Coverage
K&R coverage focuses on the following:

    Kidnap/Ransom: Situations where a person is abducted or where ransom
      has been paid in the belief that a person had been abducted;
    Extortion: Situations involving threats of abduction, bodily harm, property damage,
      introduction of computer viruses, disclosure of proprietary information, or product
      tampering;
    Delivery: Money or other property in transit to pay a ransom or extortion demand;
    Wrongful Detention: Arbitrary and capricious acts of involuntary confinement of a
      person by an agent (or a person purporting to be an agent) of any governmental entity,
      insurgent party, organization, or group;
    Hijacking: Situations where a person is illegally held under duress while traveling on
      any aircraft, motor vehicle, or waterborne vessel;
    Additional Expense: Coverage for such items as independent negotiators/consultants,
      travel expenses of security personnel and family members, the services of interpreters,
      rewards for information, and all other reasonable expenses incurred in obtaining release
      of the hostage;
    Legal liability: Suits alleging negligence in a hostage retrieval;
    Personal Accident: Insurance for victims;
    Crisis Response Fees: Fees and expenses of the associated security firm;
    Additional Endorsements: Recall Expense, Business Interruption/Contingent Business
      Interruption, Child Abduction Coverage.

   Individual vs Corporate coverage
The primary market for this insurance is corporations seeking to protect officers and key employees,
and their families. The coverage is provided not only for the 'banana republic' situation but the very real
threats to officers and key employees living and working in the US or any other 'civilized' Home Country.
In addition, there is coverage available for Individuals or Families purchasing it for their own protection. In fact,
between 1995 & 1998, over 90% of kidnap victims worldwide were targeted due to their individual wealth.

The existence of this coverage as a generic fact is known but most companies and individuals, for very
obvious reasons, keep their purchase of such coverage a very tight secret! In fact, many companies
purchase it for their officers and key employees without even divulging it to those employees - again
for fear of sending out the 'wrong' signals.

   Premium Costs
Individual Coverage
As an example, we can look at the cost for $1 million of individual K&R. The applicant must disclose all
known travel destinations (e.g. if travels regularly include specific places or regions), but if an unexpected
destination comes up, it would be covered once the coverage is in place. Once the coverage is in effect,
it is worldwide and covers any K&R situation wherever in the world it occurs.

We look at 2 US executives - one living in Manila and one in Jakarta, both locations relatively high risks
in the current worldview. If the executive in the Philippines stays put in Manila, his premium is going to
be somewhere between $5,000 and $8,000, based on his profile and some other factors. If he travels to
less-risky places (e.g. Athens, Europe, etc.), the pricing doesn't change. If, however, he travels to the
hinterland of the Philippines regularly, his premium could even double!! The executive in Indonesia would
start out at approximately the same rate and going into the hinterland might be even more expensive,
based on recent events in Bali coupled with the growing spectre of terrorist threats worldwide.

By comparison, in the US, the same coverage might cost $1,000 or less!!!

Corporate Coverage
A small US-domiciled company ($100,000,000 and under in Sales/Assets) with no international operations
other than Europe, Canada or UK can expect to pay less than $500 for a $1,000,000 policy. A larger company
or a company with more international exposure will pay more.

   Crisis Management
Basically almost all K&R coverage is 'wrapped around' the services of a Crisis Management organization.
This entity is brought in to any situation which could give rise to a claim as well to advise insureds in advance
on what sort of precautions should be taken. It is somewhat akin to a Medical Case Manager in a health care
plan, whose job it is to ensure that the patient receives good care while, at the same time, protecting the
interest of the insurance company.

Most kidnaps are carried out in order to obtain a ransom, and in most cases a ransom is paid. Rescues are rare,
largely because the authorities in most countries recognize that the safety of the victim is paramount. While the
average occurrence of deaths following a kidnapping is 9%, in cases involving a Crisis Manager less than 2%
of people are killed - almost always at the time of abduction rather than during the negotiation.

As an example, one of the Crisis Management companies used by several of the K&R insurers describes their
services as follows:
    Expertise: Consultants are drawn from elite law enforcement agencies and military units in the U.S.,
      England, Holland, and Australia. These individuals have prior experience in countering crimes of kidnap
      and extortion.
    Description: It is an international management consulting company. Their purpose is to advise
      businesses, governments and individuals on how to reduce the impact on their activities from
      conditions resulting from political instability, social and technological change, terrorism,
      fraud and crime.
    Experience: Since its foundation in 1975, the Company has worked with more than 3,500
      clients in over 130 countries. Its offices around the world are staffed by consultants and analysts
      from a wide range of professional backgrounds, ensuring a multi-disciplinary perspective to their
      clients' complex problems.
    Knowledge: Corporate clients and a number of governments and international agencies regularly rely
      on the assessment and forecasting skills of the Group. The in-house team of analysts is supported by
      a worldwide network of retained correspondents. Analysts travel to their specialist regions and can also
      draw on the experience of consultants, who are constantly working in countries of interest to international
      business.
    Worldwide: Consultants are stationed in offices in the U.S., Colombia, Mexico, Brazil, England, Holland,
      Russia, Germany, Philippines, and Australia. They are on call 24 hours a day to respond immediately and
      effectively to life-threatening incidents affecting clients.
    The Group's Objectives: In the case of a kidnapping or threat:
       - Achieve the safe release of the victim,
       - Support the family of the victim,
       - Protect the client's legal and commercial interests,
       - Minimize management disruption and stress,
       - Act as a liaison with local law enforcement.

[For further information on Crisis Management, refer to the Control Risks Group website]

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