How kidnapping insurance keeps a lid on ransom inflation
IN THE early 1970s, leftist guerrillas in Argentina discovered a lucrative new way to make money: kidnap millionaires. Panicking firms would agree to huge ransoms, more concerned with freeing their executives than driving down the fee. That was not just bad for businesses. It also became a textbook case of how poor negotiating can send future ransoms rocketing and attract new entrants to the kidnapping trade.
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.
...Insured negotiations are almost always carried out by family members, with calls recorded and trained negotiators giving advice. In countries where kidnaps are common, the police are seldom involved.
Read more from the Economist [HERE].