Kidnap and Ransom: What you need to know
Jon Gregory of AIG Property Casualty tells us why more and more corporations are considering Kidnap, Ransom and Extortion Insurance, and how brokers can approach recommending it.
Video transcript below:
Jon Gregory, Head of Kidnap and Ransom, AIG Property Casualty
Jon Gregory: One of the fundamental points I think to stress these days is this product, is now as relevant in an environment like Australia, as it is in those traditional high risk environments like Iraq, for example, Afghanistan or Venezuela or Columbia which has always been seen as the sort of bedrock of this type of insurance.
Reporter: Kidnap and ransom insurance is dramatically named, but as Jon Gregory of AIG explains to us, this isn’t just for the naked wealthy. This little known but high stakes product has been on the rise lately and Gregory urges that brokers discuss K&R with any client with links to large corporations.
Jon Gregory: Kidnap, ransom and extortion insurance has traditionally been focused on those pure perils, but kidnap is essentially the abduction of an individual and the return of the individual in return for a ransom payment. Extortion is traditionally focused on the communication or extortion of property, product or a person in return for a ransom. So that’s the pre-threat in this sense. One of the fundamentals that we are now seeing in terms of a buying dynamic is that the biggest corporations have probably considered this and looked at buying it and many of them of course do. What we are now seeing is those small to medium size businesses buying this type of insurance because the whole culture of corporate governance and duty, care and responsibility to employees is driving all of this and there have been enough losses now I think, high profile losses in the last 2 or 3 years to make this continue to be a relevant insurance. You know if any business is putting people in environments where there is any element and place of instability and we are seeing it currently for example Ukraine and obviously just before Christmas in Sudan. That type of threat to persons and employees has to be managed.
Reporter: Gregory explains that brokers recommending this product must examine several factors.
Jon Gregory: So I think you know if you are broker looking into this sort of, this sort of policy for a client, I think fundamentally you need to examine your client’s profile in terms of its industry type, who it’s necessarily trading with and what that brand, that public brand perception is of that business and some brands realistically are more emotive than others. I think you then need to consider where you are sending employees and where you are subsequently looking to build your business out.
Reporter: Gregory also explains that now more than ever Boards of Directors are aware of their obligations towards employees making them more receptive to a K&R purchase.
Jon Gregory: Directors are liable subsequently for how they run a business and what they do to protect their employees and around all of that corporate governance we talked about earlier, they have a responsibility now to recognize that fact and as an insurance broker I think as soon as you start to say to a client, hey have you thought about who you are trading with or where you are sending your people and what you are doing to protect them and what you are doing in advance of that travel and putting people in those environments, then I think that tends to tweak consciousness and it’s not a very difficult conversation from that point to the point with a client saying okay, what does an insurance policy look like for me this way.