An increasing need for Kidnap and Ransom insurance

It was recently reported that the terror group Boko Haram is planning to kidnap western foreign workers in Nigeria in order to raise ransom money, according to the UK Telegraph. South African businesses with employees travelling to African countries must not only ensure that their employees are always safe when travelling, but to also have a Kidnap and Ransom insurance policy in place to cover costs to retrieve employees safely.

This is according to Dave Honeyman, Executive Head: Accident & Health at SHA Specialist Underwriters, who says that foreigners who conduct business in Nigeria need to realise that there is a real risk in that area as the terrorist group is attempting to raise funds. “Kidnapping is a ‘growing practice’ on the African continent. Most governments are against negotiating with terrorist organisations or hostage takers and will not pay a ransom. So it is increasingly important for businesses with operations in Africa to protect their employees given the volatile nature of the political situations in certain territories.”


Many businesses are either not aware of the existence of kidnap and ransom insurance or the types of organizations, whose employees are most vulnerable to kidnapping, says Honeyman. “The organizations most vulnerable to kidnapping are those with employees travelling across Africa, however, high profile/status employees, those who work with sensitive information as well as technology and or large amounts of money, are also at a heightened risk of being kidnapped.”

The aim of a kidnap insurance policy is not to encourage or condone kidnapping, but to reimburse the loss incurred by the insured. “Kidnap and ransom insurance policies do not pay ransoms on behalf of the insured, however, the insured can seek reimbursement under the policy once ransom has been paid”.


“In addition to the reimbursement of ransom monies, kidnap and ransom insurance also covers the  destruction, loss, confiscation or wrongful appropriation of money intended to be utilized as ransom money while in transit to the kidnapper, the costs incurred in attempting to mitigate  physical disfigurement or emotional harm suffered as a result of a kidnapping as well as judgements and legal expenses incurred by the insured company due to legal action taken by the kidnap victim or his/ her family as a result of  the kidnapping,” he explains.


However, Honeyman notes that the real value behind having kidnap and ransom insurance is not only having the policyholder reimbursed for the cost of the ransom, but rather unlimited access to a team of specialized response consultants (highly trained and qualified individuals who primarily had  careers in the military, police or special forces, intelligence and diplomatic services) who provide  valuable and experienced kidnap response advice services and dedicated support to secure the hostage’s safe and timely release with minimum disruption and minimum hardship.


“The proper management of a kidnapping by highly trained individuals is essential to protecting the life or well-being of the victim, as well as the organisation’s assets.” The risk that the existence of kidnap and ransom insurance may contribute to the likelihood of a kidnapping needs to be mitigated, thus confidentiality is of utmost importance. “When companies take out a kidnap and ransom insurance policy, there is a clear condition in the Policy that obliges the insured company to take reasonable steps to restrict knowledge of the insurance as far as possible, in order words to ensure that only key employees are aware that the cover is in place”.

Whilst kidnapping cannot be prevented, businesses can take out kidnapping insurance to alleviate the damage caused by kidnapping to assist both the hostage as well as his or her family in the time of a kidnapping. When a hostage situation happens, the kidnappers are likely to contact the victim’s family or their company, says Honeyman.

“If the family is contacted, they will most likely know who to contact at the company and the policy will be kicked into action. The negotiators will generally not   contact the kidnappers directly, they will instead guide the family member’s or company’s representative through the negotiation process. The hostage takers should not become aware that they are speaking to expert negotiators as this may provide them with an indication that there is insurance cover in place and may cause the ransom demands to increase.”


“Businesses of all sizes – from large corporates to two-man startups and especially businesses travelling into Africa – should consider kidnap and ransom insurance. Businesses owe their employees and their families a duty of care and this cover should be considered as part of their overall insurance armory,” he concludes.

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