Measuring Response: Kidnapping: A Changing and Growing Risk
Mexico has become a top destination for insurers and it's not exactly due to the country's sun-soaked coastline.
Kidnappings are soaring south of the border, and institutions of higher learning that offer international study or travel programs are being cautioned.
"Our concern is that all of Mexico, from a kidnapping perspective, has become so dangerous and so out of control that we're warning people about Cancun and other traditional tourist spots that have become dangerous as well," said Greg Bangs, a vice president at Chubb & Son.
As students look to broaden their world perspective, more and more hot spots have popped up across the globe. The risks associated with studying and traveling abroad have increased the academic market for kidnap and ransom coverage in the past five years, according to Lloyd Yavener, vice president of marketing for Clements International.
"I think the schools have realized that they may have liability exposure if they don't provide coverage," he said.
Traditional kidnapping methods--targeting a wealthy individual or linking the ransom to a political cause--have given way to a new trend. Now the targets typically are Mexican nationals, Bangs said.
Anywhere from eight to 10 gangs of professional kidnappers now operate within Mexico City, he said. One group recently kidnapped a 5-year-old boy from his family's Mexico City fruit stand. When his mother went public, the kidnappers injected acid into the boy's heart and killed him, according to published reports. The incident signaled that Mexico's upper class is no longer the sole target. One security firm has even started selling microchips that are injected under the skin, allowing a kidnap victim to be tracked.
U.S. citizens also are being warned about escalating violence among drug cartels and encouraged not to stray from well-known tourist destinations, especially alone.
Bangs said Mexico's Congress estimated there were 4,500 kidnappings in 2007, but he's seen an estimate that places that number as high as 7,000. Ransoms generally range from $400,000 to $1 million and victims are being maimed more frequently to put pressure on the pace of negotiations. The overall ransom market is estimated at $100 million, according to international security firm Clayton Consultants.
Most people won't report the kidnappings out of fear that police are involved, Bangs said.
"We have this in many places around the world," said Bangs, Chubb's worldwide product manager for kidnap and ransom, crime and workplace violence coverage. "There are a number of well-established kidnapping gangs and kidnapping groups. There's also, strangely enough, a financial market that is set within each country for kidnapping."
Provisions within kidnap and ransom contracts generally prohibit an insured from disclosing coverage, or else the policy can be voided. Underwriting aspects for the academic realm concern not only the destination, but factor in side trips or additional travel on a student's down time. A college or university with a higher profile also may become a larger target. A school's past history with threats also will play into coverage.
Coverage typically applies to costs associated with extortion, threats or even wrongful detention of an individual. Services from international security consultants such as Control Risks or the Ackermann Group are provided under the policy.
Bangs said "express kidnappings," in which someone is abducted and forced to obtain cash through an ATM, are happening more frequently in Brazil and elsewhere.
Traditional kidnap and ransom coverage may exclude this method of kidnapping because it falls more toward a mugging, according to Sarah Katz, an underwriter at Victor O. Schinnerer & Co. The Chevy Chase, Md.-based underwriter provides coverage that eliminates that exclusion, Katz said.
In addition to Mexico and Brazil, Iraq, Colombia and Venezuela round Bangs' top five list of countries where kidnappings occur more frequently.
By Al Slavin, senior associate editor, Best's Review
