When looking at a kidnap insurance policy people tend to focus on the size of the ransom benefit and the “amount” that is available to be paid to kidnappers in the event of an abduction. As we have discussed, the international kidnap consulting benefit and consulting services are far more important. One reason for this is rarely discussed, in some countries the amount of ransom demanded, even by professional kidnappers, is surprisingly low.

High profile international kidnappings and even kidnap insurance is often the topic of Hollywood movies. In these movies, we see the kidnapper asking for extraordinary sums of money. In the movie “Man on Fire” starring Denzel Washington, the kidnappers asked for $10,000,000 US Dollars. This Hollywood standard for kidnap insurance is rarely the case in the real world.

In many Latin American countries, it is not uncommon for kidnappers to request $250,000 or less and for the actual exchange be negotiated down and settled for amounts as low as $25,000 USD. This is no surprise; in the kidnap for ransom trade, it is about turning over victims and not holding victims for many months in complicated negotiations.

Don’t think you need kidnap insurance considering these low amounts?  Before canceling your kidnap insurance policy, think twice. For high net worth individuals or corporate expatriates the kidnappers will try to get all they can after an abduction knowing they have deep pockets. Although many ask for small amounts, they could ask for $1,000,000 USD.

Second and as we have discussed, the essential part of a kidnap insurance policy is the consulting benefit. Whether the demands are $5,000 or $500,000 if things are not handled in the proper way, lives will be lost. If you or a client has $500,000 in “liquid assets” are you expert in kidnap negotiation and exchange?  Professional kidnappers should be dealt with by professional security experts, not your family.

It has been over one year since the beginning of the Arab Spring in Tunisia, and Egypt, the center of the Arab Spring in 2011 since the overthrow of Hosni Mubarak, is much worse from a security standpoint today than before the uprising. Tourism has come to a halt in Egypt, but there are still thousands of foreign nationals living in Cairo. These individuals in particular should consider kidnap insurance in Egypt.

On Friday of last week, armed Egyptian tribesmen stopped a bus and kidnapped three South Korean women and their local guide in Egypt’s Sinai Peninsula.

This was the latest of several kidnappings in Egypt’s Sinai region, which has seen a surge in kidnapping, general lawlessness over the last year as armed tribes, and Islamist asserted push for power. Because of the uprisings and turmoil, kidnap insurance in Egypt is more expensive than it was one year ago.

At this time, Egypt is run by the military wing and protests against military rule are ongoing in the streets. It is recommended that any foreign national living in Egypt purchase kidnap for ransom insurance.

The Korean tourists were abducted about 20 miles from St. Catherine’s Monastery, close to where two Americans were kidnapped last week. Kidnappers in Egypt will generally target foreign nationals and Americans while leaving local nationals alone.

Tribesmen often abduct tourists to use in negotiations with the government over the release of jailed colleagues. In many cases, Kidnap insurance in Egypt is not just about kidnap for ransom, but kidnapping for political purposes. Even in these instances, a kidnap for ransom insurance policy provides security professionals that can give life saving assistance for all kinds of abductions, not just kidnap for ransom abductions.

If living or working abroad, kidnap insurance for high net worth individuals should be a prime consideration along side other “core” international benefits, such as international medical insurance and expatriate life insurance.

First, we define “high net worth individual” as someone that has more than $500,000 in liquid assets or more than $5,000,000 in total assets with total assets including real estate. Many expatriates working abroad for Fortune 1,000 companies will meet this definition, which may cause you to wonder if we have defined “high net worth” correctly in this context?

For expatriate purposes in Latin America, Africa, and 20 other countries like Thailand, China, Russia, etc. the answer is yes. The reason is that these individuals are high net worth relative to the average person living in a particular area of the host country. To the poor in most of these countries, $100 USD is an exceptionally large amount of money to have in your pocket. Our relative base of comparison here is certainly not New York City.

So if kidnap insurance for high net worth individuals is a staple, what is the process so these people can make sure they secure kidnap and ransom insurance? First, many employers will provide kidnap and ransom insurance for their expatriates, but the quality of many of these policies we find to be low. What’s more, the employer is not able to share the details of the kidnap and ransom insurance policy with employees, or else it can void the policy.

It comes down to a matter of trust. If an expatriate gets vague or nebulous answers from their employer regarding the existence and quality of a kidnap and ransom insurance policy, the expatriate should move to obtain a kidnap and ransom insurance policy on their own. Kidnap insurance for high net worth expatriates is available in most host countries, and you do not have to be an American to qualify. Prices begin at about $1,400 per year.

If you are a high net worth expatriate living in one of over 90 countries we consider to be high risk, hoping your employer’s policy will cover you is a foolish gamble, especially if you have a spouse and child in the host country.

Expatriate kidnap insurance is a form of ransom insurance designed to protect an expatriate working and living outside of their country of citizenship. Expatriate kidnap insurance will also protect the expatriate’s immediate family if they also live in the host country.

Ransom insurance describes a type of international insurance that pays a ransom benefit in the event of a kidnapping and abduction of an expatriate living away from their home country. The ransom insurance “benefit” typically begins at $500,000 and can be as high at $5,000,000 under a standard policy.

The term ransom insurance is misleading because for most kidnap for ransom insurance policies, the ransom benefit is perhaps the least important aspect of the insurance policy. In other words, a good ransom insurance policy goes far beyond the ransom benefit. Perhaps the most important aspect of a ransom insurance policy is the international consulting aspect of the kidnap for ransom insurance policy.

The consulting part of the insurance is the need to get a qualified kidnap consultant into the host country as quickly as possible in order to negotiate with the kidnappers. A good expatriate kidnap insurance policy will fully cover the consulting costs, which can be several thousand dollars a day.

The bottom line in a kidnap for ransom insurance policy is, do not concentrate too much on the ransom benefit, and consider the consulting benefit. In this way, the term “ransom insurance” can be misleading.

Egypt, and the political turmoil there, is current proof that all foreign nationals living and working in a dangerous locale can be victims of tourist kidnapping, and although Americans are targets of tourist kidnappings they are not disproportionately targeted over foreign national of other nationalities traveling and living in Egypt.

Just in the last month in Egypt, Americans have been the victims of kidnappings but so have Chinese nationals, Koreans, and Italians. It is unclear how many of the kidnapping victims had kidnap and ransom insurance. Many of the Egyptian kidnappings have not been about kidnap for ransom because the intent of the kidnappers, especially those in the tribal regions, is to use the kidnap victims as a bargaining chip to have political prisoners, or in many cases real convicted criminals, freed from jail.

We have been asked about kidnap and ransom insurance for short-term trips to Egypt and we know of no kidnap and ransom insurance products for short business or tourist trips to Egypt, or any country.

Many of the kidnappings in Egypt have been targeting tourists so we investigated how many tourists are still traveling to Egypt in the midst of the political upheaval, which includes daily protests in the streets, many of which are violent.

According to the minister of tourism, the number of tourists to Egypt in 2011 only dropped to 9.8 million from over 14 million the year before. We at McKinley Kidnap and Ransom Insurance look at these numbers with a high degree of skepticism. Numbers and statistics can be arranged in almost any fashion to tell the story the manipulator wants to tell.

Considering what is happening in Egypt today, and the story just gets worse as we hear of tourist kidnappings almost weekly, would you spend your hard-earned money to travel as a tourist to Egypt on vacation? We do not think so either. Egypt needs to put every resource into eliminating tourist kidnapping before their tourism trade is completely ruined, which in turn will ruin the entire Egyptian economy.

Kidnap and ransom insurance for CEOs is a separate consideration in most large companies. Large companies and non-profit organizations that have employees traveling or working internationally as expatriates, typically have an existing kidnap and ransom insurance policy in place today.

When McKinley International is asked to provide consultation on kidnap and ransom insurance for these companies, it is not because they do not have an existing policy; it is usually because the existing kidnap for ransom insurance policy is inadequate for the situation and CEO travel. One size does not fit all.

Even when we find an adequate kidnap and ransom insurance policy for the employee group as a whole, we sometimes take a different approach for kidnap and ransom insurance for CEOs and senior executives. For example, the kidnap and ransom insurance for CEOs may require a policy with much higher limits that say, the $500,000 limit on the general employee population.

International security consultants are often asked to write a named policy for kidnap and ransom insurance for CEOs and senior executives, even when and an existing international kidnap and ransom insurance policy exists. Other reasons beyond the need to provide an additional kidnap and ransom insurance benefit include a better consulting company for the region, additional benefits attached to the policy, and no need to front the ransom money.

The global economic storm makes the threat of kidnap for ransom much more likely over the next 20 years. Kidnap and ransom insurance is becoming a staple for any American living abroad for reasons we discuss below.

We have all heard the horror stories about Daniel Pearl in Pakistan, Nick Berg in Iraq, and other victims kidnapped abroad and violently murdered – because either the demands could not be met, or the demands were unreasonable in the first place. This was the case with the two victims above, both Americans beheaded on video tape! Fortunately, these types of kidnappings are still very rare in the world.

Kidnapping Continues to Grow Worldwide

The “business” of kidnapping is growing at a shocking pace; the trade of live bodies for ransom money is only expected to get worse over the next twenty years. The party in the “rich nations” is over for quite some time.

Record deficit spending and over-inflated “bubbles” in housing, stocks, and commodities will mean that rich nations can no longer keep up the spending and will need to de-lever over the next 10 to 15 years.

At the very best, this means economic doldrums for the U.S., all of Europe, Japan, and even China for at least 10 years. If sovereign deficits are not addressed immediately, we would see global collapse and “depression like” levels of negative economic growth.

With the rich countries putting their wallets away for up to a decade as the storm blows over, this will have a trickle down effect on the developing world and the poor will get even poorer and more desperate in Latin America, Africa, and the Middle East. Somali pirates will grow in number. The badlands of Rio will expand in every direction. The population of shantytowns in Mexico City will have increase by 250,000 people a year.

Many will Choose Kidnap and Ransom Insurance

Desperate people means that kidnap and ransom insurance for all American expatriates and travelers will become an essential benefit for the near future. A larger population of poor and increased desperation will feed the business and infrastructure of the global kidnap for ransom business. Unlike most in the global economy, the “kidnap business” will be a growth industry for the next 10 years. (Wall Street must be envious they cannot participate in one of the few growth sectors of the next decade!)

We predict the growth in “Hollywood style” kidnappings, where the kidnappers make incredible demands of $1,000,000 or more will certainly not be the norm. Instead, we expect that the poor in the developing world will see the presence of Westerners as a meal ticket, a way to escape destitution, or to find enough money to treat a sick child at home sleeping in a box. Kidnap and ransom insurance plans will pay out smaller amounts much more frequently.

The burdens on kidnap and ransom insurance will not be on the insurance benefit. Thousands of these international kidnapping will only ask for $20,000 to $50,000 as the initial ransom, and most will be negotiated down by 50%! It will be the consulting aspect of a good kidnap and ransom insurance program that will save lives.

If an expatriate kidnapping occurs and the kidnappers only request $15,000 USD from the family, does that mean the family can “relax” because they have $100,000 in the bank and can easily write a check to get safe return of the head of household? If people would stop to think through this scenario, they would not like what they find.

K&R Insurance Ensures Professional Assistance

Driving out to see armed killers and kidnappers at 2 a.m. with $20,000 of cash in the car and of course, no police or the kidnappers have threatened to kill the hostage. What would stop them from taking you as a second kidnap victim and starting the process all over again?

No, the right consulting company that can successfully and professionally negotiate with international kidnappers and then secure safe release of the hostage is the most important part of a good kidnap and ransom insurance policy. The actual benefit of a kidnap for ransom insurance policy is only 4th or fifth in importance for 95% of international kidnappings that will occur in the next decade.

Officially, as of December 17 2011, the United States has no more military personnel on the ground in Iraq (other than trainers and certain support personnel) and, officially, the war was over. However, the U.S. contractors that have been working in Iraq on infrastructure projects and for a variety of other reasons (like military trainers) have not pulled out of Iraq on the same timeframe. They are still there! We anticipate the kidnap risk in Iraq is now much higher because of the speedy withdrawal of the U.S. troops in Iraq. Therefore, kidnap for ransom insurance for contractors in Iraq has now become as essential as war risk medical insurance in Iraq.

If sectarian violence in Iraq emerges, again kidnap risk in Iraq will go up ten-fold. Contractors in Iraq wishing to purchase kidnap for ransom insurance should purchase the policy now, before any violence breaks out. Kidnap for ransom insurance rates for contractors in Iraq do not stay the same and can change daily. If violence waves emerge again, the rates could be 100% higher on Friday for kidnap and ransom insurance then they were on Monday.

We are watching Iraq very closely over the next six months. No contractor in Iraq should be without a kidnap for ransom insurance policy at this critical time.

There are hundreds of non-profit organizations based in the United States; many operate aid and relief organizations around the world. Many of them recruit celebrities to endorse their causes. On many cases, celebrities traveling abroad will be sponsored by the NGO or PVO group to bring attention to the cause in certain developing countries. The problem is, these developing countries pose the highest kidnap threat for celebrities. For this reason, kidnap and ransom insurance for celebrities is an essential product that cannot be offered by the sponsoring NGO.

Kidnap and ransom insurance for celebrities is a product offered by Lloyd’s of London. Celebrities traveling international to promote the good cause of their NGO group are serious kidnap targets in Latin America, Africa, and many other areas. McKinley International Risk Management was contacted just this week about insurance for celebrities traveling abroad, in this case to Ecuador. Kidnap risk in Ecuador for high profile celebrities and high net worth individuals is very high.

If a celebrity leaves the country for just 10 or more days a year, although kidnap and ransom insurance polices are annual, they should consider purchasing a kidnap for ransom insurance policy. Celebrities cannot participate in existing kidnap and ransom insurance policies of their NGO because they are not employees of the NGO. It’s possible the kidnap and ransom insurance policy of the non-profit organization can arrange to cover employees and volunteers (non-employee celebrities), but this won’t be possible in every case.

Even though celebrities traveling abroad may be traveling with person security details, it is not enough. Kidnap and ransom insurance policies for celebrities are essential for world travel, even to Western Europe.

In 2012, the work of journalists seems to be more hazardous than ever before. In addition to blatant war risk when journalists are reporting in active war zones, there is a kidnap for ransom risk for journalists both in and out of war zones today.

All the major news organizations have reporters and journalists in dangerous countries in the news today, and almost all of them present a significant kidnap for ransom risk for journalists. The proper kidnap for ransom insurance for journalists and reporters is an essential benefit.

There is no question that good employers like CBS News provide a kidnap for ransom insurance benefit for journalists and for their reporters. However, the problem is that technically, the employer is not allowed to share the details of the kidnap for ransom insurance plan for journalists with the reporters themselves.

For any journalist working for a smaller organization or freelancing we strongly suggest they purchase an individual kidnap for ransom insurance policy for journalists, whether that kidnap and ransom insurance policy is reimbursed by their employer or not. In the event of an incident in Egypt, Syria, Libya, West Bank or the 20 other dangerous locations where reporters report, nothing could be more important.