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South Africa
Tuesday, February 1, 2005
Body snatchers

The tragic kidnapping and subsequent murder of Leigh Matthews, the 21-year old daughter of a Johannesburg businessman early last year thrust the phenomenon of kidnapping into the local limelight.
But this was not an isolated incident, notes Guardrisk in a recent newsletter. It notes that SA has the dubious distinction of having the third-highest kidnapping rate in Africa (after Nigeria and Somalia) and has been placed in the top 10 in the world by the UK’s Control Risk Group. According to the South African Police Service’s Crime Information Analysis Centre there have been more than 4 000 kidnappings a year since 1994, dropping to 3 071 in 2002/3; still an alarming statistic in the context of the global figure of 15 000 a year. However, it must be said that the SA figures include domestic abductions and are therefore not a true reflection of actual kidnaps for ransom.
About 90% of the kidnappings are committed for financial gain and, not surprisingly, the kidnap insurance industry is growing, already accounting for premiums of around US $100 million a year worldwide.
Locally, while the kidnap insurance market for individuals is relatively limited compared to other parts of the world, more and more companies are purchasing this insurance for their staff, says Guardrisk. The average kidnap policy covers ransom costs, medical and psychiatric treatment, travel costs and death or dismemberment.
But kidnap insurance is not merely a funding mechanism; it also pays for the services of security consultants and other experts who have specialised knowledge of the dynamics of kidnapping and who will assist with negotiations both for the ransom and the safe release of the victim. These individuals often have experience in some of the world’s most respected security services, including the CIA, Mossad, SAS, Scotland Yard and MI-5. The services of these highly skilled individuals don’t come cheap at around $2 000 a day.
Because of their expertise such security consultants are the most important component of any kidnap insurance policy. The fatality rate on security-consultant handled kidnappings is 2% compared to 9% for those handled without this type of expertise.
Guardrisk says insurers are tight-lipped about the cost of this type of insurance but it is estimated that a family policy for R1 million worth of cover for an individual with assets of R2,5 million would cost in the region of R6 000 a year. Naturally, the risk is linked to the individual’s net worth and travel patterns, and premiums would be calculated accordingly.
Understandably, kidnap insurance is something to be kept under wraps (it’s a requirement of coverage that no one knows it’s in place), since openly discussing the existence of such cover would invite the attention of kidnappers.

Copyright © Insurance Times and Investments® Vol:18.1 1st February, 2005
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