Ransom Insurance (Hostage Insurance)

Recently I was flicking through a chapter of The Desert and the Sea: 977 Days Captive on the Somali Pirate Coast, a memoir of the author’s time spent held captive by pirates. The pirates wanted a ransom of $20 million, but there was a problem with making this astronomical payment; the author hadn’t taken out ransom insurance (hostage insurance).

Sure, I know about car insurance. I know about home insurance too. I know that in some professions that you can even insure valuable body parts. For example, a surgeon may select to insure their delicate hands. But ransom insurance? This was a new term for me, and one that was definitely worth taking a better look at.

What Is Ransom Insurance?

For as long as people have been on this planet they have also had a desire to travel. Travel quite often occurs in the bland form of taking the family to Disneyland or the beach. Maybe get a little bit exotic and take the family to see the FIFA World Cup. Travel also includes folks like NBA star Dennis Rodman heading to North Korea to visit his buddy Kim Jong Un so they can play a little game of H.O.R.S.E. And if that wasn’t extreme enough you can then head into the potentially crazy-scary travel destinations. How about signing a business deal in Iraq or setting up a new company factory in rural Venezuela?

Countries including Afghanistan, Haiti, Iraq, Latin America, Mexico and Nigeria can be high risk for hostage taking. And whether it is to get a taste for adventure, attempt to change the world, or just to make a few more bucks, people are going to keep travelling to these exotic destinations.

So what do you do now that you know you are at risk of being taken as a hostage? Take out a kidnap and ransom insurance policy of course! …but you will still also need access to plenty of cash.

Why will you need plenty of cash if you are taking out a kidnap and ransom insurance policy? Doesn’t the insurer pay the ransom money? You see, where these insurance policies differ to what you may expect is that the policy is intended to pay for any of your out of pocket expenses. The insurer won’t pay you until you have already incurred the loss of money. So no matter if it is kidnappers in Venezuela or pirates in Nigeria who are holding you and asking for $1 million, you will still need to front up with the money, even if you have kidnap and ransom insurance.

Who Takes Out Ransom Insurance?

While it is possible for anyone to take out ransom insurance, you are unlikely to see many policy holders amongst a busload of Contiki tour patrons. Ransom insurance is an extremely specific type of insurance. It is likely only ever going to get taken out by a small number of people.

• The Rich & Famous – Being in the public eye, or being known for having a bank balance the size of multiple small African countries, makes you a target. This group of people has a much increased probability of being kidnapped. It doesn’t matter whether they are in the Democratic Republic of the Congo or just staying home for a weekend in Los Angeles. The Rich & Famous group extends to their family and friends, especially young children.
• Companies – Money can be made everywhere, high risk countries included. For shipping companies the coast off Somalia has been a high risk zone, particularly for the decade starting in the mid 2000s. The easy answer would be for the shipping liners to follow a different course, however that would cost more money. Kidnap and ransom insurance allows them to pay to free hostages. But where it is even more important for these companies is recovering some of the lost expenses if they do lose a fully stock cargo ship.
• Other Individual Contractors / Workers – There are a variety of reasons why people would choose to work in a high risk country. Some of the top reasons why would include the money, the possibility of improving society, and world awareness of these zones. The types of roles these people perform could be in private security services, humanitarian work or journalists. All three are also targets for kidnapping. Sure, you could be safer staying at home and making big money on Roblox or selling on Etsy, but what fun is that?

What does Kidnap and Ransom Insurance Cover?

Kidnap and ransom insurance isn’t just for covering the brown duffle bag full of banknotes. Almost anything to do with the scenario of being taken as a hostage can be covered …for the right price.

Policies can cover the following areas:

• Ransom money: This is the big one that we think about first. You have paid out your hard earned $1 million to the hostage takers as ransom.
• Negotiation and transport: I have extensive experience with kidnapping. My experience consists of reading at least 3 books where hostages were involved and watching Tom Hanks being taken by Somali pirates in Captain Phillips. Oh yeah, I have seen Taken too, but not the sequel. I’m clearly an expert. The hostage negotiation process can take considerable time, not just days, but weeks, months and even years. Trained negotiators cost money. And then you have to fly everyone back to the United States. They are always from the United States in the movies!
• Death and disability: Basically your run of the mill life insurance policy. Run of the mill apart from the fact that you are entering a high risk situation that many insurers wouldn’t touch with a 10ft barge pole.
• Legal costs: XYZ Company takes out a policy covering John Smith and Jane Smith. John and Jane unfortunately die in a kidnap situation and their families sue XYZ Company. The insurance policy can help to cover XYZ Company’s legal costs.

Shop around, as this insurance is one area where you don’t want to skimp and get trapped by the false economies of bargain hunting. Quality of policy is everything.

Kidnap & Ransom Books and Movies

Now that you have finished the article you are probably in the mood for seeing a bit of kidnap and ransom in action, right? Well here are a few items that may tickle your fancy.

If you are looking for a book covering hostages then The Desert and the Sea: 977 Days Captive on the Somali Pirate Coast is a great read. It was the inspiration to create this article.

Kidnap Movies:

• Captain Phillips is a movie based on the true story of …you guessed it, Captain Phillips. Captain Richard Phillips was in charge of the MV Maersk Alabama. On 8 April 2009 four pirates took control of the ship 240 nautical miles southeast of the Somali port of Eyl.
• Taken is the fictional story of former spy Liam Neeson who has had his daughter kidnapped in Paris. It is lucky that Liam Neeson has a “very particular set of skills”. These skills make him the ideal candidate to take his daughter back. Even better news is that if you enjoy this movie then Liam Neeson was kind enough to also bring you an encore, with Taken 2.

Kidnap Books:

• The Desert and the Sea: 977 Days Captive on the Somali Pirate Coast by Michael Scott Moore. This is a true story. It is worth reading to gain an understanding of how the life of being held captive plays out. Moments of drama amongst months of not doing much at all. Unfortunately for the author of this book he did writes that he had chosen not to take out kidnap and ransom insurance. The fact that the author has released the book should be enough of a clue to tell you that he does make it out alive at the other end. I do also wonder if he intentionally kept his middle name of “Scott” on the cover of the book just to give readers assurance that he is in no way the same person who makes documentaries about school shootings or 9/11.

Kidnap and ransom insurance sure is an interesting subject. Let’s just hope that nobody reading this article ever finds a need to make an insurance claim. Stay safe people!

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