Kidnap & ransom insurance in high demand by South Africans

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Ask any South African about a kidnap-for-ransom, and you’re likely to hear a far-fetched Hollywood story with Liam Neeson being brought out of retirement, swooping in and saving the day.

But the reality is that (often high net worth) businesses and individuals are far more at risk that we realise, with Southern Africa becoming a target for kidnap-for-ransom events in recent years.

In March 2020, a City Press News report detailed the worrying, and steadily rising, threat of sophisticated kidnap-for-ransom syndicates operating in South Africa, who are “raking in millions from cash businesses and co-opting South African police officers.” In November, the SAPS issued the 2nd quarterly crime statistics (1 July – 30 September 2021), which reported 2000 kidnapping cases, with 52 of these being ransom-related, and the rest hijackings.

It’s against this backdrop that more and more businesses and individuals are taking out kidnap and ransom (K&R) insurance cover. Justin Naylor, Managing Director of specialty insurer iTOO Special Risks, has noticed a substantial increase in this type of cover:

This is definitely due to an increase in kidnappings this year, in comparison to last year.

He adds: “In terms of the response costs, it covers a team of expert consultants who respond 24/7 on a global basis to assist our clients in all aspects of the hostage situation or incident, including negotiation with kidnappers. Our policy also covers the payment of ransom, which is in the form of reimbursement, so the family pays and then we reimburse them the ransom payment. We see many South Africans taking out Kidnap and Ransom cover. It includes companies where their executives travel for business and high-net-worth individuals.”

He explains that the amount of cover varies: “Due to the confidentiality of the cover, we cannot share the ransom demands of our clients. However, we offer cover starting from smaller amounts such as R500 000, but you will have some clients requesting cover of up to $5 million (US).”

But if businesses and individuals add K&R insurance coverage to an already long list of insurance coverage, how can they afford the large, upfront annual insurance premium payment, especially since the pandemic caused premium costs to increase?

That’s where we come in. Our premium finance solution gives you payment options to help finance these sizeable insurance premium costs. One of the many benefits of this solution is that you can pay off your insurance premiums monthly (instead of one annual lump sum payment), which frees up your cash flow.

Considering this rise in kidnap-for-ransom events, which will likely increase further with the post-pandemic economic downturn, K&R insurance coverage is no longer a nice-to-have, but a must-have. Yes, it costs money, but the costs of ignoring safety concerns and forgoing adequate insurance coverage can be far higher in the long run than any upfront savings. If you’re looking for a solution that makes this upfront cost less of an immediate financial burden, you can contact us here – we’re the largest provider of premium finance facilities in the South African marketplace.

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