Securing the right insurance coverage for your NGO can be challenging. Especially when that policy relates to kidnap and ransom incidents. In our latest blog, founder and head of our new business partner AMBRELIA, Stéphane Lorey, shares his expertise to help NGOs navigate the challenging task of securing the right policy and the right price, and explores why having this coverage is so crucial.
Non-Governmental Organisations (NGOs) can become targets for various reasons. While NGOs are typically driven by noble causes and engage in humanitarian or developmental work, there are certain factors that may make them vulnerable to targeting, including perceived influence, access to resources, etc. These risks can be exacerbated for NGOs that operate in remote or isolated areas with limited security infrastructure. These regions may have a higher incidence of criminal activities, including kidnapping or extortion.
In 2022, 169 aid workers were kidnapped worldwide, a 34% increase compared to 2021 figures.
Kidnap and Ransom (K&R – or crisis management policy) is an insurance coverage that provides financial protection and assistance to NGOs, in the event of a kidnapping or extortion situation involving their employees or volunteers.
K&R policies typically cover expenses related to kidnapping incidents, such as ransom payments, crisis management fees, legal advice, and public relations support. The policy may also provide coverage for extortion, wrongful detention, hijacking, and other related risks. However, coverage details and limits can vary, so it’s crucial to carefully review the policy terms and conditions. This blog explores how to ensure that your policy provides the right coverage, and the costs that are involved.
Why INGOs Need a Kidnap and Ransom (K&R) Policy
K&R policies include access to specialised crisis management services. These services may involve 24/7 emergency hotlines, professional negotiators, security consultants, and other experts who can assist during a kidnapping or extortion crisis. It’s important to understand the extent of these services and how they are activated in case of an incident.
In order to get bespoke coverage, work with a specialised broker to tailor the K&R policy. This customisation may include coverage limits, geographical scope, duration, insured people and additional endorsements or extensions. Consider factors like the countries where your organisation operates, the local security situation, and the potential risks faced by your personnel.
However, before obtaining a K&R policy, I recommend conducting a thorough risk assessment specific to your NGO’s operations, geographical areas of operation, and the nature of the work being carried out. This assessment will help insurance providers understand the risk profile of your organisation and offer appropriate coverage options.
K&R policies typically emphasise the importance of confidentiality to protect the privacy of the affected individuals and prevent further risks. Ensure that the policy addresses the confidentiality requirements and protocols in handling sensitive information related to a kidnapping incident.
As a complement to your K&R policy, we highly suggest implementing some robust security measures and providing appropriate training to employees or volunteers who operate in high-risk areas. This includes security awareness training, travel safety protocols, and emergency response plans. Insurance providers may also require evidence of security measures and risk mitigation efforts to offer favourable coverage terms. Secondly, we propose establishing a dedicated crisis response team within your organisation (HQ and region level). This team should be responsible for managing potential kidnapping incidents, including coordinating with the insurance provider, law enforcement agencies, and other relevant parties. Clearly define roles, responsibilities, and communication protocols to ensure an effective response.
The Cost of K&R Policy for NGOs
NGOs often operate in regions with high levels of political instability, civil unrest, and criminal activity. Some current examples include the Sahel region, Burkina Faso, and Haiti. This increases the risk of murder, kidnapping and extortion incidents, which can result in human tragedy and significant financial losses for the organisation. Insurance providers must consider these potential risks when determining the premium rates.
Kidnapping and extortion incidents can be complex and difficult to resolve. They may involve negotiating with criminals, coordinating with law enforcement agencies, and navigating cultural and linguistic barriers. This requires specialised skills and expertise, which is reflected in the cost of coverage.
Some other factors must be considered:
Customisation: Each NGO’s risk profile is unique, and coverage must be tailored to the specific needs and operations of the organisation. This requires a customised policy that can be more expensive than standard coverage options.
Coverage Limits: Kidnap and ransom policies typically provide high limits of coverage due to the potential financial losses associated with a kidnapping or extortion incident. This increases the cost of coverage.
Crisis Management Services: The crisis management services mentioned above, such as access to professional negotiators and experts, can be expensive but are critical in managing a kidnapping or extortion incident effectively.
Reinsurance: Insurance providers often rely on reinsurance to spread the risk of large losses across multiple insurers. However, reinsurers may charge high premiums for coverage due to the high risk associated with kidnapping and extortion incidents.
In summary, the cost of a Kidnap and Ransom policy for an NGO can be expensive due to the high risk associated with operating in unstable regions, the complexity of resolving kidnapping incidents, the need for customised coverage, high coverage limits, the cost of crisis management services, and the cost of reinsurance. However, the cost of coverage should be weighed against the potential financial losses associated with a kidnapping or extortion incident.
When aid workers are kidnapped, it poses significant challenges and risks not only to their personal safety but also to the organisations they represent and the communities they serve. Therefore, it’s important to work with an experienced insurance professional or broker specialising in K&R coverage for NGOs. They can assess your organisation’s specific risk profile, help you understand the cost implications, and negotiate the most suitable coverage at the best possible premium.
Please feel free to contact me should you need to know more: firstname.lastname@example.org
About the Author:
Stéphane is the founder and head of AMBRELIA, a Paris-based international insurance broker specializing in the protection of European NGOs ‘staff.
Stéphane graduated from the ESSEC business school in France and worked in the IT sector before changing industry and creating AMBRELIA in 2013.
Stéphane lives in the Paris area, has 3 daughters, and loves the mountains and climbing high peaks!
Image Credit: OCHA/Angelique Rime
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