Demand for Kidnap & Ransom Insurance on the Rise in Latin America

By Jeremy Lang | April 2, 2012

Schools, Entertainers and Non-Governmental Organizations Need Specialized Protection

Keeping people safe while they’re living, working or studying anywhere in the world means knowing the specific risks they face in each location. Latin America — defined here as South America, Central America and Mexico — is no exception. While many insurance professionals know about some of the risks, such as the threat of drug-related violence in parts of Mexico, others are less well known.

For example, “express kidnappings,” in which victims are abducted and forced to withdraw money from their bank accounts via ATM, are a particular problem throughout Latin America. Called “express kidnappings” because the victims are typically released after a day or two of withdrawing the maximum daily amount, they are much more common in Latin American than Europe, Africa, the Middle East and other regions of the world.

Overall, nationals and visitors living, working or studying in Latin America are at greater risk than before. They may face kidnappings, extortion or muggings from organized criminal groups, such as drug cartels or small criminal enterprises. Politically unstable regions, such as in some areas of South America, can quickly become chaotic or violent.

Of all the kidnappings worldwide by region in 2011, 26 percent were in Latin America, surpassed only Asia and the Pacific, which accounted for 38 percent, according to data from Control Risks, a global risk consultancy.

Latin America generated 26% of all worldwide kidnappings in 2011.

This article focuses on three of the many types of industries that operate in Latin America — educational institutions, entertainment, and non-governmental organizations (NGOs) — as well as perils, risk management and insurance products that are applicable to any sector.

Increased Demand for K&R

Kidnap and ransom insurance (K&R) is at the heart of any risk management program. Once used primarily to protect business executives and wealthy families, K&R has evolved to meet fast-changing risks encountered by anyone who lives, works, travels, studies or volunteers in potentially risky environments. As risks have increased, so has the demand for K&R.

K&R usually covers hostage taking, extortion, wrongful detention, disappearances and emergency evacuation, among other risks. Typically, insurance carriers extend to their policyholders the services of professional risk and security firms with local knowledge and expertise. In addition to stepping in when a crisis strikes, partner firms often play an active education and training role. Overall, K&R is designed to keep people and businesses safe and, if a problem arises, to respond quickly and professionally.

Why is K&R so important? In addition to its function — to protect the life and health of individuals and groups — it also protects organizations, such as NGOs or universities, that have international programs. These organizations have a duty of care and could face lawsuits if their workers, volunteers or students are harmed.

Teaching Awareness

In Latin America, similar to other areas of the world, proper preparation starts with teaching visitors and nationals (who may be at even greater risk because their habits are more predictable and because they’re seen as having ties to deep-pocketed corporations) about the local environment.

This is an area where a knowledgeable risk management and crisis firm play a big role, sharing knowledge about the region, specific cities and neighborhoods. Awareness is key.

Students, for example, may be used to walking around U.S. campuses with their phones out, texting or making calls. Carrying around laptops is commonplace here; in some places, it can be an invitation to theft. Similarly, wearing expensive jewelry or giving the impression of being wealthy can make someone a target.

In addition to awareness of one’s surroundings, it’s important to know how to get around safely in Latin America without becoming a target. Are cabs safe? Is public transportation a good idea? These are issues that need to be resolved in advance for practically all travelers. Others, such as entertainers on tour, will also have specific needs.

In the United States, for example, many entertainers maintain high profiles on the road. They may travel in a convoy of tour buses or flashy, conspicuous SUVs. In Latin America, however, they may need to be low key and not attract attention. For musicians and others in the entertainment industry, that could mean using common, low-profile sedans and limiting traveling groups to just a few vehicles.

In terms of insurance, anyone associated with the tour, including musicians, performers, sound technicians, managers and roadies, is a potential target and therefore coverage is recommended. Family members, even if they’re joining the tour for just a few days or weeks are also potential targets. Hired security for the tour is often recommended.

These precautions also apply to filmmakers and production companies, whether they are making big-budget movies, documentaries or commercials.

Another important consideration, particularly for NGO workers who work in war-torn or other troubled areas, is the question of whether NGOs can trust law enforcement. Some police agencies may be corrupt and function as an arm of local criminal gangs. While local residents know this, visitors may have no way of knowing that going to local authorities may put them in harm’s way. Countries where private security personnel far outnumber public police are among the most violent in the world, according to the Institute of International Studies and Development.

Demanding ‘Protection’ from NGOs

Anyone can fall victim to criminal gangs demanding “protection” money but this has emerged as a problem for NGOs, particularly in Mexico, where church groups have been extorted. Across Latin America, missionaries and others associated with religious entities, have been kidnapped and held for ransom.

The political stability of some Latin American regions is also an important risk factor. Political and social upheaval means emergency travel evacuations may be necessary. Schools and universities in particular need to be prepared. Students, faculty and staff may need to be evacuated at one time and parents are understandably frantic, adding pressure on school administrators.

With growing and fast-changing conditions in Latin America, having the right insurance coverage, as well as access to an experienced risk management and crisis firm, is essential. People in certain industries, including education, entertainment and NGOs, also need advice and products that reflect the specific risks they face. Heightened risk doesn’t mean individuals and businesses need to avoid visiting countries and regions in Latin America; they just need to be prepared.

About Jeremy Lang

Lang is VP, U.S. Kidnap and Ransom, for Hiscox. Phone: 646-452-2358. Email: Web site:

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Insurance Journal West April 2, 2012
April 2, 2012
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