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Kidnap and ransom insurance to the rescue

Phoenix, Ariz., is the U.S. kidnapping capital, with 370 reported cases in 2008. In fact, it has more kidnappings than any single city in the world except one: Mexico City, with 7,000 cases in 2008.

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Phoenix's kidnappings are tied to the problems of neighboring Mexico where drug cartels routinely use kidnap and ransom tactics to battle rivals and authorities. Phoenix, as a key drug-transfer point, gets caught in the cross fire. Illegal immigrants, driven by Mexico's escalating poverty, also funnel through Phoenix despite the risk of being kidnapped by cartels who then extort payments from the immigrants' relatives.

Other kidnap and ransom hot spots include Nigeria and Indonesia. Knowing about these hot spots is important because, in many areas of the world, businesspeople are a lucrative source of ransom funds. But Mexico, Venezuela and other parts of South America remain the most dangerous areas, says Gregory Bangs, the kidnap and ransom manager for Chubb Group, a New Jersey-based insurance firm.

As more American companies conduct global business, entering countries that can be politically and economically unstable, their employees face greater risk of abduction and extortion, among other hazards. Kidnap and ransom policies ("K&R") provide insurance coverage in the event of a kidnapping.

Are you a mark?

Who runs more risk of being kidnapped: the local Mexican manager of a foreign-owned bottling plant who stops every morning at the corner shop for a pastry and a bit of chit-chat, or the New York VP in town that day to meet the manager?

The top 10 countries for kidnappings

Source: Control Risks

Afghanistan
Brazil
Honduras
India
Mexico
Nigeria
Pakistan
Philippines
Somalia
Venezuela

Disclaimer: The statistics are based on Control Risks' records of kidnap-for-ransom cases, defined as the abduction of a person or persons with the intent of their detention in an unknown location until a demand is met. These statistics are based on those cases about which Control Risks has obtained reasonably reliable information and do not purport to represent the full extent of the problem.

If you guessed the NYC hotshot, guess again. The out-of-towner lacks the routines that make the local manager relatively easy pickings for kidnappers. K&R insurance sales are up as such kidnappings increase worldwide. Driving the trend, Bangs says, is general social unrest and the current global financial crisis.

Despite the uptick, kidnap and ransom insurance is hardly new. It arose in the wake of the infamous 1932 kidnapping and eventual death of American aviator Charles Lindbergh's 20-month-old son. That same trauma sparked the creation of the FBI.

U.S. employers initially lagged behind the rest of the developed world in adopting K&R insurance. European companies embraced K&R after being jolted by the Marxist Red Brigade's political kidnappings in the 1970s.

Companies that once dismissed kidnappings as unlikely now ask K&R insurers for staff training and help in assessing their risks. More than 75 percent of Fortune 500 companies now carry K&R coverage, estimates Bangs.

Wear jeans

"One of the things we preach is to make sure that you're very careful," says Bangs. "More and more, that seems to be sinking in."

"What really drives the kidnappers is a perception of wealth," he says.

Anyone with a flashy appearance takes the chance of catching the eye of a would-be kidnapper. Who doesn't want live a little large on a big international trip? Resist the urge, says Bangs. "Don't stay at the high-profile foreigner hotel." Leave the posh luggage, designer watch and splendid clothes back home. "Wear jeans!"

Above all, drive a plain-vanilla car to avoid what Bangs calls a "car-jacking on steroids." In this scenario, a car cuts in front of yours, another one pulls in behind and you're suddenly in the trunk of your own vehicle with the kidnappers at the wheel dialing your cell phone's most-used numbers to demand a ransom.

Don't think you can simply leave the driving to someone else. Unlicensed cabs, such as the green and white ones swarming Mexico City's Zona Rosa, present their own danger. "Don't use gypsy cabs," says Bangs, who estimates that up to half of such drivers are criminals. "If you're lucky they'll rob you and not kidnap you."

Keep your guard up when leaving bars or restaurants in the late evening. Lawless cabbies will take you to an out-of-the-way ATM machine, force you to withdraw your daily cash limit, put you back in the car, and drive around until the clock ticks midnight. Then you're forced to extract the new day's cash limit.

Compared with something like health insurance, K&R coverage is relatively cheap. For a U.S. firm with $500 million in annual revenues, Bangs says, $10 million in kidnap and ransom coverage could cover five to 10 employees who travel to Latin America for a week at a time and would cost about $5,000.

Most firms cover all their employees instead of limiting it to top-ranked executives. Bangs advises that employers would do well to treat K&R coverage as another part of their crisis-management plans. Your firm probably knows the drill if a boiler blows or a hurricane roars in. But what about kidnapping?

K&R insurance includes an array of services: employee training and security to prevent kidnappings and — if that fails — experienced negotiators, on-the-ground agents and fund-transfer experts to get the employee out safely.

About the author: E.N. Hester has worked as an award-winning reporter and editor for newspapers and magazines and as an environmental communications expert for government agencies. He has written about a variety of local and national policy issues.

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