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Insurance for kidnapping is not cheap but what do you expect

It is a hazard of Doug Milne’s job that sometimes his valued clients – people he considers friends – are murdered. He is not a member of the security services, however, but an insurance broker, albeit one who focuses exclusively on kidnap and ransom insurance for companies and wealthy individuals. That he describes himself as an insurance broker at dinner parties rather than recount some of the more dramatic aspects of his work is typical of his very British sense of self-restraint.

Take his attitude to some of his experiences when travelling for business (he refuses to say whether he is insured against kidnap himself, as this would nullify a policy). Mr Milne recalls taking a taxi from Bogotá airport in the mid-1980s when three people pulled up alongside him waving guns. After swerving across the road they managed to pull off down a slip road. “These sort of things happen,” he shrugs in a conference room at the company’s London headquarters. “You get so used to it. Your adrenalin goes crazy but afterwards you have a drink and get over it.”

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His wife, he says, is used to seeing him off as he departs for dangerous destinations. But these days he tends not to give her “a lot of notice if I’m going somewhere like southern Iraq. I’d rather put up with the aggro just for a couple of hours than a few weeks”.

Despite this buttoned-up approach, the 53-year-old chief executive of Special Contingency Risks, a subsidiary of insurance broker Willis, says he is affected by the deaths of clients. He recalls one individual he used to stay with in Colombia, a “very dynamic, macho man”, who was kidnapped by “some of Pablo Escobar’s men”. Two weeks after he was released, when the ransom was paid, Mr Milne’s friend spotted one of his kidnappers at a bullfight – the police subsequently arrested six people. A year later, as they were being sentenced, three men burst into his office and “butchered him to pieces” in view of his girlfriend. “I was completely and utterly shocked,” he says.

Do such experiences make him more cautious about becoming close to clients?

“No, I went to a Scottish boarding school,” he offers by way of explanation for his stiff-upper-lip approach.

Born in Qatar, “of oil company stock”, he spent much of his childhood moving around the Middle East. His parents met in Basra, Iraq – his mother was there to get work experience with an Iraqi trading family and his father was an oil engineer working for the Iraq Petroleum Company, a consortium of the world’s largest oil groups.

After boarding school, he tried his hand at art, hoping to “find some hidden talents. I didn’t”.

A year later he snapped up the offer of a job at Willis to “look after all the unusual bits of insurance no one else wanted”. This included twin insurance – in the days before antenatal scans, parents could buy insurance against the additional cost of bringing up twins.

Another part of his “mixed bag” of products was looking after kidnap insurance. “It was a lot more interesting than twins,” he says.

Convinced this was a growth area, he persuaded his boss to send him to Colombia and Peru in 1982, then hotbeds of kidnapping. After a two-week language course in Spanish, he flew to Bogotá. “I came back to London with a full order book. My boss agreed I could specialise and gradually we built up a business,” he says.

Now, in addition to insurance, SCR provides security advice and his team ranges from accountants to security professionals with a military and police background.

Mr Milne says he is on call 24/7. He may pick up the phone at any time of day to a security manager of an international oil company or the wife of a billionaire alerting him to a kidnap.

The level of ransom varies by country. “I came across a company that had a couple of oil engineers kidnapped in Niger – they claim to have paid $30m to have them released. I would have paid less than $1m for an oil engineer in that area.” Paying such inflated prices, he says, distorts the market and inflates kidnappers’ expectations.

Broadly, he identifies two types of kidnapping. First, there are those that are highly organised, where the target has been followed extensively. “It might have cost them $30,000 to set up so there’s no point in offering less than $30,000 as there’s no return on equity,” he says. “These require a lot of financial negotiation.”

Then there are “cheap and cheerful” kidnappings. “These are random; you might be stopped in your car, beaten up and locked in the trunk. Your loved one will be called and asked for $30,000. There is very little negotiation involved in that. Our best strategy is prevention and having a contingency plan that includes having cash in the house to pay the ransom.”

As these are a lot less professional (often carried out by individuals on drugs) they can be very violent and the risk of death is high. “They are smaller in terms of financial demand but more expensive psychologically,” says Mr Milne. “One of the interesting things about kidnaps [is that] you might get a victim who’s been held in a Colombian jungle for a year, will come out quite fit, well cared for … quite upbeat; whereas the victims in these shorter kidnappings are quite traumatised.”

A growing part of his work is expatriate evacuation triggered by political upheaval. This year he is closely monitoring Algeria and Saudi Arabia.

Last year the company helped move employees of international companies from Libya and Egypt. “We had 52 clients in the area who had contingency plans but once the air space was closed, the plans fell away.” The key lesson was that “the best plans don’t work. You need lateral thinking”.

Piracy is another area that has grown in recent years and the sums are much higher than in individual kidnappings. “If it was an oil vessel, paying less than $10m is unlikely and generally a ship might be held for over 200 days,” he says.

Every day there is a new scenario developing, he says, so his even temperament is important.

Is he a typical insurance broker? He emits a deep throaty laugh. “No. And I’ve no desire to move to other parts of the insurance world.”

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