Why kidnap and ransom insurance is fundamental in construction

28 February 2018

Construction companies are facing a wider spectrum of personnel security risks than ever before, which is why kidnap and ransom insurance is key.

Kidnap and Ransom (K&R) insurance has traditionally been a concern in unstable countries such as Colombia and Iraq.

But, as the Sydney cafe siege, Paris and Nice attacks and London terror attacks demonstrated, the risks insured by this coverage are occurring in more familiar places.

Construction is one of the main sectors that has an interest in this area of insurance.

The K&R market has had to adapt coverage to meet these new risks.

New risks emerging in Kidnap and Ransom market

Hostage crisis, active shooter, cyber extortion, illegal detention and virtual kidnap are just some of the new perils now insured under this policy.

Outside of protecting employees and contractors while under their duty of care, this insurance also provides non-damage business interruption cover, which typically is not insured in other property or terrorism coverages where physical damage is a prerequisite.

Emergency evacuation is another insurable peril within this market.

Limited cover for this is usually provided under a personal accident and travel policy, but there are often territorial or incident exclusions (such as terrorism), and the coverage typically only insures foreign nationals while abroad on business travel.

Emergency evacuation cover

This specialist market has, however, looked to broaden its appetite for emergency evacuation to include cover for local nationals, build in terrorism-related perils and cover events such as political and civil unrest, pandemic and natural catastrophe.

Construction companies should regard security risks K&R insurance as a fundamental part of their spend to ensure they protect their personnel in times of crisis.

The repercussions for failing to deliver on this duty of care obligation may lead to brand and reputational damage, litigation and business interruption.

For more information please contact Lucy Higgins, K&R Associate on +44 20 7528 4253