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Kidnap & Ransom: Crisis Response
Gordon Coyle and Steve Ward sit down to discuss Kidnap & Ransom (K&R) risk for high net worth individuals, family offices, executives, and business owners. They discuss what a Kidnap & Ransom policy actually covers, how private security firms work differently from law enforcement, why the first hours of an incident are critical, and why coverage starts at $5,000 to $10,000 a year.
Kidnap and ransom insurance, also called KR&E (kidnap, ransom, and extortion), is not just for billionaires. Anyone with a public-facing profile or net worth between $5 million and above is exposed, and social media has expanded that risk significantly, with several high-profile kidnappings reported. A K&R policy covers far more than the ransom itself: PR costs, crisis management, professional negotiators, law enforcement coordination, 24/7 hotline response, and medical care for overseas incidents. Starting premiums run $5,000 to $10,000 per year for substantial limits. Steve Ward explains why private security firms can move in hours when law enforcement ramp-up time is measured in days, why their priorities do not always align with a family’s priorities, and why the real statistics on kidnap and ransom incidents are far higher than what Google or public reporting shows. Crypto holders represent a fast-growing and largely unaddressed new exposure in the K&R space.
Gordon: I’m Gordon Coyle. I’m principal of the Coyle Group, a mid-market commercial insurance brokerage, and with me today is Steve Ward. Steve, want to just take a second to introduce yourself?
Steve: Sure, my name is Steve Ward. I’m a principal and founder of Polaris Risk. We’re a global provider of corporate risk management services, and what that really means is we provide services in the line of cybersecurity consulting, armed protection, crisis management, investigations, and intelligence to both individuals and organizations globally.
Gordon: Great, thanks. So in light of recent news and what’s been going on in the world today, we thought it would be valuable to have a few-minute conversation around kidnap and ransom risk, especially with how it applies to high net worth individuals, families, family offices, executives, corporate structures, small business entrepreneurs – everybody who’s exposed to this type of risk. Steve, what are you hearing from the street? What are you experiencing and seeing from your clients with regard to this?
Steve: So our clients run the gamut, Gordon. They include high net worth individuals — and when we say that, we use it with a pause and hesitation. It’s not like a Jeff Bezos-type is the only person that retains us. We mean people whose net worth falls anywhere between 5 million and several billions. We’re seeing that with the use of social media, polarization, what’s going on geopolitically and just in the country, there’s interest in understanding Kidnap & Ransom plans and programs. This is also in part because situations like one we’ve seen unfold online recently [Nancy Guthrie], it’s been all over the news, do take place. And the key is to have a plan and be prepared; to understand that when you’re an individual in the spotlight, whether you’re in news, media, sports, or you’re a business person, there is a threat to you directly, and a collateral threat to your family.
Gordon: So Steve, you used an initial before: K&R. For the audience, let’s just say that’s kidnap and ransom. And we frequently will refer to K&R, sometimes as KR&E, kidnap, ransom, and extortion risk, as kind of like code words rather than just coming out and saying it. So what Steve’s talking about is kidnap and ransom. From my perspective on the insurance side, there are products designed to help reimburse the costs and provide expert guidance like Steve’s firm in the event of an abduction, kidnapping, a threat of violence, whatever that may be. And with just the heightened sensitivity to it, we are seeing more inbound inquiries regarding K&R insurance.
Steve, you mentioned a second ago that there’s importance around having a plan. Can you just expand on what that plan looks like and why you need to be thinking about that if you’re kind of in this high net worth space?
Steve: Sure. There’s a famous saying about how everyone has a plan until you get hit in the face and then the plan goes out the window.
Well, what I’m saying is that you need to look at the uncomfortable facts that your position in the global spotlight or social media spotlight or wherever you are could create some collateral damage to your family. You need to have some plan in place so that if something does happen, you’re not caught behind the eight ball and you have an idea of how to address and also who you would call on. They can help you in a time of need.
Gordon: One of the conversations we’ve had around this with a particular client is, well, isn’t that the role of law enforcement? And you’ve kind of said that may not be the most optimal kind of plan to have. So you want to just talk about that for a sec?
Steve: Sure. Well, law enforcement is very, very helpful and obviously we would never discourage anyone working with them.
Local, state, federal. There is a ramp up time and there are certain aspects with jurisdiction and assessments that they do. When we’re engaged and the teams that we’re engaged with, which could be anything from PR teams to forensic teams to investigative teams, we create the infrastructure for the family, protects the family so that they’re not going to be targeted by individuals claiming to have information and asking for ransom.
And then we can help the family guide law enforcement and help them work to make their own decisions about how they’re going to operate and how they’re going to respond. In some cases, law enforcement, the answer is not to pay a ransom. In other cases, you may want to pay that ransom because you want that person back.
In my industry, there are many kidnap and ransom negotiators. These are people that are very well known that worked on the law enforcement side, but work in the private sector. And they’re the ones that can be brought in, part of this team, the crisis management team, that will engage and assess and tell you what they’ve seen about, hey, I think we can pay the ransom. We can get this back. I think we’re going to have to do that. But law enforcement has a different model. And sometimes their views are not going to be aligned with the client and the family of the individual that may have been abducted.
Gordon: And what we’ve also talked about in the past is timing. And I think no dig on law enforcement. Like you said, they have procedures, they have a framework within they operate. But timing in the first hours of an event is critically important. Can you speak about that? Sure. Keeping in mind that every law enforcement department around the country, well, the world has not built the same.
Steve: Organizations like mine have significant forensic capabilities at our fingertips, we have the ability to assess a scene, to look for information, and to identify potential forms of information, and obtain that data quickly. We can also work with law enforcement to show them where it was. You’ll see in certain cases that unfold, it could be a week or two before [law enforcement] identifies information that comes off a digital camera somewhere. That’s a week too late.
There has to be ways to move things forward. And having teams like ours, as well as other teams that have the research, have the ability to do scale and move quickly, means you can have a better outcome in many cases. Or you’ll have a better strategic approach, both publicly and internally, to [a K&R situation], because the people you’re talking to are people that deal with this on a daily basis.
There has to be ways to move things forward. And having teams like ours… means you can have a better outcome… a better strategic approach.
Steve Ward, CEO, Polaris Risk
So Gordon, you know, we’ve heard about my aspects of it, but let’s talk about your aspects, the insurance, all of the different engagements that need to be done and the timing and effects. How does that roll out? And can you talk a little bit about the insurance side?
Gordon: Sure. So with a kidnap ransom extortion policy, depending on how it’s structured and who it’s with, the timing piece of it kind of is critically important as well. There’s typically a 24 seven hotline that for somebody that doesn’t have a firm like Polaris engaged can get an expert level firm engaged early on and very quickly they’re on the ground and they can be responding within hours.
The other things that the policy is going to pay for, a lot of individuals, they just think, oh, they’re going to just help fund the ransom. The ransom is probably the least important financial aspect of this transaction because you’ve got, as you mentioned, Steve, you’ve got PR costs, you’ve got crisis management, you’ve got negotiators, you’ve got law enforcement coordination, a lot of different elements. In addition, if it’s taking place overseas, if there’s a bodily injury that takes place and you’ve got to get medical care, it’s a highly customizable policy with multiple coverage parts to it.
And it just has to be structured the right way. But essentially what the insurance does is help fund the reimbursement of the expenses that are associated with an event like we’re talking about. And one follow up to that, Gordon, people hear this and they get a little concerned and wonder, oh my God, this must cost millions and millions of dollars.
Steve: Can you expand on it? Because this is a fact that stunned me and I was shocked by it. So maybe you could expand upon that because I think this is something that could move the needle on someone who wants to learn about it.
Gordon: Yeah, good point. So for a lot of business owners, family offices, wealthy families, you can buy a KR&E policy for somewhere between $5,000 and $10,000 a year that has a substantial limit of protection and is very broad in its approach. Now you could go wild and add in all kinds of different options and jack that price up. But we’re talking about a starting point of somewhere between $5,000 to $10,000, which is extremely reasonable and all the services that go with it.
One thing I do want to make clear is that if you’ve worked with Polaris and you’re with them to create the plan, you’re going to want to embed Polaris as your preferred vendor if an event takes place. If you don’t have a relationship with Polaris and the policy enacts itself, they’re going to give you the vendor that’s closest to you. But bottom line is that it’s pretty affordable.
Steve: Yeah, that’s what I thought, Gordon. The final aspect I’d say is don’t let the statistics fool you. A lot of people are running Google searches and ChatGPT.
What you see reported versus what really takes place is another thing. In many organizations, they do not report this publicly and people do not know about negotiations with express abductions and things such as that. So the statistics are growing at a rapid pace and the insurance industry, I believe, is growing at a very rapid pace because of other threats to cryptocurrency holders and other aspects.
Gordon: Yeah, crypto is a totally new exposure to the kidnap marketplace. And I think it has significant threats on its own that are really not being addressed properly because there’s a high degree of social interaction online with crypto folks. They’re typically much younger than the traditional kidnap risk person.
And that is probably another subject we can cover in another conversation. So wrapping up, is there anything else that you wanted to add into the convo before we end?
Steve: I would say that anyone that has a forward facing profile that is someone that’s a well-known celebrity, newscaster, sports, business person, or just a high net worth family, this is something you should explore with your insurance brokers and or your legal counsel. And you should look for organizations that can give you some light on this because this is not an anomaly. These things do happen.
Gordon: Yeah, I think that’s a good point. And I think we’re only going to see it get worse.
Steve: Right. What we see now is a roadmap for others in the future.
Gordon: Right. Steve, thanks for joining today and talk soon.
Steve: Thank you, Gordon. Thank you for having me.