Kidnap, Ransom and Extortion (KRE, K&R) Threat


The kidnapping, ransom and extortion threat faced by businesses operating abroad today has become not only common but also costly. Sometimes known as KRE or K&R, in many parts of the world criminals have become organized and even specialize in certain activities related to the crime.

The insurance industry has specific policies written to cover the kidnap and ransom threat. KRE insurance coverage became more well-known to the general public with the rise of piracy off the coast of Somalia and elsewhere about a decade or more ago. Private shippers began losing money through kidnap and ransom demands for cargo and passenger return.

In Latin America, KRE has been a problem for many decades. Government security statistics have included kidnapping and extortion since the 1970s. Worse, organized gangs who specialize in kidnap and ransom crimes have sprung up and become extremely capable. These gangs have compartmentalized themselves. One criminal segment specializes in the kidnapping. Another group gets paid by the kidnap specialists to hold the hostage. A third group has expertise in negotiating with the enterprise or family of the hostage.

Insurance policies vary, but a K&R policy usually has two main parts. The first part of the policy provides for funds to activate a team of K&R security experts to assist the company in coordinating the appropriate response among all parties (police, government, company and family).

The second part of the policy involves the actual ransom payment. The underwriters often suggest contracting for a policy that has large limits. It is not unusual for policies to cover multi-million or tens of millions of dollars per kidnapping.
Once you become aware that the missing and that extortion is the reason for the kidnapping, most companies will immediately seek the assistance of KRE security personnel. These K&R experts must be pre-vetted and on the insurers approved list of vendors before a company can engage them under the terms of the policy.

A typical KRE case lasts, on average over two years. Many go on for up to five or more years. The victim is usually released unharmed but the perpetrators often remain at large. Many companies and families prefer to pay the ransom knowing that the odds are in their favor that their loved one will be returned unharmed.

The length of time these cases take is due to several factors. Negotiations often take an extended period of time. The professional kidnapping and extortion gangs go to great lengths to ensure that the victim is sequestered in a safe location before conducting any actual negotiations. The criminal negotiators want to ensure their own safety and hence the back and forth can be frustratingly slow.

Once the negotiators have concluded a bargain, the actual exchange of money for hostages can also take a long period of time to arrange. Often the kidnappers demand that a third party act as an intermediary. Choosing and approving this person takes time too.

KRE is part of the risk associated with doing business in foreign countries. Companies must ensure that they not only have included K&R in their emergency plans but that they also have sufficient insurance to cover the often very costly expenses associated with successfully concluding a kidnap and ransom incident.