This dramatic account of the kidnapped crew of an oil tanker reminded me of kidnap and ransom insurance, one of the expenses of doing business in a global economy.
The sailor and the pirate king
Indian sailor Sudeep Choudhary was kidnapped at gunpoint by Nigerian pirates. He and his crew were taken to a swampy jungle prison in the Niger Delta where human skeletons hung in the trees. The hostages pinned their hopes on shaky ransom negotiations and the desperate efforts of their families back home. Sudeep tells Outlook's Kevin Ponniah his harrowing story and how his freedom was secured.
BBC World Service aired a story this morning previously aired a couple of years ago. As I listetned to the audio, which is about half an hour, I recalled what I learned about K&R insurance in 2009. Kidnap and Ransom insurance is one of the costs of doing business in a global economy. I noted a few details at my old blog in 2009.
Kidnap and Ransom Insurance
It doesn't take much imagination to see that kidnap and ransom insurance feeds a flourishing worldwide enterprise in criminal activity. It's the insurance equivalent of derivatives in the securities trading market. There's no stated law against it, so it must be okay. I know that fire insurance does not pay if arson can be proved. That makes sense. Otherwise, we would all burn down investment property and collect for the damages. What a deal!
But in the case of kidnapping and ransom, there is no such exclusion. In fact, the insurance is created precisely to pay off when (and only when) a criminal activity is proved. And all that indemnity and reimbursement language is all it takes to make the package legal.
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