In January 2024, a Chinese exchange student studying in the US state of Utah went missing, with his parents receiving a ransom demand for US$80,000. As the incident unfolded, it emerged that the student had not been physically abducted by the extortionists, but had isolated himself under instruction that his family would come to harm if he did not do as the extortionists requested.
Virtual kidnapping, where a victim’s family is persuaded to pay a ransom even though the victim is not being physically held, is one of the latest iterations of a kidnap and ransom threat that has continued to shift and change over the last 30 years. “The methods of kidnapping and extortive crime are constantly evolving in terms of who the perpetrators are, where they are focused and how they operate,” says Control Risks’ Michael Barty, Associate Director of Special Risks Analysis. “Criminal elements are exploiting the technological advances of the past decade to develop new tactics such as virtual kidnap, while regional kidnapping and extortion dynamics have fluctuated in line with changes in the political and security environment.”
In response, the insurance product that supports victims has also changed to counter the threat, says Hiscox’s Julio Garay-Roa, Crisis Management Strategy Manager: “We are responding to a much more complex security environment than we might have seen three decades ago and in geographical areas where we might not have expected to see problems.”
Kidnap in the 1990s and 2000s
In the 1990s and early 2000s the kidnapping environment looked very different. “High-profile cases involving wealthy individuals were commonplace in Colombia and Mexico, perpetrated by highly capable criminal groups and politically motivated guerrillas,” says Barty. It was a threat that Hiscox recognised and responded to, adds Garay-Roa: “When we set up our Guernsey office in 1998, our focus was primarily Latin American private clients; protecting wealthy families in volatile security environments such as Colombia, Mexico, and Venezuela.” Although, adds Garay-Roa, “the threat wasn’t limited to Latin America either, as gangs targeted victims in certain Western European countries, throughout Africa, Asia, as well as the Middle East.”
Change in geography
That profile has changed both in terms of where incidents take place and the demographic of targets. Colombia and Mexico have seen “a moderate decline and stabilisation respectively in cases since the late 2000s” says Barty, but groups have “expanded their activities in other Latin American countries where the security environment is permissive.” Ecuador and Perú for example, have experienced sharp increases in cases in the past five years.
Rise of virtual kidnapping and extortion
Following the 2020 pandemic there has been further change in the kidnap and ransom environment, not least the rise of virtual kidnapping in areas previously not exposed to the kidnap threat. “The Asia Pacific region has seen a sharp rise in cases, mainly targeting overseas students and business travellers, including in countries or cities with a benign security environment. Likewise, the past few years have seen a higher number of cases in western countries,” says Barty. Similarly, extortive crime has also risen. “In Europe, we saw a significant escalation in remote threat and threat extortions as well as incidents stemming from disputes with former or current employees. The US experienced a marked uptick in threats linked to employer-employee disputes, as layoffs and economic slowdowns in the aftermath of the pandemic significantly worsened workplace tensions,” says Barty.
Managing a broader security threat
These changes have contributed to a much broader security threat today than simply a kidnap for ransom targeted at high profile individuals, says Garay-Roa: “We’ve seen how the virtual kidnap threat has risen in Europe and the US, and how, very often, it is now targeted at students or business people with little or no public profile. Together with other personnel risks such as civil commotion, social engineering, workplace violence, cyber stalking, abduction, blackmail, and acts of terrorism, more people in more countries now find themselves vulnerable.”
Given these growing threats, and the changing risk environment, even in countries perceived as modern and stable democracies, the kidnap and ransom insurance product continues to evolve to offer the wider crisis management protection needed. “Many businesses are now considering buying more comprehensive insurance products to protect their staff. Hiscox’s Personnel Security Plus, for example, offers additional coverage for many of the personnel risks identified from workplace violence, to cyber stalking and acts of terrorism,” says Garay-Roa. “And, while we can’t foresee what the next thirty years will bring in terms of the security threat to corporate entities, private individuals and their families, it’s important that we continue to offer the responsive insurance coverage and crisis management support that our clients can depend on, wherever they are in the world, particularly where they may not have the internal resources to deal with sensitive and potentially life-threatening crisis situations.”
