Kidnap/Ransom & Extortion - Chubb Group of Insurance Companies

ForeFront Portfolio SM Risk Analyzer
for Privately Held Companies
KIDNAP/RANSOM AND EXTORTION
Risk review performed for:
Date:

The Purpose of the Risk Analyzer
When it comes to insuring your company, you can’t afford to leave things to chance. A lack of proper coverage
at a critical time can potentially result in a huge financial loss. The key to a sound base of insurance protection
is securing coverage that truly meets all of your company’s unique exposure needs.
How Chubb’s ForeFront Portfolio SM Risk Analyzer can help. The Risk Analyzer can help you uncover some
of the biggest potential threats to your company’s bottom line. It will help you answer several important
questions about your company’s possible financial exposures:
• What are your company’s exposures and vulnerabilities
• What is your company’s tolerance for risk
• Is your company’s insurance protection adequate
Your trusted agent or broker can assist you in using the Risk Analyzer to identify possible financial exposures
your company might have in each of eight critical areas:
Risk*
Employment practices liability
Fiduciary liability
Crime
Directors and officers liability
Description
Employees and former employees can sue a company, its board
members, and its officers for discrimination, harassment, and other
employment practices exposures.
Retirees, former employees, and employees can sue the company
and its plan fiduciaries for alleged mismanagement in administering
benefits.
A trusted employee can embezzle funds, steal inventory, or commit
fraud over a long period of time.
Investors, shareholders, customers, clients, government regulators,
creditors, and competitors can sue a company’s board members and
officers over their actions or decisions.
Miscellaneous professional liability Customers and related third parties can sue professional service
providers for negligence in providing or failure to provide a service.
Workplace violence expense
Internet liability
Kidnap/ransom and extortion
An employee, relative of an employee, or outsider can threaten or
perpetrate harm against employees in the workplace.
An outside person or company can sue the company for copyright
infringement or defamation over content it posts on its Web site.
An employee can be kidnapped while traveling, or a criminal can
attempt extortion against the company by threatening its employees
or products.
By using Chubb’s ForeFront Portfolio Risk Analyzer, you are taking an important step toward effectively
managing some of your company’s most dangerous financial exposures. Your answers to the Risk Analyzer
questions will serve as the foundation for a program of insurance coverage, specifically designed to meet your
company’s needs.
* Shaded area denotes the risk area covered by this version of the Risk Analyzer.
1

Kidnap/Ransom and Extortion Coverage Gap Analysis
WHAT ARE SOME TYPICAL GAPS IN TRADITIONAL COVERAGE
ForeFront Portfolio Kidnap/Ransom and Extortion Insurance can help fill coverage gaps that may exist in
your company’s current insurance program.
For example, a general liability (GL) 1 policy may not provide coverage for incidents of kidnap/ransom
or extortion.
ForeFront Portfolio Kidnap/Ransom and Extortion Insurance covers reasonable expenses related to kidnapping
and extortion incidents, including:
• Reimbursement of ransom or extortion money paid, as well as interest on a loan taken to pay
a ransom or extortion demand.
• Independent security consultant.
• Independent public relations consultant.
• Reward for information leading to arrest and conviction of perpetrators.
• Kidnapped employee’s salary and temporary replacement employee’s salary.
• Personal financial loss resulting from the kidnapped employee’s inability to attend to
personal financial matters.
• Medical, cosmetic, psychiatric, and dental expenses incurred following the insured
person’s release.
• Rest and rehabilitation.
• Wrongful detention.
• Political threat.
• Product recall expenses
• Business interruption.
• Accidental death or dismemberment.
1 GL policy references are based on the commercial ISO policy.
2

Kidnap/Ransom and Extortion Risk Analysis
EXTORTION THREAT
Questions:
Does your company produce a product that is designed to be consumed or used on the body
■ Yes ■ No
Is it possible someone could threaten to breach your company’s network security
■ Yes ■ No
Exposure:
If your company produces products that are consumed or used on the body, it may need a crisis
management plan, as well as appropriate insurance, if it is to survive an extortion threat against one of its
products.
Computer systems are common extortion targets, and not even the strongest network security systems
are foolproof. If your company (like most) stores important information on its computer network, it faces
possible risk of extortion.
Could this happen to you
Extortion threats against CEO and his wife
• A CEO received a telephone call demanding $100,000 or else he and his wife would be killed.
• The CEO delivered the money to the drop-off point designated by the caller, but the money was not
picked up.
• The CEO’s company hired an independent consultant to investigate the threat.
• A few months later, the CEO received another threatening call demanding $125,000.
• The CEO again delivered the money to the drop-off point, and again it was not picked up.
• The consultant determined that a former employee was involved, and the police were notified, stopping
the threats.
Result: The company paid more than $40,000 in consulting expenses.
Consider this:
A GL policy does not provide coverage for incidents of extortion.
3

Kidnap/Ransom and Extortion Risk Analysis
DOMESTIC KIDNAPPING THREAT
Questions:
Has your company been involved, or is it now involved, in any socially or politically contentious activities
■ Yes ■ No
Are your executives relatively well-known and wealthy, creating the potential for a kidnapping or
extortion threat
■ Yes ■ No
Exposure:
An atmosphere of conflict can result in a dangerous kidnapping threat for your company—especially if your
organization’s executives are well-known and wealthy. However, even entrepreneurs from relatively small,
unknown companies may be perceived as wealthy by local standards.
Could this happen to you
CEO’s daughter kidnapped
• A company’s CEO was contacted by the abductor of his daughter demanding payment of money if he
“wanted to see her again.”
• The CEO retained an independent consultant to advise him how to respond to the demand.
• After negotiating for five months, a ransom was paid, and the CEO’s daughter was released unharmed.
Result: In addition to the ransom payment of $50,000, the company also paid more than $65,000 in
consultant fees and other expenses related to the episode.
Consider this:
A GL policy does not provide coverage for domestic kidnap/ransom incidents.
4

Kidnap/Ransom and Extortion Risk Analysis
INTERNATIONAL KIDNAPPING THREAT
Question:
Does your company have one or more international offices Will it in the future
■ Yes ■ No
Exposure:
In today’s politically charged environment, your company can be a highly visible “statement” target that
can gain widespread publicity for the perpetrators.
Could this happen to you
Kidnapped executive
• The president of the foreign subsidiary of a U.S. company was kidnapped.
• The kidnappers demanded a ransom from his family in return for his safe release.
• The victim’s company retained a consultant to negotiate with the kidnappers for his release.
• Over several months, the consultant negotiated a ransom payment, as well as the president’s safe
release. The president was treated for several minor medical problems he developed while in the
custody of the kidnappers.
Result: The company paid a ransom, plus consultant and medical expenses, totaling more than
$1 million.
Consider this:
A GL policy does not provide coverage for international kidnap/ransom incidents.
5

Kidnap/Ransom and Extortion Risk Analysis
WRONGFUL DETENTION OR POLITICAL THREAT
Question:
Do any of your company’s employees travel overseas on behalf of the company Will they in the future
■ Yes ■ No
Exposure:
In today’s increasingly global economy, don’t assume that your company’s size or relative anonymity
provides any protection for your employees. Even a small company may be viewed as wealthy by
local standards.
Could this happen to you
Death threat against business traveler
• A company sent an employee to Mexico on business.
• The employee received several anonymous threats saying that if he did not leave Mexico he would
be killed.
• The company repatriated the employee to the United States and retained a consultant to investigate
the threat and to give advice on how to respond.
Total cost: The company paid more than $15,000 in consulting fees.
6

Chubb’s Solution
Chubb’s ForeFront Portfolio Kidnap/Ransom and Extortion Insurance helps privately owned companies
manage their kidnapping and extortion exposures.
WHO IS INSURED BY FOREFRONT PORTFOLIO KIDNAP/RANSOM AND EXTORTION
INSURANCE
Our policy covers:
• The company.
• Directors and officers.
• Employees, including seasonal, temporary, and leased employees.
• Volunteers.
• Students.
• Relatives of employees.
• Guests on the company’s premises or in an employee’s home.
• Any person retained to deliver the ransom.
WHAT ARE THE COVERAGE HIGHLIGHTS FOR FOREFRONT PORTFOLIO
KIDNAP/RANSOM AND EXTORTION INSURANCE
• Insurance for extortion threats against the company and its employees, such as threat to do
bodily harm or abduct or detain any insured person; damage any premises or tangible property
located on the premises; contaminate raw materials or products; disseminate, divulge, or use
proprietary information; disseminate or make public negative information regarding merchandise; or
introduce a computer virus.
• Crisis management expertise—Chubb pays for the services of The Ackerman Group, Inc., a
highly regarded global security firm recognized for its expertise in handling kidnapping or extortion
threats, or another crisis management expert of the insured’s choice.
• Access to state-of-the-art travel information service—Our customers gain access to The
Ackerman Group’s RISKNET TM , a free Internet-based information service for business travelers that
includes worldwide news, travel advisories, and terrorist activity information.
• No deductible for most risks.
RISKNET TM is provided at no charge to
ForeFront Portfolio Kidnap/Ransom and
Extortion Insurance customers. If
purchased separately, it would cost
approximately $3,000 annually.
7

Risk Analysis Summary
Your answers to the Risk Analyzer questions on the preceding pages could point to areas where your
company may have significant financial exposures or gaps in its current insurance program that threaten its
financial well being. Your answers will help you and your agent or broker to develop a ForeFront Portfolio
insurance program that is tailored to your company’s specific needs.
THE NEXT STEP
Your agent or broker will develop a recommendation for managing your company’s risks with ForeFront
Portfolio—an integrated insurance solution from Chubb.
8

For promotional purposes, Chubb refers to the member insurers of the Chubb Group of Insurance
Companies underwriting coverage. Not all insurers do business in all jurisdictions.
Chubb Group of Insurance Companies
Warren, NJ 07059
www.chubb.com
This literature is descriptive only. Whether or not or to what extent a particular loss is covered depends on
the facts and circumstances of the loss and the terms and conditions of the policy as issued. Actual
coverage is subject to the language of the policies as issued. Loss scenarios are hypothetical in nature and
for illustrative purposes only. Whether or not or to what extent a particular loss is covered depends on the
facts and circumstances of the loss and the terms, conditions, and endorsements of the policy as issued. It
is impossible to state in the abstract whether the policy would necessarily provide coverage in any given
situation. Consult your agent, broker, or other expert.
Form 14-01-0942 (Ed. 9/06)