Kidnap and Ransom cover is a good example of how insurers can offer much more than a risk transfer product. With their extensive experience and access to experts, specialist insurers can guide their customers (e.g. through pricing and policy terms) on security measures to minimise the risk of their employees being kidnapped in the first place. And if the worst happens and an employee is kidnapped, insurers deploy their experience, expertise and network of experts to maximise the chances of a positive outcome.
Looking beyond K&R, new technologies - in particular the Internet of Things (IoT) - offer a wealth of new opportunities for insurers to offer a proactive service. AXA's engagement with Rolls Royce in autonomous shipping is a notable recent example.
One reason it marked a high point is the spread of kidnapping-and-ransom (K&R) insurance. This is involved in a minority of the $0.5bn-1.5bn thought to be paid out in ransoms each year, but the share is growing. Around three-quarters of Fortune 500 companies pay to cover some employees. Insurers reimburse the ransom and, at least as importantly, provide seasoned “crisis management” experts to help with negotiations. The best can get a ransom down to 10% of the initial demand. They can also calm criminals who may consider harming hostages to induce distraught relatives to pay up. In kidnappings motivated by money, a hostage’s risk of death during negotiations is 9% without K&R insurance, but just 2% with it, according to Anja Shortland, who is writing a book about kidnapping insurance. Kidnappers rarely know if a victim is insured.