Businesses are increasingly expanding into China. According to the U.S. Department of State, China, overall, "is a safe country, with a low but increasing crime rate." Violence against foreigners is rare, but criminal activities against foreigners are growing, especially in the larger cities.
Mexico is another country frequently selected by U.S. companies for expansion. According to the State Department, kidnapping of non-Mexicans is increasing. The U.S. Embassy in Mexico recommends using caution when traveling in Mexico and advises its own personnel to exercise caution.
Other areas in Latin America are common business travel destinations, where there also is an increasing prevalence of kidnappings. Fairly recent statistics indicate that approximately 10 kidnappings take place per day in Colombia, or nearly 4,000 each year. Ransoms paid in Colombia can easily exceed $1 million, and local law enforcement agencies are largely ineffective in their rescue attempts.
Consultants are often retained to negotiate the release of the victims, and typical fees paid to the negotiators are $2,000 per day plus expenses.
Insurance to cover ransoms and the cost of negotiating will certainly reflect these costs, so it's easy to understand why prevention is the most effective means of dealing with this exposure. Nevertheless, insurance protection is often sought to cover the various risks of loss and services rendered in the event of a kidnapping, and the scope of protection varies widely. When purchasing K&R coverage, policyholders are usually provided with services aimed at mitigating the risks of loss.
Whether purchasing insurance or not, there are some basic loss-prevention techniques that are universally recommended. The key is learning to be a difficult target. Avoid publicity and keep a low profile. One K&R consultant recommends sending house staff out ahead of you to see what cars are parked in the street every day.Bodyguards should not be used to drive vehicles; they should ride as passengers.House staff should be instructed to take photographs of suspicious people. Always be aware of who is around you and where safe places are. Routines should be avoided and routes of travel frequently changed. Don't be predictable.
Other recommendations include always walking away from a disturbance, not toward it. Drinks should never be left unattended at a restaurant or bar to avoid drugging, a method increasingly used by kidnappers.
Michael Ackerman, president of the Ackerman Group, a firm that provides a broad range of security and investigative-related services, offered the following advice for kidnap victims in a recent article: "Come across as a decent human being, even if you aren't one," he wrote.
In the next Risk Primer column, some of the key terms, conditions and exclusions from different K&R policies will be discussed in an effort to develop a list of important features to watch for when considering this coverage for your organization.
a principal of the Orchard Park, N.Y., consulting firm of Aldrich & Cox, writes a regular column for Risk & Insurance®.
October 1, 2005
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