Kidnap and Ransom Insurance

Recommendations

Info

Understanding the K&R Market Kidnapping, unfortunately, is one of the fastest-growing organized criminal activities. In fact, kidnappings of foreign nationals increased nearly 100% 5 between 2011 and 2012, the most recent publicly available data on the subject, and the average ransom demand in 2012 was approximately $2 million. 6 Furthermore, over 80% 7 of kidnapping cases go unreported because they are not made public. Figure 1 depicts the kidnapping threat in countries around the world. Global Kidnapping Risk Map Kidnapping Risk Rating ■ Low Risk ■ Medium Risk ■ High Risk ■ Extreme Risk Source: red24 Figure 1 4 KEEP CHALLENGING October 2015
Kidnap and Ransom: An Analysis Perspective Outlook Factors Advances Increasing political unrest in countries such as Iraq, Ukraine, Nigeria, Afghanistan and Venezuela is leading to an exponential increase in kidnapping incidents. Case in point: ISIS, the Islamist militant group, earned about $20 million in 2014 from ransoms paid for hostages, including several French and Spanish journalists. 8 Source: Cognizant analysis Figure 2 Globalization is forcing corporations to expand their international footprint by deputing employees around the world – providing a lucrative financial option for kidnappers. Case in point: Somali pirates took over a Korean supertanker in the Indian Ocean in 2010. The pirates held the 24-crew ship for 217 days until they received a ransom of around $9 million. 9 Professional, business and charity workers are the most frequent kidnapping targets (22% of total victims) as they adopt a more adventurous attitude while traveling on work. 10 Case in point: A reverend from the U.S. was kidnapped from Hope Academy in Nigeria, where she had been working since 2005, for a ransom demand of around $300,000. 11 Kidnappers are using new technologies to execute their plans. Social media stalking is adopted to examine activity patterns of potential victims to aid in planning their attack. Case in point: An executive was kidnapped in Monterrey, Mexico, by a group that used Google search to assess his status based on the name placard displayed at the airport. 12 Unfortunately, the underlying drivers for K&R insurance appear vibrant and suggest continued growth despite the best efforts of the international community. Figure 2 offers our analysis of the ransom industry from various perspectives. Sizing the Changes in the K&R Insurance Market K&R insurance is typically organized by reimbursement policies. Companies are legally able to pay ransom for a kidnapped employee, and insurers reimburse the company in its home country. Policies can be sold as an individual product or as coverage under other liability products. Studies have shown that the death outcome in kidnapping incidents is reduced by 88.89% 13 when the victims are insured for kidnaps. K&R Insurance: A Market Analysis The total K&R insurance market was valued at about $4.37 billion 14 in 2010, with an annual growth rate of roughly 12.25%. 15 Market penetration by traditional insurance carriers is about 11.6%. 16 An extrapolation of this data indicates that the market opportunity size in 2015 is $7.79 billion, from which only $1.05 billion has been accounted for 17 (see Figure 3), indicating an under-penetrated market that demands insurers’ attention. Applying Code Halo Thinking to K&R Insurance Market under-penetration in the K&R space is the result of limited prospecting and marketing capabilities, limited underwriting capabilities and limited loss control measures. An inability to resolve these issues has fueled the perception that K&R insurance products are too expensive, deterring customers from purchasing them. Insurers can work toward resolving these issues — and possibly reducing the number of kidnapping incidents — by gathering and applying meaning Market size (U.S. $ billions) 14 12 10 8 6 4 2 0 7.79 2015 1.05 8.75 2016 1.78 9.82 2.99 2017 11.02 K&R insurance market opportunity forecast K&R insurance penetration forecast Source: Cognizant analysis Figure 3 2018 4.20 12.37 2019 5.42 KIDNAP AND RANSOM INSURANCE: AT AN INFLECTION POINT 5
Page 1 and 2: Kidnap and Ransom Insurance: At an
Page 3: Conventional K&R marketing, underwr
Page 7 and 8: Creating a K&R Code Halo Ecosystem
Page 9 and 10: Implementation View The implementat
Page 11 and 12: Footnotes 1 “Kidnap, Extortion, D
Page 13: About Cognizant’s Insurance Busin

Kidnap and Ransom Insurance

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?