Held for Ransom
Why companies operating abroad need to consider kidnap & ransom coverage
Simple kidnapping is not the only risk that can confront traveling employees; they also face other dangers, such as extortion or hijacking, and increased exposure places a duty of care obligation on all Canadian businesses to protect their employees. Employers need to do more than just evaluate the regions where they expect their employees to work; they must also provide adequate training and education on safety and security. A company that fails to properly train or protect them opens itself up to lawsuits from a victim or victim’s family. Crew members of the Maersk Alabama, whose hijacking was made famous by the movie Captain Phillips, are suing Maersk Line, claiming they were forced to sail across a known area of known piracy activity without adequate protection.
Duty of care is typically defined as a legal obligation to adhere to a standard of reasonable care in acts or omissions that could foreseeably harm others. Depending on the jurisdiction, that obligation can be based in legislation, case law, employment/contract law or torts, but it’s also a standard of corporate responsibility and best practice.
The obligation has evolved over recent years. In the past, it meant employers were responsible for protecting the health and safety of their employees in the workplace only. Now that obligation’s been extended to protecting employees, their dependents, contract workers and guests on expatriate assignment. This can become a nightmare for small and mid-sized companies, which typically lack larger companies’ risk management infrastructure.
More than Ransom Costs
Kidnap and ransom coverage can be a cost-effective means of providing that protection and support. K&R has evolved to address many of the elements of travel risk management for any size of business by offering pre-trip planning and security briefings, a communication plan with clear instructions of what to do in the case of a threat or incident, and round-the-clock emergency assistance, crisis response, and evacuation. In addition to the insured benefit for reimbursement of the ransom, policies typically cover extortion, wrongful detention and hijacking. Extensions to these policies can include coverage for lost earnings, personal accident insurance (which pays a lump sum benefit in the event of injury or death), legal costs, psychological counselling, and cosmetic surgery, to name a few. A large mining company operating in Mali, employing locals and expatriates, will naturally have much broader needs than a smaller employer, whose employees travel only occasionally to a particular hot spot.
As corporate duty of care obligations expand, so do crisis response companies’ services. Rather than lean on untrained staff or second-hand research for crisis response, companies with operations in risky territories can rely on intelligence analysts to continuously monitor the world for threats, and advise them of potential issues. In some cases, an advance team of consultants can be sent to a location to conduct a risk assessment of local conditions. Furthermore, online resources provide stakeholders with quick access to current and archived intelligence, and many security companies offer benchmarking of employers’ risk management programs to help identify any gaps.
Training programs, both online and in the classroom, are also becoming more widespread. Courses are conducted by teams of intelligence, travel and security experts to help educate employees prior to deployment, and to help managers know exactly what to do to prevent an incident, or react to one.
One of the most significant recent trends in travel risk management has been the growth in mobile tracking services. The latest tech can automatically match risk alerts with employees’ locations, so alerts can be pushed directly to the employee’s cell phone or email. Online tracking tools can show employers exactly where their employees are, at any time, around the globe, and also include GPS trackers and panic buttons. Companies can use social networks and blogs to supply information on the circumstances of a crisis situation as it is unfolding, and to provide another means for reaching employees.
The number one goal of any travel risk management program is to avoid having an incident occur in the first place. But, in high-risk areas, there’s a limit to what companies can do, so having the right crisis response partner is also crucial. Security evacuation coverage—another important extension offered under a K&R policy— relocates or repatriates insureds in the event of war, civil unrest, or expulsion by the local government. The benefits include airfare and accommodation, and can be extended to include lost income.
For more targeted events, like a kidnapping, even some of the largest multinationals don’t have the expertise or resources on hand to deal with the fallout. These services are delivered by crisis response companies and are typically included in the premium for the K&R policy. Consultants immediately head to the incident location to negotiate with the captors and liaise with police—something that requires expert knowledge of the local environment. They also provide guidance and support to the victims’ families, and assist with the recovery process of the hostage upon their release.
Many insurers have changed their policies recently and now require mandatory evacuations from high-risk zones if it appears that the risk is too great to ensure employee safety. That’s not always possible, of course, so it’s essential that in dealing with a threat to a company’s overseas operation, the K&R insurer engage the services of a highly experienced response service with a broad global reach.
Carol Graham is the executive vice-president and COO with Sutton Special Risk. Richard Grant is senior vice-president, corporate risk, with Trisura.
Copyright 2014 Rogers Publishing Ltd. This article first appeared in the September 2014 edition of Canadian Insurance Top Broker magazine