As part of the IIANC PARTNERS program, our Presidential PARTNERS are able to submit a guest blog posting to our blog, Insurspective. Please see below from IIANC Presidential PARTNER Great American Insurance Group.
The Truth Behind the Policy
Every year, thousands of people are kidnapped for ransom worldwide. All manufacturers are potentially vulnerable to a threat of product extortion. These dangers are real and can occur anywhere, at any time. No one and no business is truly immune.
Great American Insurance Group’s Fidelity / Crime Division offers a Kidnap, Ransom and Extortion policy that provides specialized protection against crimes of kidnap and extortion, when a demand for ransom is a condition of negotiation. This type of coverage is often overlooked by many when evaluating their insurance portfolio, quite possibly due to a misunderstanding. Let’s take a closer look at some common misconceptions and explore the truth behind a KR&E policy.
“I don’t travel internationally, so I don’t need that type of insurance.”
While international business travelers are certainly at risk, individuals and organizations of all sizes are susceptible to potential kidnapping and extortion events. It’s not a prerequisite to be a domestic firm with foreign travel patterns to qualify for a Kidnap, Ransom and Extortion policy. In fact, all of the following are examples of potential KR&E customers:
- Businesses manufacturing a product
- Corporations with locations outside the U.S.
- Students/faculty at universities traveling abroad and on campus
- Primary schools, daycares, hospitals
- Wealthy individuals and families
- Establishments dependent upon public access (i.e. amusement parks, concert halls, retail stores)
- Establishments with cash intensive services (i.e. banks, check cashers)
“Only a ransom payment is covered.”
Another common misconception revolves around the presence of ransom payments. It may come as a surprise, but there are several expenses in addition to ransom payments, that can be covered under a standard KR&E policy from Great American. For instance:
- Fees and Services of Security Consulting Experts
- Rest and Rehabilitation
- Medical Expenses
- Interest and Loans
- Travel Costs
- Extra Security
- Psychiatric Care
- Legal Liability
- Prevention Services
“I’m not covered unless there’s a demand for money involved.”
Many agents and insureds assume there has to be a demand for money as result of a kidnapping or extortion event in order to be covered. While our standard Kidnap, Ransom & Extortion policy requires a demand for ransom as a condition of negotiation, Great American offers many endorsements that extend coverage, as illustrated in these scenarios:
- A person sends threatening emails to the Dean of a prestigious university, after being denied admittance to medical school. She promises vengeance for the decision and “to sleep with one eye open.” Great American Insurance Group’s Threat Response Expense endorsement provides coverage for the services of Control Risks to assess a threat. It can also pay for the costs of temporary security protection.
- A large casino is forced to close down their operations due to a bomb threat at a neighboring business. Our Alternate Loss of Earnings endorsement provides coverage for loss of earnings that result from the closure of an insured’s business due to a threat from a neighboring business.
- While awaiting the arrival of parents at a daycare, one child recognizes an older man dressed in a red shirt. An employee of the daycare takes note of the recognition and allows the man to take the child home, not knowing he recently lost custody of the child. The mother, who has rightful custody, has not been able to make contact with the child or father. Enhanced Child Abduction provides coverage for a kidnap by a non-custodial parent.
- A senior executive at an engineering firm was scheduled to give a presentation out of town to potential investors at 2 p.m., but failed to show. His wife called, stating she had not had contact with him since his plane landed. The hotel had no record of him checking in. Disappearance Investigation and Expense provides coverage for the services of the security consultants to investigate a disappearance.
- A large IT company held its annual marketing conference in Thailand. Three days into the week-long conference, political turmoil erupted in the capital, with violence spilling out into the streets. The company was forced to cancel its conference early and evacuate its employees to safety in Malaysia. Our Travel Security Evacuation endorsement can pay for the costs associated with repatriation and travel expenses.
- An employee was driving home after a long day’s work in Mexico City, when two sport utility vehicles cut him off. He was forced out of his car by gunpoint, beaten and thrown in the back of one of the vehicles. The kidnappers took his ATM card from his wallet and drove around withdrawing cash from his account. After midnight they dumped him on the side of the road, bruised and battered and never demanded ransom. An event like this is covered under Great American’s Express Kidnap
- Three armed men, wearing ski masks, entered a convenience store in Southern California. They took 10 victims hostage and dead bolted the doors behind them. The victims were held at gunpoint while a personal consultant negotiated with the hostage takers for a tense five hours. Hostage Crisis provides coverage for rest and rehabilitation, psychiatric care, personal accident and the cost of negotiators.
- A manufacturer of juice drinks receives an e-mail, warning a harmful pathogen was going to be leaked into one of their drinks. The following week, a package of contaminated juice drink is sent to the production plant. The company pulled all juice drinks from the shelves, erring on the side of caution, with fears the pathogen had already been released into the drink. Great American’s Products Loss endorsement provides coverage for expenses incurred as a result of the procedures of the recall, and examination, destruction and replacement of the insured’s products. Coverage is also provided for the loss of value on, or the cost of making, the product.
The Truth Is…
Kidnap, Ransom & Extortion policies might surprise you. For example, in addition to the examples above, did you know a KR&E policy from Great American can offer unlimited reimbursement for fees and expenses for crisis management consultants that respond during insured events? One of the most highly regarded and experienced response firms in the industry is Control Risks. Under the terms of a Great American Kidnap, Ransom & Extortion policy, Control Risks will provide the immediate support of a fully-trained, experienced consultant to assist claimants. They have 36 locations worldwide to serve our policyholders.
So you see, the truth is telling. A Kidnap, Ransom & Extortion policy from Great American Insurance Group offers a variety of benefits that you may not have been aware of, but it’s worth it to individuals and businesses to understand the truth behind them.
By Patrick Shannon, Sr. Account Executive, Great American Insurance Group, Fidelity / Crime Division
Great American’s Fidelity / Crime Division has been providing Kidnap, Ransom & Extortion coverage in the United States and Internationally since 2004, as well as mono-line crime coverage since 1995. We offer $65 million in capacity for KR&E coverage for organizations and individuals and can tailor coverage for certain classes of business, including hospitals, academic institutions, banks and religious groups. We also offer $50 million in capacity in mono-line crime coverage. Coupled with the financial strength of Great American Insurance Company, our specialization and expertise gives us the ability to offer coverage enhancements beyond standard forms and to intelligently address the unique exposures of any potential insured.
Great American Insurance Group, 301 E. Fourth Street, Cincinnati, Ohio 45202. Examples are for illustrative purposes only. Coverage description is summarized. Refer to the actual policy for a full description of applicable terms, conditions, limits and exclusions.