An interview with Lucy Higgins, JLT: Why you should consider Kidnap and Ransom Insurance

Tell us a bit about JLT and your role within the company.

JLT provides insurance broking, risk management and claims consulting services to large and international companies. Our success comes from focusing on sectors where we know we can make the greatest difference – using insight, intelligence and imagination to provide expert advice and robust – often unique – solutions. We build partner teams to work side-by-side with you, our network and the market to deliver responses which are carefully considered from all angles.

I work within JLT’s Credit, Political and Security Risks division where I focus on the ‘people’ security risks.  With the security risks environment evolving so rapidly nowadays and with contemporary terrorism making a marked shift from property-focused terrorism to ‘people’ focused terrorism, it is essential to have a specialty broker that understands this diversification of risk and can ensure that our clients’ insurance coverage mitigates these changing risks.

What are the key services you offer to your clients?

We work with our clients from the outset to fully understand their security risk concerns whether in a personal capacity for their family or in a professional capacity for their most important assets- their people.  With the support of our in-house security analysts, once we have identified these security concerns and potential exposures, we will find the best risk –transfer solutions in the insurance market.

Our services do not stop once cover is placed; instead we are committed to being at our client’s disposal to answer any questions regarding their risks, security training or their coverage.  Should a claim arise, we are on hand to support the client through the whole process, explaining the insured coverage, collating claims data, negotiating with insurers on the client’s behalf and arranging settlement.  This is also complemented by mid-term analytical reports and risk insights to ensure that our clients remain informed of market developments every step of the way.

Given that the market is changing so quickly with new insurable perils such as active shooter, hostage barricade and emergency evacuation, it is important to ensure that we partner our clients with the best insurers in the market who have a proven claims track record.  As one of the key elements of this policy is in providing access to expert Response Consultants to support a client during a crisis, our role is further extended to ensure that we partner our clients with a suitable response team which has experience in the client’s countries of exposure.  The ultimate goal is ensuring that our clients have peace of mind in knowing that should a crisis event happen, their policy will respond as anticipated.

With JLT’s extensive experience in this line of insurance as well as our significant market presence, we will leverage our position to deliver the best possible terms, coverage and claims response for our clients.

Who normally purchases this cover?

Interestingly, this is one of the few Insurance coverages which can be applicable for almost every individual, family or company.

Our clients consist of companies across all industry sectors worldwide as well as high net worth or high-profile individuals and families.

What are the most common misconceptions surrounding Kidnap and Ransom Insurance?

Unlike the name suggests, Kidnap & Ransom insurance actually covers a broad scope of insurable perils.  The name for this insurance was born out of the Colombia-era FARC and ELN kidnappings in the seventies, however, with security risks globally having evolved significantly since this time and the scope of this insurance now goes far beyond simply kidnap-for-ransom and extortion insurance.

Currently, insurable perils include (but are not limited to): hostage barricade, active shooter, malicious detention (by legal government authorities or criminals), extortion (including product and cyber), hijack, child abduction, home invasion, political evacuation, natural catastrophe evacuation and pandemic/epidemic evacuation….

Providing an example case study, explain how your team worked to minimise and mitigate the impact of the event.

Given the strict confidentiality of these policies, we are unable to provide specific details around the cases we have handled, however, here are some examples of the types of claims we have encountered:

  • Malicious Detention

A foreign national was illegally detained for a number of years by a government following accusations that he was inciting anti-government sentiment.

JLT supported the client by collating all of the relevant data and liaising with the insurer to establish the extent of coverage available and negotiate a favourable settlement.  Meanwhile, the response consultants were working directly with the client to assist in handling the crisis (meetings with the government agencies, family liaison of the victim, media handling, and negotiation strategy).

  • Express Kidnap

A local wealthy businessman was kidnapped on his way home from work and driven to various ATMs around the city to withdraw money to secure his release.  He was mistreated during this 2 hour incident.

The Response Consultants were contacted directly by the client following this event to discuss increasing this individual and his family’s security following the event.  JLT worked with the client to collect all of the relevant costs associated with this event (such as medical care, temporary relocation to another city, temporary security, rest & rehabilitation) to negotiate the coverage with insurers.

Following this event, JLT organised a post-incident debrief with the response consultants and victim and additional training was provided by the consultants to the victim on elements such as personal security awareness and evasive driving to mitigate the risk of this occurring again.

  • Emergency Evacuation

A number of multinational companies employing foreign nationals were caught up in the 2011 Arab Spring.  With the security risk elevated and foreign nationals at risk, plans were made to evacuate all foreign personnel (expats and business travellers) out of the country.

While the response consultants provided the immediate, on the ground response support and strategy in evacuating the personnel, JLT assisted post-event in explaining the scope of cover available to the client, as well as collation of costs for travel and accommodation, personal effects left behind and salary.  JLT submitted this data to insurers and negotiated on the claims payment in full.

What is the most used section from the policy?

While financial indemnification is an important benefit of this policy coverage, arguably the most critical element of this policy is the access to the Response Consultants.  They have unparalleled experience in dealing with the events insured by this policy.  Given that any crisis incident can be complex, emotional, time consuming and financially detrimental for any company or family, having expert response consultants at your side to support you throughout this event, with their fees and expenses cover up to an unlimited amount is imperative.  Their ability and skillset to liaise with local law enforcement, understand cultural and linguistic nuances during a negotiation, assist in media-handling and family liaison, and their experience in handling ransom payments is critical.

In any ordinary crisis situation, a client would hope to rely upon local police/ government to assist in handling the crisis incident, however, because these personnel do not work exclusively for the client, often other important issues may be prioritised.  Furthermore, a widespread crisis situation may mean that local emergency services are overwhelmed.  Therefore, clients will have the peace of mind in knowing that they have consultants working for them to resolve the crisis.

What are the territorial limits of the policy?

Typically these policies operate on a ‘worldwide’ basis.  Unlike a Travel or PA policy which includes territorial exclusions, our policies provide 24/7 worldwide coverage, whether at home, abroad, on a business trip or on vacation.

Are there any excesses or deductibles on this policy?

No – this policy provides ground up coverage.  For certain Insured Events such as hijack or hostage there are ‘waiting periods’ which may be applicable before coverage will trigger, however these periods are negotiable.

Who is typically covered by this policy?

Family:  this is typically the whole family who is covered including extended family and any domestic staff/ guests whilst working for the Insured family or while on their premises.

Company: two types of coverage can be provided:

  • Cover on a blanket basis for ‘All Directors, Officers and Employees of the Insured’ this also extends to include those persons’ immediate families and also anyone under the company’s duty of care (be it guests, customers, contractors, consultants, freelancers, temporary staff).
  • Cover on a named person’s basis, specifically covering named persons on the policy only.

Cyber-attacks have been rife in the press of late and seem to be an increasing threat, what can JLT do to insure a client against a cyber threat?

As a specialist broker JLT has its own dedicated Cyber Insurance team who are monitoring this evolving risk and providing comprehensive and bespoke insurance solutions to our clients.

As the term ‘cyber’ is so broad and is rapidly evolving, it is important to highlight here that there are several insurance policies, outside of the specific cyber policy, which provide a small element of cyber cover.  One such example is this Kidnap & Ransom policy which will provide an element of cyber extortion coverage in the event of a computer virus hack, malware or denial of access incident.  So long as there is an accompanying ransom demand (for cash or in Bitcoin), the Kidnap and Ransom policy will trigger covering the ransom, relevant additional expenses, response consultants’ fees and expenses and Business Interruption.

What other value-added benefits are accessible through this policy?

Once a policy is purchased clients will benefit from a number of value-added services as follows:

  • Free access to a country/travel risk information and alerts platform
  • Access to 10-20% of the premium paid to put towards and risk prevention services such as:
    • Personal security awareness training
    • Hostile Environment training
    • Safe travel training
    • Crisis management review/drafting
    • Security audit review

Why should clients consider buying this insurance?

From a family perspective:

  • Peace of mind for your loved ones’ safety
  • Financial protection
  • Immediate access to expert consultants globally
  • Media support
  • Legal support
  • Negotiation strategy support
  • Government/law enforcement liaison

From a company perspective:

  • One-off predictable security mitigation cost
  • Evidence of duty of care to your employees
  • Legal liability coverage
  • Immediate access to expert consultants globally
  • Business continuity
  • Balance sheet protection
  • Brand and reputational protection
  • Media support
  • Negotiation strategy support
  • Government/law enforcement liaison
  • Allows company’s personnel risk threshold for high risk territories to be elevated, allowing business development in previously inaccessible markets.

Why use a broker? Why not go direct to the insurer and/or in lieu of insurance pay a retainer to a security firm for their services?

While clients may consider going directly into an insurer rather than using a broker, there are a few key points to highlight which demonstrate the value of having a broker involved in the process:

  • A broker works for the client (not the insurer). If a client goes direct, the client has to negotiate with the insurer themselves and the client might not have the market experience or relationships to know what coverage or good rates are available.
  • In the event of a complex claim, the broker can leverage their wider market relationship with the insurer alongside claims experience to negotiate a favourable claims outcome for the client. Without a broker’s backing, the client has less leverage to negotiate on a claim.
  • A broker has an overview of the wider market and can assess the changing rates, product availability and claims trends, thus allowing the client to make an informed decision on which insurer/ product is best-suited.
  • A broker may have their own proprietary wording; this is drafted to the benefit of the Insured.

Some clients do decide to pay a retainer to a security consultant instead of purchasing an insurance policy.  Here are some of the reasons why an insurance policy is more beneficial and cost-effective:

On a retainer contract, these are often provided on a membership basis.  Clients have to pay an annual membership fee and thereafter, there is a ‘pay to play’ format.  If the client has an incident, the consultants will respond but for an additional fee.  Some consultants do simplify this by offering a higher annual fee, however this full retainer cost can be extremely high.

In contrast, an insurance policy is a one-off predictable, budgeted cost and the consultants’ fees and expenses are covered directly by insurers up to an ‘unlimited’ amount.  With the insurable perils now covering a broad range of crisis scenarios, clients can have the peace of mind that no matter what the incident, the insurance will respond.

What information is needed in order to obtain a quote?

Whether for a family or company, the key information we require is:

  • Name of company/ family
  • Number of people to be Insured by country of residence
  • Travel pattern (countries of travel, duration and frequency of trips)
  • Confirmation of assets/turnover
  • Confirmation of any previous incidents/ threats that would have given rise to a claim under this policy.

If you already purchase a Kidnap and Ransom policy but would like a free and confidential stress-test to ensure you have the correct coverage and limits in place, we can offer this without any obligation to purchase.

If you would like more information on JLT’s offering, or would like to speak to an expert about your circumstances, you can contact Lucy by visiting JLT’s website here

Arrange to speak to an Enness Broker