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To Insurance Companies, Kidnap Protection Is Worth a King's Ransom

July 06, 1986|KATHLEEN CALLO | Reuters

LONDON — Keeping people from the clutches of kidnapers and negotiating on kidnap ransom demands has become big business.

Private companies increasingly hire consultants to protect employees from kidnapings and terrorist attacks, and are taking out insurance policies to help cover possible ransom costs.

British companies see it as a lucrative new export market, but politicians and police in various countries are complaining that kidnap specialists are making the task of the police more difficult by negotiating directly with kidnapers.

Moreover, they say, kidnap and ransom insurance--or "K and R" insurance, as it is called in the industry--makes matters worse by providing kidnapers with the promise of a booty.

Kidnapers Encouraged

"The existence of such companies encourages kidnapers and paramilitary organizations," says John Hume, leader of the mainly Catholic Social Democratic and Labor Party (SDLP) of Northern Ireland.

"If people understand there's no money in carrying out these crimes, they won't commit them."

Other countries hit since the 1970s by a wave of kidnapings, with the worst in Western Europe, Latin America and the Middle East, share the British concern and have also had to grapple with the question of ransom insurance.

Countries like Italy and Ireland, each with a history of sensational kidnapings, have forbidden insurance firms to offer ransom policies and have called on other nations to do the same.

Two-thirds of the world's kidnap insurance policies are handled by the Lloyd's insurance market in London.

Spectacular Case

One of the most spectacular ransom cases was in Italy, when kidnapers held the grandson of American oil billionaire J. Paul Getty for five months in 1973. They finally released him for $3.2 million ransom, but only after sending the family the boy's severed ear in an envelope.

This year, Irish banker's wife Jennifer Guinness was abducted in April, reopening the thorny issue.

She was released by gunmen on April 16 after being held a week for $2.5 million ransom. But while police hunted for the kidnapers, the family was reported by the press to have hired a security firm specializing in handling kidnapings.

Guinness' relatives had promised full cooperation with the authorities, including not contacting the gunmen. But press reports said the police were worried that the family was planning secretly to negotiate a ransom payment. The police denied this.

Team of Specialists

Control Risks Group Ltd., London's leading kidnap consulting firm, has a team of 30 specialists trained in dealing with kidnap and extortion attempts.

The company had handled 180 kidnap cases in the last 12 years, Verity Hanson-Smith, a company spokeswoman, said. It had advised negotiators faced with a total of $697 million in ransom demands and had succeeded in whittling down the total paid out to $109 million, she said.

Dale Campbell-Savours, an opposition Labor Party member of Parliament, called on Atty. Gen. Sir Michael Havers to prosecute both Control Risks and Cassidy, Davis Ltd., Lloyd's leading underwriter of kidnap and ransom insurance, for breach of legislation aimed at preventing terrorism.

'Acts as an Incentive'

The British Prevention of Terrorism Act outlaws giving money or involving others in giving money to those involved in terrorism.

"Kidnap insurance acts as an incentive to the IRA (Irish Republican Army) to kidnap. I am opposed to the payment of millions of pounds to the IRA," Campbell-Savours said.

The government of Ireland, where ransom payment is illegal, has pushed Britain for years to outlaw these companies.

But after the Guinness kidnaping, Irish Justice Minister Alan Dukes said the ransom payment problem was too big for any one country to handle and that it should be taken to the European Community (EC).

Jurisdictional Bans

"Insurance against kidnap can be banned in one jurisdiction, but in the case of big companies or multinationals, it can mean that ransoms can be paid in another country," he said.

Authorities suspected this to be the case in 1983 when IRA guerrillas fighting British rule in Northern Ireland kidnaped and then released supermarket executive Don Tidey. Irish police suspected that a ransom payment was made to his kidnapers outside the country after his release but this was never confirmed.

British Home Secretary Douglas Hurd told members of Parliament recently that he had initiated contact with EC ministers over the possibility of curbing ransom payments.

But some politicians here say kidnap insurance is too lucrative a business for the government readily to ban.

"The government knows this multimillion-pound business will simply go elsewhere," says John Hume, the Northern Ireland politician.

$4.2 Billion in Premiums

For Lloyd's of London, which pioneered the area of kidnap and ransom insurance, such business brings in a total of $40 million a year in premium income.

That is a small percentage of the $4.2 billion total premium income, Terence Atkins, company spokesman, said.

The kidnap insurance business took off in the 1970s, but Lloyd's first came up with the concept back in 1933 after the kidnaping and murder of American aviator Charles Lindbergh's baby. In 1932, the infant was snatched from his home and eight weeks later his body found in a shallow grave nearby.

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