Kidnap and Ransom insurance for expatriates involved in mining projects going beyond the duty of care

TFG Global Insurance Kidnap & Ransom (K&R) policies offer truly comprehensive coverage and are bespoke to the risk profile of each Assured. Actually, scope of these policies go beyond basic K&R as programmes can cover malicious threats, disappearances, home invasions, assaults and hostage takings (distinct from a traditional ‘kidnap for ransom’).

David Tompkins of TFG Global Insurance Solutions Ltd. and Mark Doust of Special Contingency Risks (SCR) have forged a strategic partnership in the provision of Kidnap & Ransom (K&R) insurance coverage to mining companies in Central and South America and Africa (MEA). Drawing attention particularly to increasing risks in the region, the two tell mining companies to be thorough when shopping around for insurance cover packages for their respective needs.

Addressing common gaps

“Not all Kidnap & Ransom (K&R Policies) are ‘packaged in the same way’. Unfortunately, cases of some insurance policies leaving clients to their own devices when it comes to providing some forms of assistance are not uncommon,”

Tompkins notes, pointing out how TFG Insurance customises its Special Risk insurance packages to address common gaps, mainly, through: a Special Risks Policy; Coverage of the entire workforce; and, to boot, a team adequately qualified to do due diligence on client’s behalf.

• Special Risks policy

One of the most fundamental parts of the Special Risks Policy (K&R) is the ‘service provision’ component. Typically, each insurer is partnered with a crisis response consultant. These consultants provide 24/7 and immediate crisis response to policyholders facing a critical security incident. The consultant will advise the policyholder on every aspect of incident response including ransom negotiations, stakeholder management (including family members) and liaison with local law enforcement, military and diplomatic interests. Thus, purchasing a

Special Risks Policy is the best way an organisation can guarantee professional crisis support – insured policyholders are considered ‘priority’ clients by the response firms.

On TFG’s approach, Tompkins says, “The policies offered by our associates at SCR offer truly comprehensive coverage and are bespoke to the risk profile of each Assured. In fact, the term ‘kidnap and ransom’ does not adequately describe the scope of these policies as our programmes can cover malicious threats, disappearances, home invasions, assaults and hostage takings (distinct from a traditional ‘kidnap for ransom’). We provide recommendations on the level of coverage required and always aim to provide a range of options to ensure that clients understand exactly what they can cover.”

• Coverage of the entire workforce

The trend of events in high-risk countries indicates that even senior employees from a host country may also be abducted and a huge ransom demanded. For this reason, the K&R policy that TFG sources for international clients caters for this need. These special risk policies often cover the senior management, expats and local staff and the extensive negotiations and security consultancy that comes with an incident, which often exceeds the actual ransom paid by the employer and then later reimbursed by the insurance company.

“We strongly recommend that any special risk policy for global mining operations not only cover the expatriates and senior executive staff, but the entire workforce and any contractors on site as there is a duty of care that comes in play,” emphasises Tompkins. Seconding David’s point on duty of care obligations, Mark stresses, “Any individual working for the organisation (in whichever capacity) should be covered by a Special Risks Policy. Local nationals are often targeted more often than expatriates and deserve the same protection afforded to expatriate colleagues.”

• Engaging brokers for due diligence

With the insurance market awash with hundreds of products, the significance of mining companies exercising prudence in selection cannot be overstressed. It is advisable to rely on a broker who has extensive experience in K&R coverage.

So,Tompkins urges mining clients to let credible brokers do due diligence on their behalf. “Most brokers will be able to provide quotes, but do they have the team behind the scenes to examine existing coverage and the negotiating leverage on the insurers – existing or new? Finally, do they have the partnership that TFG Global has with SCR, which has a 24/7 Response team at the ready to assist the client in dealing with the insurer and their response firm during a potential or ongoing claim,” he says. “My experience is that kidnapping is not a 9 to 5 business, and the response centre staffed by former special forces and security officers at SCR is key. The last thing you want is to try to contact your broker, who might not be available in the event of a crisis.”

An enduring partnership

Mark hails the enduring partnership TFG has forged with SCR, saying that it is the result of having so much in common, sharing the same mentality of securing the most competitive premiums for clients while not compromising on coverage.

“As brokers we act on behalf of clients, advancing their interests to the insurance market and doing everything we can to secure the best possible claims outcome. Our sizeable market share and leadership position in regards to a 24/7 client proposition reinforces what we can do for clients – we are more than a transactional insurance broker. We go beyond the Duty of Care.”

Thorough Planning in Crisis Management

In SCR, TFG could not have found a more perfect partner for global mining clients in Africa. SCR has the expertise, in-house, to help mitigate the client’s risks and reduce their exposures. Its success is rooted in the mindset of thorough planning and examining all possible scenarios, not leaving anything to chance.

“Planning is key and SCR can create crisis management plans from scratch or audit existing ones against international standards. Once a plan is in place it needs to be tested – this can be done via simulated incident training and ‘stress tests’ where various scenarios are put to clients to resolve. All training and consultancy is carried out by ex-law enforcement and ex-military personnel who are full time members of our team. Their experience is invaluable to clients who may have never dealt with a critical security incident before,” says Doust.

Part of the crisis management planning process also includes risk intelligence – understanding the territories a client is operating in. SCR is able to offer bespoke intelligence packages to clients which issue notifications when an incident of interest takes place in a country of operation or prospective operation. Additionally, clients are trained to understand, analyse and report risk intelligence to their boards and stakeholders. Underlining the practical relevance of training, Doust

cites the core objective of the ‘family liaison’ course, “One of our most popular courses at the moment is ‘family liaison’ training where a staff member is coached and mentored by a senior consultant to prepare them to deal with a victim’s family members. This is an exhausting role and not one that can be contracted out to HR!”

Client rescue case studies

Unfortunately, some of TFG’s clients have been impacted by kidnappings. Handily, the kidnap coverage, more especially all the response services and support provided by the insurer’s policy were instrumental. In one case, the insurer had specialists flown into a remote part of Africa and supported the negotiations and the client 24/7 for several months. Worth mentioning, the significant costs for these highly trained individuals that were incurred were completely paid by the insurer and the employees were returned safe and sound.

David hails the winning partnership on K&R policies TFG has forged with SCR. “It’s in every sense, we could not ask for a more ideal partnership.” Mark says key to the success in all incidents around the world including in a number of current hotspots such as Ethiopia, DRC, Nigeria and Afghanistan in the past 18 months has been timely intervention.

“Early intervention has proven to be key in preventing a ‘nuisance’ from materialising into something far more concerning. This is why we add cover for malicious threats rather than have a policyholder wait until a serious security incident has taken place which may have been months in the making. Important to note that our policies also provided temporary security and threat assessments during the civil unrest in South Africa – not many clients appreciate that these programmes can be activated at home as well as overseas”