ISIS terror is making K&R policies all the more critical
The release of a third video showing the Islamic State in Iraq and Syria (ISIS) executing a foreign hostage has ignited global unrest and brought heightened awareness to the growing threat of kidnapping and terrorist activities in the Middle East. In August, American journalist James Foley became the first U.S. national to have been executed since the start of the Syrian conflict in 2011. Within two weeks, the militant group publicly killed another U.S. hostage, followed by a third video in which a British national was beheaded. ISIS claimed each execution an act of retribution for the ongoing U.S. airstrikes against the group’s position in Northern Iraq. While debate ensues over the relationship between ransom payments and funding terrorism (the U.S. and U.K. governments currently both have non-payment policies for ransom demands), the risks facing foreign national workers living in these areas of extreme danger continue to mount. Aid workers and media personnel (including journalists) sent to work and report on the conflict in Syria have become primary targets of ISIS. According to data from Reporters without Borders, 65 journalists killed last year while covering stories in country, while an estimated 25 to 40 individuals are currently being held hostage.
The Middle East is unfortunately only one of many areas around the globe plagued by kidnap for ransom crimes, with countries such as Mexico, Nigeria, Pakistan, China, India and Columbia also seriously impacted. As a result, employers whose workers travel overseas must pay attention to this growing threat and make sure they are adequately insured should anything happen to one of their employees. Insurance coverage for these perilous crimes is widely available, via a Kidnap, Ransom and Extortion policy (KRE or K&R). These policies are comprehensive, providing reimbursement for ransom, public relations support, spousal coverage, reimbursement of salaries and most importantly expert guidance and counseling with security experts. These security management experts (which customers have access to through their insurance policies) have extensive experience in the methods, patterns and process of the groups that are involved in terrorism.
Companies purchasing K&R should make sure the policy covers each entity/employees that fall under the organization’s umbrella and includes all the countries were employee are working or traveling to for business. Some K&R insurers may seek to exclude certain high risk counties. A company must also review the breadth of extortion/threat of ransom, to make sure transit for a person or group is covered. It’s also important to consider that all the groups (insurer, company, security management consultancy firm and broker) are working together to manage negotiations and extraction. All companies should have an internal crisis management plan as well – should there be an issue in any country, a corporate procedure is already established, including a communication protocol that the company will execute. After his capture, Foley’s employer reportedly tried to negotiate with Syrian officials to arrange his release and even with the help of a military operation, was unable to successfully save him. Clearly, even the most experienced organizations and personnel can face major challenges when it comes to rescue efforts.
There is an active insurance marketplace for coverage with many major players, including but not limited to Chartis, Hiscox, Chubb and Travelers to name a few. There are several other major insurers that provide comprehensive K&R policies. Given the competition in this market, this allows buyers to negotiate favorable terms and conditions at reasonable pricing. Again, one of the most important features of these K&R policies is the access to a security management consultancy firm. Companies should ensure that their insurer’s security partner is with a leading firm with extensive knowledge of international situations and a successful intervention record. Kidnapping for ransom is an ancient crime and it continues to be a profitable endeavor in many parts of the world. Technology and political unrest have allowed terrorist and militant groups like ISIS to expand their repertoire to include extortion and other crimes. A company should have a broad KRE policy to assist potential victims of these crimes in responding effectively to such events.
About the Author
Jennifer Sharkey is a Senior Vice President at William Gallagher Associates and Leader of the firm’s ExecutiveRisk Practice. She is responsible for the strategic and tactical leadership of this practice by providing consulting, marketing and negotiation expertise on Directors’ & Officers’ Liability, General Partnership Liability, Private Equity/VCAP, Fiduciary Liability, Fidelity, Kidnap/Ransom & Extortion, Employment Practices Liability and Professional Errors & Omissions Liability.