Kidnap insurance now a necessity for multinationals in Southern Africa

When one thinks of kidnapping for ransom, Hollywood movies instantly come to mind. After all, the big screen and the Americas is where such stories usually play out. But what about Africa?

In 2003, kidnap-for-ransom statistics sat at 6% for Africa and the Middle East combined. By 2016, this figure had risen sharply to 44% - with Africa accounting for 34% of that total. This represented a 600% increase in just 13 years.

According to data gathered by Constellis during March and April 2020, there was an 80% increase in the number of foreign nationals kidnapped in Africa during that time compared to the previous two-month period. Africa was, in fact, the only region reviewed where an increase was recorded during this period despite national lockdowns as a result of Covid-19

In the past, African kidnapping and ransom events have been relegated to Nigeria, which has one of the highest kidnap-for-ransom rates in the world, and countries like Algeria, Mali, Niger and Sudan where terrorist activity is prevalent. However, in recent years, Southern Africa as a region has become a target for kidnap-for-ransom events - and it's not getting any better.

In September 2020, South Africa's Mail & Guardian newspaper reported on the dramatic increase in kidnappings in Mozambique. The country went from one reported case in 2008 to six in 2011, 17 in 2012, and 37 in 2013, according to official statistics.

Although incidences declined between 2014 and 2020, the Constellis report maintains 'a new kidnapping wave is in progress in Mozambique', and cites some of the cases that have occurred this year. It also draws possible syndicate connections between these cases and those in neighbouring countries, referencing 'the similarities between kidnaps in Mozambique and high-profile incidents in South Africa and Madagascar'.

A City Press news report in March 2020 highlighted the concerning, and steadily increasing, security threat of sophisticated kidnap-for-ransom syndicates working in South Africa. The report stated these syndicates were 'raking in millions from cash businesses and co-opting South African police officers'.

It's against this backdrop that insurers as well as multinationals operating in, and expanding into, Africa are increasing looking for sound kidnap and ransom (K&R) cover for employees working in these areas.

As a specialist Southern African reinsurance broker, Reinsurance Solutions Intermediary Services (RSIS) has first-hand experience in handling K&R policies. We have come to appreciate that K&R is more than just an insurance product - it is a risk management tool that can help reduce this specific risk while providing financial protection and access to specialist services should an insured event occur (complementary to D&O).

As such, our K&R product provides for indemnification for financial loss arising from insured losses including post-event care, and crisis management services facilitated by specialised security responders before, during and after the event. These costs are covered by the insurers and are unlimited.

Policies cover kidnapping and ransom; extortion (related to death threats, damage to property, proprietary information, computer viruses and product extortion); hijacking; wrongful detention; threats without ransom; the disappearance of an insured person; hostage crisis situations; child abduction; and assault, where three or more insured people are physically attacked on the insured's property, resulting in personal accident.

Cover for business interruptions; business interruptions as a result of computer viruses; emergency political repatriations; product recall expenses; and loss of hire (marine) are all available as extensions to K&R policies.

Our K&R cover is flexible, and can be specified for short trips, specific projects, annual policies and multi-year periods of up to three years. Insured employees can include named individuals - key employees or those travelling overseas; blanket coverage for all directors, officers or employees; and specified consultants or contractors.

Given the region's vulnerability to security threats, and the dramatic increase in kidnap-for-ransom events in recent years, it's evident K&R cover is no longer a nice-to-have for corporates in Africa, it's a must have.