top of page

The market for kidnap and ransom insurance is booming

Criminals from across the globe have long exploited the lucrative business of kidnapping. Estimated to extract $0.5bn to $1.5bn from their victims each year, it is no wonder the appetite for it among criminal gangs is growing.

After all, the victim’s families, eager to see their loved ones returned safely home, will go to almost any length to secure their release. The reward for the perpetrators is high and relatively straightforward to carry out. Business executives from High-Income-Countries travelling to kidnapping hotspots, which are present in countries with weak institutions and corrupt law enforcement, are vulnerable to kidnapping. Other people going to these regions include foreign aid workers. In 2010, Linda Norgrove, who was employed by a US aid company, was captured and killed in the mountainous province of Eastern Kunar, Afghanistan. Nations ravaged by war leave power vacuums, which are quickly occupied by militias and criminal organisations. Usually, criminal enterprises seek money in exchange for release. However, if impatient, the groups sometimes sell their hostages to the militias, which escalates the situation considerably.

Thus, the business of insuring for a ransom demand has become an available precaution taken by organisations to protect their employees. Seventy-five per cent of Fortune 500 companies have done so for some of their employees. K&R insurance has become a formal industry, which will typically reimburse the victim’s family after payment of the ransom is complete. Also, services such as expert negotiators, responsible for advising family members through the ordeal, are provided. The industry has become so sophisticated that insurers co-ordinate prices between each other, as to avoid expectations of a hefty financial reward by kidnappers. As a result, rogue negotiators are few and far between.

The evidence of successful release is compelling. In some circumstances, negotiators have reduced the ransom demand to as little as 10 per cent of the original price. Professor Anja Shortland, an expert on kidnapping from KCL University, claims that K&R insurance can reduce the chance of death from 9 per cent to 2 per cent. Thus, acquiring a hostage negotiator will have a significant increase in the possibility of survival for the victim. Ninety-seven per cent of kidnappings handled by professional negotiators result in the eventual safe release of the victim, according to estimates.

However, the success of the industry has not pleased everyone. The US and UK position has long been the promotion of a hardline no concessions policy, which they argue is undermined by the insurance sector. This stance is in contrast to countries such as Spain, whose government has spent millions of Euros to secure the release of journalists kidnapped in Syria in 2014. By reasoning that submitting to the request of criminals will only make UK and US citizens more vulnerable, the respective governments left a void which was hastily filled by the private sector. The UK and US governments instead opt for covert operations to extract the victims if the conditions are suitable. Unfortunately, Linda Norgrove’s capturers killed her during the rescue mission.

Although, the execution of hostages is still a rarity. Even rarer is the kidnapping of foreigners in regions such as Latin America and Sub-Saharan Africa. According to forecasting for 2020 by insurance provider Control Risk, the likelihood stands at 4 per cent for Latin America and 8 per cent for Sub-Saharan Africa. Despite this perspective, kidnapping is still a concern for many. Thus, the industry will continue to thrive.


Written by Jack Jones


*Click to access riskmap-2020-a3-kidnap-1.pdf


bottom of page