By Adeniyi Olominu

“In the wake of the insurgency, insecurity and kidnapping amongst others insurance exist not just as a tool for economic development but the hope of a commoner in the event of the security maladies plaguing the country.”

Insecurity among other things is one of the maladies of the country Nigeria. The increasing level of insecurity in the country is becoming horrendous, taking into account the continuous agitations for the Federal and State Governments to address the issue of insecurity in Nigeria ranging from kidnapping, banditry, abduction, unlawful killing, and other life-threatening occurrences. In the wake of the election propagandas, it seems not to be an issue, worthy of mention.

On 25th February, 2021, a Nigerian journalist, Adaobi Tricia Nwaubani, in her publication for the BBC News wrote that “The Nigerian government seems to have suggested that it can no longer be relied on to keep citizens safe.”[1]

This creates an assumption that personal security such as owning a gun will at least give an opportunity for self-defence. Even if possible, this will nevertheless not help the situation since the issuance of gun licenses is banned by the government. Needless to say that the legality of such will lead to unprecedented havoc, considering the grave atrocities committed daily.

Kidnapping in Nigeria has become a multifaceted criminal phenomenon and is underreported.[2] Kidnapping in Nigeria can be notable traced to abductions by Niger Delta militants in the early 2000s, who would kidnap foreign oil workers for international attention. Desperate to secure their staff, oil companies were quick to pay hefty ransoms.

A report by a Nigerian consulting firm, SB Morgen, stated that from June 2011 to March 2020, Nigerians paid kidnappers about $18.34 million (approximately 7 billion naira) in ransom.[3] About 60% of this was paid between January 2016 and March 2020 alone, indicating a spike in recent years.[4]

Relatives of victims in Zamfara and Kaduna states told ISS Today that some kidnappers accepted ransoms as low as ₦30,000 ($73) because the victim’s family couldn’t afford more.[5]

Kidnapping across zones in Nigeria between January–February 2021 according to WANEP News is as follows:[6]

North Central                                    443

North East                                             56

North West                                         571

South East                                                2

South South                                          73

South West                                            36

Included in this figure is the kidnap of about three hundred female students from a government secondary school in Jangeba, Zamfara State on the 27th February, 2021.[7]

On 20th April, 2021, more than 700 students of Greenfield University in Kaduna were kidnapped for ransom by armed groups. After a month, kidnappers released 10 of the students for a ransom of 17 million naira as stated by a parent of those being held.[8]

In April 2018, UNICEF reported that since 2013 more than 1,000 children have been abducted by Boko haram in north eastern Nigeria including the 276 Chibok girls taken from their secondary school in 2014.[9]

In 2019, the International Maritime Bureau’s (IMB) Piracy Reporting Center logged 44 crews kidnapped off the coast of Nigeria. By 2020, raising the number of crews kidnapped to sixty two.[10]

The Need for an Insurance Policy

With Kidnapping becoming more rampant alongside child abduction and extortion, it is important to have a tailored insurance cover; a Kidnap and Ransom Insurance policy (also known as K&R Insurance policy). In light of the insecurities issues plaguing this country, it is imperative to have protection that extends beyond security agencies to a kidnap and ransom insurance policy.

The recognition of the need for protection of family, staff, and friends has led to the development of the kidnap and ransom insurance policy by the market-leading insurance companies.[11] The kidnap and Ransom insurance policy is often provided as part of a corporate insurance portfolio by companies with employees who frequently travel to other countries which are kidnap-prone areas.

Kidnap and ransom insurance policy remains a grey area in Nigeria insurance policies. It is a policy designed to protect individuals and corporations that operate in high-risk areas across the world. Generally, the kidnap and ransom insurance policy covers the perils of kidnap, extortion, wrongful detention, and hijacking. Kidnap insurance exists to protect individuals from the risk of kidnapping, extortion, and hijacking etcetera.

Like most insurance policies, the kidnap and ransom insurance policy reimburse loss incurred by the insured. However, the policy does not pay ransom on behalf of the insured, the practice is that the insured must first pay the ransom, thus incurring the loss, and thereafter seek reimbursement under the policy.

The development of this insurance policy is largely attributed to the rapid increase in extortion, kidnappings, hijacking, and request for ransom in recent years around the world. Each year, there are at least tens of thousands of cases of kidnapping incidents across the globe, excluding the unreported cases. It is of extremely important to protect oneself, family, and business by purchasing the kidnap and ransom insurance policy.

To prevent fraud and false representation of kidnaping, insurance companies are advice not to write the name of the insured person on the policy but rather write a code name and number, which is used to reference the actual person insured in the insurance company’s database only. Those insured are often not aware of the existence of such policiesn. It is believed that an employee with knowledge of his kidnap and ransom insurance policy might begin to act differently or even collude with their kidnappers for fraudulent purposes.

An insured person is not expected to openly discuss or disclose to anyone the existence of any kidnap and ransom insurance policy effected on them to avoid extortion or being kidnapped for ransom. If a company is buying the insurance on behalf of its employees, it should not tell the covered employee about the policy to maintain the secrecy of its existence.

The policy

Before you decide to purchase the kidnap and ransom insurance policy, you need to consider several important factors. Just like every insurance policy, you must understand how it works, what it covers, learn what it typically costs, and engage the service of a legal practitioner in reviewing the policy.

A comprehensive policy will cover the following events:

 

  1. Kidnap
  2. Extortion
  3. Hijack
  4. Wrongful detention
  5. Threat
  6. Disappearance
  7. Child abduction
  8. Express kidnap
  9. Business interruption
  10. Hostage crisis

Insurance companies indemnify the following losses under the kidnap and ransom insurance policy:

  1. Ransom money reimbursement[12]
  2. Transit delivery
  3. Judgment settlement & legal liability
  4. Crisis management consultants’ fees and expenses
  5. Accidental death or dismemberment[13]
  6. Additional expenses[14]

Developing the Kidnap and Ransom Insurance Policy in Nigeria

Various international organizations, such as the African Insurance Organization, have hugely reinstated that, “The number of kidnaps in Africa continued to increase in the first half of 2011, Africa’s proportion of the global total increased from 23 per cent in 2010 to 34 per cent. Nigeria is now the kidnap for ransom capital of the world, accounting for a quarter of globally reported cases.” [15] Therefore, there is a demand for terrorism, kidnap, and ransom insurance policies to provide financial cover in the event of a related unexpected event.

Speaking on the insurance cover, Mrs Funmi Babington-Ashaye, Managing Director, Risk Analyst Insurance Brokers Limited, said, “This is a novel insurance product which companies and persons who operate in hostile areas need to procure for their safety. Although it is not currently underwritten in Nigeria, it is a potentially fertile area that the insurance companies might want to explore. Whether we like it or not, kidnapping is a serious business risk that must be addressed consciously.”

She added that, “Unlike the traditional insurable risks, kidnapping for ransom and extortion is an emerging area of focus. Indeed, the Kidnapping for Ransom and Extortion Insurance Policy is a new product that insurance companies in Nigeria need to critically study and introduce into the local market, particularly with the spate of the increases in kidnapping for ransom. From available statistics, it is evident that the market for this product exists. Insurers must respond to this felt need of the market by developing appropriate product offerings. For the product to be successfully introduced, there is, however, the urgent need for interested insurance companies to embark on capacity building in this regard.”[16]

However, because of the exorbitant cost of these policies, most individuals who purchase them are affluent or high-profile people, such as celebrities, musicians, sports stars, politicians, and foreigners who effect the policy in their respective countries. Fear and doubt can be said to have plagued the development of K&R insurance in Nigeria.

In view of the recent kidnapping incidents in the southern part of Nigeria and the civil instability in the northern part of Nigeria, there is a dire need for insurance companies in Nigeria to develop the kidnap and ransom insurance policy by taking into consideration the main tenet of insurance itself, which is protection against any unwanted risk or event.

Bibliography

© Adeniyi Olominu, 2022

Adeniyi Olominu, Esq is an associate of Messrs Olumide Ayeni SAN & Co. Specializes in Insurance, Dispute Resolution, Employment and Labour Law.

Email: aolominu06@gmail.com

[1] Self-defence is not the answer to Nigeria’s kidnap crisis. The Minister of Defence had a message for communities that have suffered attacks by armed gangs: Defend yourselves, don’t just sit and be slaughtered like chickens.

[2] William Assanvo and Don Okereke ‘West Africa/ Nigeria’s kidnapping crisis’ Enact, 1 February 2019, viewed 2 July 2021, <https://enactafrica.org/enact-observer/nigerias-kidnapping-crisis>.

[3] SB MORGEN, May 2020, ‘Nigeria’s Kidnap problem: The Economics of the Kidnap Industry in Nigeria’, Page 4

[4] Teniola Tayo and Pelumi Obisesan ‘Nigeria’s kidnapping crisis unites the north and south’, Institute for Security Studies, 6 April, 2021, viewed 1 July 2021, <http://issafrica.org/iss-today/>.

[5] Ibid

[6] WANEP, ‘Kidnappig in Nigeria Vol. 12’, West Africa Network for Peacebuilding, 2 March 2021, viewed 1 July 2021, <http://wanep.org/wanep/>.

[7] John, C 2021 ‘Mass kidnapping in Nigeria Captures International Attention-Again’, Council on foreign relations 3 March, viewed 1 July 2021, <http://cfr.org/blog/mass-kidnapping-nigeria-captures-international-attention-again?amp>

[8] Reuters ‘Kidnappers abduct unknown number of Nigerian university students’ Reuters, April 21 2021, viewed 2 July 2021, <https://www.reuters.com/world/afric/kidnappers-abduct-unknown-number-nigerian-university-students-2021-04-21>

[9]Unicef ‘More than 1,000 children in northeastern Nigeria abducted by Boko Haram since 2013’ Unicef Press release, 13 April 2018, viewed 3 July 2021, <https://www.unicef.org/wca/press-releases/more-1000-children-northeastern-nigeria-abducted-boko-haram-2013>.

[10] Adam Ragozzino, ‘Hundreds of Nigerian Students Kidnapped’ Global Risk Insights, April 2021, viewed 3 July 2021, <https://globalriskinsights.com/2021/04/hundreds-of-nigerian-students-kidnapped-again-is-nigeria-a-failed-failed-state/amp/>.

[11] Hiscox, AXA and AIG; they write a majority of the global market share of kidnap and ransom insurance in terms of premium. Having relationship with crisis management consultants.

[12] Money paid or lost due to kidnapping

[13] Death or permanent physical disablement occurring during a kidnapping

[14] Medical care, severe disruption of operations, potential damage to company brand, PR counsel, wage and salary replacement and other expenses related to kidnapping incident.

[15] Daniel, ‘African Insurance Organization Designates Nigeria As Global Capital For Kidnap For Ransom’, October 2012, viewed 1 July 2021, <https://www.informationng.com_2012/10/african-insurance-organization-designates-nigeria-as-global-capital-for-kidnap-for-ransom.html/amp>

[16] Sola A. 2017, ‘Foreigners Need N3m Monthly Premium For Kidnap Insurance Cover In Nigeria’, NewsPage, 6 December 2017, viewed 1 July 2021, <https://newspageng.com/2017/12/06/foreigners-need-n3m-monthly-premium-for-kidnap-insurance-cover-in-nigeria/>

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