Two Insurers Approved for Selling for Kidnapping Coverage in La.

July 5, 2006

Insurance coverage has been approved in Louisiana to take on a realm of the once-unthinkable: kidnappings, ransom, extortion and hijacking.

Although it’s not for everyone, high-profile people, such as corporate executives who people who could be perceived as wealthy while traveling to South America, Mexico, Middle Eastern countries and Russia might want to consider it, insurance officials said.

“It’s for high-worth clients,” said Ed O’Brien, vice president of the Independent Insurance Agents and Brokers Association of Louisiana.

The state Insurance Rating Commission recently granted two companies – New Hampshire Insurance Co. and National Union Fire Insurance of Pittsburgh – permission to offer such coverage in Louisiana.

Neither has yet begun offering the policies, but other companies offer such coverage.

“The fact of the matter is that there is insurance coverage available somewhere to cover almost any kind of high-risk activity you can name,” said Insurance Commissioner Jim Donelon. “Some of it, however, may be cost prohibitive, so you will want to explore all your options.”

The yearly cost of policies depends on a client’s net worth.

In the companies’ filing with the rating commission, basic rate kidnap and ransom coverage for someone with a net worth of $500,000 would be $665 a year and rates rise as the client’s net worth increases. For someone worth $10 million, the rate would be $1,155. If more than $10 million, the filing says “check with company.”

“I can’t tell you how much of it is sold here and neither can the people who buy it,” O’Brien said. “One of the conditions of getting a policy is you can’t tell anybody you have it.”

Loretta Worters, vice president of the Insurance Information Institute, said companies do not like to discuss such coverage.

“If they talk about it, they think a company could become a good candidate for kidnap and ransom, and it could,” Worters said.

But Worters said the sale of such policies is on the increase.

Most kidnappings have gone unreported because they are settled privately, said John Croskey, president of Black Fox International and owner of

“If you’re an executive for a company or a major corporation and you’re going to Mexico, Colombia, Russia or the Middle East, to not have this coverage is foolish,” he said.

Croskey’s operation and others like it have contacts around the world who are called, when needed, to handle negotiations when an insured person is kidnapped. Many times, a $1 million ransom can be settled for $150,000, which the insurance company covers, along with all costs of securing the kidnapped person’s safety, he said.

“Our people have dealt with these people before, know who they are and how to negotiate with them,” he said. “It’s a matter of money. They only want the money, especially in Colombia and Nicaragua.”

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