Forget a ransom note showing up with words and letters cut from a newspaper, a gruff voice disguised over a late-night telephone call, the victim’s frazzled family rushing about to raise an exorbitant ransom, and the FBI tracking down the kidnappers just in time to save the victim. Forget everything you thought you knew about kidnappings, at least when it comes to the kidnapping of executives of multinational corporations.
The international business of kidnapping in the 21st century is not your grandfather’s kidnapping racket. Today, takings of executives and the wealthy in the United States are extremely rare, particularly considering satellites, drones, public surveillance cameras, mobile trackers, and the FBI. Most kidnappings in the US involve custody disputes and the increasingly popular crimes of express kidnappings—when a victim is forced to withdraw a small sum of money from an ATM—and virtual kidnappings—when a criminal telephones and falsely claims to have a family member, keeping the victim on the line until a quick and moderate ransom is paid.
However, countries like Mexico, Venezuela, Nigeria, and many others are hotbeds for kidnappings of not only local nationals but wealthy tourists and employees of foreign corporations in the oil, mining, engineering, shipping, and similar industries. It is estimated that ransoms collected last year exceeded $2 billion, and that’s probably low since most kidnappings go unreported.
Clearly, business is good for kidnappers, but what most don’t realize is that business is booming for insurance companies, response teams, and security consultants in the kidnapping and ransom (K&R) arena. Insurance premiums for K&R policies total in the billions annually, and revenues are rising exponentially (cyber policy premiums for ransomware attacks are increasing even more).
Though wealthy individuals and celebrities can purchase K&R policies, most policies are sold to corporations and non-governmental organizations (NGOs) that operate abroad, with more than 75% of Fortune 500 companies purchasing such policies as part of an overall benefit portfolio for those at risk. The policies can cover not only the employee but spouses, children, domestic help, and friends. And the policies aren’t cheap. Though premiums are based on the danger, established security measures, and significance of the company and its executives, a policy for a top C-Suite executive can cost the employer anywhere from $250,000 to $500,000 a year. Insuring ships from piracy can cost millions.
The insurer does not pay the kidnappers directly. In fact, the insurer prefers that the kidnappers remain unaware of insurance coverage. Some policies even require that the employee remain unaware to avoid fraudulent kidnappings. The insurance company only reimburses the insured for the ransom that is paid, thus the insured must have the capital or access to loans in order to raise the ransom. In addition to the ransom money, insurance typically pays evacuation costs, medical and psychiatric expenses, death or dismemberment benefits, lost revenue, public relations expenses, and other reasonable and necessary expenses.
These policies are offered by only a few specialty risk insurers like Hiscox Ltd. and Lloyd's of London, which account for two-thirds of the K&R business by premium income. Then, there are the crisis management teams. For example, Hiscox partners with Control Risks, the market leader in crisis response consultancy. Control Risks operates from a technological war room and can deploy its consultants and negotiators—many of whom are former military officers and intelligence agents—around the world within hours, preferably without the attention of the media, law enforcement, and government agencies.
Lloyd’s of London either underwrites or reinsures most, if not all, K&R policies sold around the world directly or through its syndicates. This centralization provides insurers and crisis response teams with a concentration of worldwide data on kidnap hotspots, gangs, market price, and outcomes of all known cases. What evolves is a “kidnapper business model” that most often details criminals who are more interested in successive kidnappings of junior to middle management abductees for quick, low ransoms than a high-net-worth individual or CEO whose protracted kidnapping could draw governmental or military intervention.
In this type of model, rather than quickly paying whatever ransom is demanded, crisis teams often employ delay, bluff-calling, and counteroffers below the “going rate” as established by the protocols of Lloyd’s of London. Families are reassured and counseled on the necessity of such negotiation strategies, otherwise—they are told—kidnappers will saturate a region and ransom demands will escalate to the point that many companies and their employees will be priced out of the insurance market. This must require extraordinary finesse.
In most cases, a market-rate ransom is paid and the employee is returned within days unharmed—in most cases. There is the occasional murder of the victim, the loss of whom cannot be reflected on a balance sheet. Still, the business continues to grow—for everyone involved.
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Philip Jett is a former corporate attorney who has represented multinational corporations, CEOs, and celebrities from the music, television, and sports industries. He is the author of The Death of an Heir: Adolph Coors III and the Murder That Rocked an American Brewing Dynasty. Jett now lives in Nashville, Tennessee.