Ransom insurance may be the ultimate fail safe for rich people who become the victims of extortion. But according to one senior industry leader, it’s a policy that necessitates secrecy.
That’s one word you wouldn’t use to describe the ongoing court battle over the Rinehart family fortune, which has become the centre of media frenzy after details were released last week.
According to a report in the Australian Financial Review, Australia’s richest women has threatened to stop paying for her children’s kidnap policies unless they agree to suppress details of their court battle over the family fortune.
The iron ore baroness’ lawyers demanded in a letter that the children agree by 10am today to the following:
1. they are no longer concerned about their personal safety, nor that of their young children, and so the insurance policies can be cancelled; or
2. that they remain concerned about safety issues and that they will recommence supporting suppression orders, including so advising the court on Monday morning, 6 February, 2012.”
Peter Stening is CEO global of Stening Simpson, a risk broker specialising in kidnap, ransom and extortion which covers about 24,000 people in Australia (with total premiums in the millions of dollars).
Stening says ransom insurance is usually taken out by those who visit countries with poor security situations; with the only places you can’t get full coverage being Pakistan, Afghanistan and Iraq.
“In corporate kidnap we cover everyone from the chairman down,” Stening tells The Power Index, adding that it’s typically high net worth individuals and high profile companies who seek their policies.
So what’s the process when someone gets kidnapped? As Stening explains, it’s the insurers who are notified first and they then work with the Australian embassy and DFAT. And don’t even think about talking to the local cops. Stening says they’re often highly corrupt and want part of the action.
“The last thing we want is publicity, in 33 years not one of our kidnaps has made the press,” he says.
“They are usually reported missing by a colleague, the company then advises us. We have a protocol in place to alert rescue teams to go in and find them and if necessary pay a ransom and get them out.”
And how much does it cost? As Stening puts it: each policy is tailored for the countries they are visiting, with the price tag hovering in the tens of thousands of dollars.
“It depends so much on a number of factors: what remote regions they are going into, what other previous engagements have we have had in those countries, what’s the incidents of say Abu Sayyaf working in a particular area, out of a particular village.”
Another important factor is that no one knows about a ransom insurance policy. Stening says it’s usually only the company’s chairman, managing director and chief financial officer who are aware of the policy’s existence: “employees aren’t told,” he adds.
That leaves us wondering one thing: what do Gina’s family (and her underwriters) think of the whole world knowing about their ransom insurance policy? We’re tipping they’re not too happy.
The Power Index
Monday, 06 February 2012