money is a very lucrative crime.

If you're a business owner and your employees travel for business, your employees are an attractive target for criminals to make money through kidnapping for ransom. Learn about common kidnap-for ransom strategies, how to protect your employees, and why kidnap & ransom insurance may be right for your business.

Hot spots change, but the United Nations consistently ranks conflict zones in Africa and Latin America high for kidnapping risk. In 2023, the U.S. Department of State issued “do not travel” advisories for several African, Asian and Eastern European countries, as well as Venezuela, Haiti and multiple states in Mexico.

New realities warrant heightened awareness and protective measures

While kidnapping is not exclusive to these hot spots, it is a primary concern in many. Standard precautions such as home security, situational awareness and private transportation may not be enough. Criminals continue to evolve their tactics, and technology like artificial intelligence (AI) is fueling their creativity. In most cases, the captors’ interest is ransom. But in some cases, they inflict serious harm and even death.

Executives are an easy target at airports and high-end hotels. They can be easy to spot because of clothing, expensive luggage, jewelry and mobile devices, or because they’ve arrived in a private jet or are first to exit a commercial plane.

For these reasons, it’s important to keep a low profile when traveling and avoid flashy displays of wealth. You may also want to consider having a private security detail and arranging high-security transportation.

Abductors may quickly grab an executive at an airport, hotel or restaurant. This is known as “express kidnapping.” In this scenario, the executive is typically kept for a few days to circumvent the 24-hour withdrawal limit at ATMs and released after they’ve made multiple withdrawals. In many cases, the executive’s employer or family members are also contacted for additional ransom to prevent the victim from being harmed.

Express kidnapping can also be a risk for family members traveling with the executive. It’s most common in Central and South America, especially Mexico and Columbia, according to the Australian government.

To reduce the risk of express kidnapping, instruct your employees to only use ATMs inside banks or hotels during daylight hours. Have them stay with others or in more populated areas of any location they visit. Recognize that some criminals pose as taxi drivers or hotel staff, so always use licensed taxi services and ask to see IDs.

Another kidnapping trend is “virtual kidnapping.” Although not a physical threat, it is a scam that targets an executive’s family and friends. During an executive’s travel, the scammers call the target to report that the executive has been kidnapped, is experiencing a health emergency or has been detained by the police. Whatever the claim, they demand immediate cash or credit card payment.

With AI technology, criminals can recreate the executive’s voice, and this only adds to the credibility of their claim. While this doesn’t constitute physical kidnapping, you should consider it as part of your risk management program. To minimize the threat, ask your employees to adjust their social media privacy settings so they don’t share travel plans publicly. They should also establish a code word with family to authenticate their story.

Insurance protection

Kidnappings are a real financial threat for businesses. Savvy business owners are adding coverage to protect themselves from the abduction of their leadership and executives:

Kidnap/ransom and extortion (direct loss)

This covers kidnapping demands for cash or property.

Kidnap/ransom and extortion (expenses incurred)

This covers legal costs, independent negotiator fees, interest on loans taken out for ransom payments, salary continuation and medical expenses.

Detention versus hijacking and who’s covered

This insuring agreement distinguishes between “kidnapping” and “hijacking.”

Kidnapping is abducting someone for the purpose of demanding money or other valuables.

Hijacking is holding someone against their will when they are traveling in a motor vehicle, a plane, a watercraft or another mode of transportation.

The policy covers the business’s employees, directors, trustees and partners, and coverage extends to relatives, guests and other members of the insured person’s household. “Relative” includes spouses, children (biological, step, adopted and foster), grandchildren, siblings, grandparents (adoptive and step) and in-laws.

In-transit delivery of property

This covers the loss of property while in transit and in the custody of a messenger.

Virtual kidnapping

Some policies have expanded coverage to include these telephone-based scams.

What's not covered

Expect your policy to have inclusions. Kidnap/ransom and extortion coverage does not cover dishonest, criminal or fraudulent acts committed by the insured person or named insured. In addition, if your executives travel to countries where the U.S. has imposed sanctions, you won’t be covered. Check the U.S. Treasury website for a list of current country sanctions.

Be discreet and seek professional guidance

Do not reveal that you have kidnap/ransom and extortion coverage, even to your own employees. Once this information becomes public, it could make your company and your executives a prime target, as kidnappers look for clues for easy payouts.

An insurance professional who is experienced in executive risks can help you determine if this type of coverage is right for your business and help you find the right coverage for you and your organization. Plan your employees' business travel with confidence by contacting a business insurance agent at V.F. McNeil Insurance to discuss Kidnap & Ransom insurance today.

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