Baghdad Activity Boosts Ransom Insurance Demand

Baghdad Activity Boosts Ransom Insurance Demand

NU Online News Service, Dec.16, 1:59 p.m. EST?Demand and prices for ransom insurance are rising, driven by soaring incidents of kidnap activity in Baghdad and South America that have extracted payments as high as $77 million, a major London brokerage firm reported.[@@]

The broker, JLT Risk Solutions, said there has also been an increase in quickie kidnaps to extract cash at bank machines.

JLT said the increasing incidence of this crime has driven up the cost of ransom insurance in the past year. The firm said Baghdad, for example, has joined Bogota, Colombia among the locations in the kidnap-for-ransom equation.

Melanie Simpson, a specialist broker in kidnap-for-ransom at JLT, said the main purchasers of the coverage are corporations and individuals (whether expatriates living and working in hostile areas, wealthy local families or business travellers).

JLT also reported there has been an increase in "express kidnap" in some countries?when individuals are abducted for a short period, taken to an ATM and forced to withdraw cash and sometimes robbed of their possessions and official documents.

"The events of Sept. 11 two years ago focused the minds of many companies on the security of their personnel," said Ms. Simpson. "The situation in many countries has continued to deteriorate at the same time as a generally heightened worsening of the world terrorism situation."

In its report on kidnap for ransom, extortion and detention coverage, JLT said that Latin America continues as the global hotbed for this crime. Colombia remains at the top of the list, with Mexico, Brazil, Venezuela and Ecuador all flagged up as high-risk countries.

The economic crisis in Argentina has also brought a dramatic increase in reported cases, while in Peru there is a resurgence of kidnap for ransom. The report comments on some of the kidnap gangs operating in selected "hot spot" countries, JLT said.

The company also found a significant threat to employees, locals, travelers and tourists in parts of the Asia Pacific region, the former Soviet Union, Africa, the Middle East, Eastern Europe, India and Pakistan. It said incidents are also on the increase in Iraq. where 100,000 prisoners were released by Saddam Hussein prior to the U.S. invasion.

According to JLT, Iraq in the past had not experienced a great proportion of kidnap incidents. "However, Paul Bremer, the top U.S. official in Iraq, has acknowledged that the crime is becoming a formidable problem," the report said.

The brokerage noted that said it had seen official statistics showing there were at least 40 kidnappings in Baghdad from June to August this year.

"It is difficult to accurately gauge the true number of kidnap cases in each country, as so many go unreported for various reasons?sometimes fear of reprisals, or local police corruption or involvement. Official statistics may only represent the tip of the iceberg and the true extent of the problem can be far greater than it appears," the report said.

"It is true to say that most kidnaps are financially motivated, whether carried out by criminals or terrorists," the report added.

Some of the highest U.S. dollar ransoms paid since 1990 range from $19.5 million to $77.5 million, reported JLT, which said that various ransoms between these two figures have been paid in Europe, the Far East and Latin America.

The report, which also provides a guide to choosing kidnap-for-ransom insurance and how to select a professionally qualified firm to assist with negotiations, may be obtained from JLT Risk Solutions in London by telephoning 44 (0) 20 7528 4068.