AHMED ZBIDI: Thank you for having me, Phil.
PHILIPP: Pleasure. From your experience, what are the most common misperceptions about special crime insurance?
AHMED: That is a great question, Phil. I think three things come to mind. The first one is the breadth of cover. As you say, the name kidnap ransom, I feel like people tend to focus on the kidnap element and the ransom element, but there's a wide variety of topical events that you've mentioned, such as domestic threats, malicious detentions, as well as a wide variety of relevant additional expenses that could essentially reduce the likelihood of any legal liability arising from an insured event.
The second is probably the volume of claims. I can't speak on behalf of other markets, but definitely on the Hiscox side, our claims team have settled around 4,000 claims. That averages to about one every three days, so that's definitely not a small amount of claims. And I think the third thing is the belief, the attitude, the mentality that once you purchase this policy, it's just something you put away at the bottom of the drawer, and you just never think about risk or that policy ever again.
PHILIPP: Interesting. Why, in your opinion, then, should organizations purchase and maintain this type of coverage?
AHMED: So I suppose the question I'd ask a risk manager is, what would you do if one of your employees got kidnapped whilst under your care and custody? How do you know if the first ransom demand is an inflated demand or not? Believe it or not, there is a going rate for certain people all over the world.
So the last thing you want to do is pay an over-the-top ransom. That does two things. It tells them that you've got more cash available, and it puts all your other employees at risk. So this policy gives you that assistance with a financial strategy where there's a tried and tested methodology that's worked throughout the years.
What about family liaison? What does that look like? Keeping the family on board, up to date is often an overlooked yet integral part of an insured event. What do communications look like, both internally, to your shareholders, to your employees, externally, to members of the public, to the media? And then how do you navigate the complexities of ransom settlements all over the world with different rules and different jurisdiction?
When it comes to extortions, what if your overseas operations got extorted? How do you know whether to engage or not? Making the wrong decision, you could end up paying ransoms week after week, or if you ignore the threat, they might carry out their initial threats.
What if your CEO received a threat to life? Do you have the capability to perform a risk assessment to determine the credibility of that threat? So for me, this policy is simply more than the reimbursement of ransom paid to kidnappers or extortionists. It's all the expert assistance and advice that comes with all of these insured events.
PHILIPP: This is very helpful. Thank you. Based on your underwriting experience with North American clients, can you allude to some specific trends that you've observed over the last few years?
AHMED: That's a bit of a tough one because there's no one particular industry per se that has been interested in this policy. There's a wide variety of industries, and really, any organization that has a geographical footprint or overseas foreign travel have always been interested in this sort of policy to insure their overseas exposure. But the trend that I can allude to is they end up using this policy as much domestically as they do over the seas because of the rise of domestic threats in the U.S.
PHILIPP SEEL: Could you be a little bit more specific in regards to domestic threats?
AHMED: Absolutely. So when it comes to threats, there are two elements. There’re threats from within the organization. So this could be a disgruntled employee or a employee about to be terminated, making threatening remarks to his colleagues. Or it could be threats from outside the organization facing in, such as a customer that's unsatisfied with the services that they received.
So industries that are relevant-- applicable here could be financial services, insurance companies, health care, medical, any organization that provides some sort of service to their clients. And in terms of internal threats, any industry where there's a high volume of people in a small area such as manufacturing, where any threat to harm your fellow employees is a credible threat.
When you purchase a Hiscox policy, you get exclusive access to Control Risks who have a behavioral threat analysis team. And within that team, they're made up of ex-FBI behavioral scientists who help with the threat assessment to determine the credibility of that threat. So how the policy works, the policy pays for that threat assessment and then any additional expenses that arise from that threat, such as additional security.
PHILIPP: One other thing we've noticed is a growing concern by many of our clients over the risk of illegal detention, specifically by executive personnel traveling into some different parts of the world. The recent high-profile cases we have seen of US or North American citizens being detained serve as examples. Can you outline the scope of coverage under a special crime policy with our audience and the crucial role that the policies crisis response firm can play in that type of scenario?
AHMED: Yeah. And I also think with the current geopolitical landscape, I definitely think that this threat of detention could absolutely continue. We are definitely seeing it on the claim side, where the amount of detentions are increasing year on year. So detentions are a frightening experience not only for the person who's being detained but for the family whose loved one is being held in a jail cell in a foreign country where they probably don't even speak the same language, for the other employees who might feel that they might be targeted if they were to travel.
So a response consultant should do a preliminary investigation to determine the credibility of that detention, as there's normally a malicious accusation surrounding that detention. They also assist with government liaison, whether it's the host government or the government where they are currently being detained. They assist with family liaison, which I alluded to earlier, so about keeping the family involved up to date. And then also any post event assistance, whether it's psychiatric care, medical care.
And the policy reimburses costs such as medical care, dental care, any personal accident injury sustained as a result of that detention, any additional expenses, such as the salary of the detained person, the salary of a family who's flown out to assist with that detention, the cost of flying that family member, as well as other additional expenses that might be applicable. So as I said, this kind of ties back to my first few points about the misconception of, OK, now I have a policy, of just buying the policy and putting it away. This should absolutely just make you relook at your own internal risk framework.
PHILIPP: Thank you, Ahmed, for sharing the perspective from the underwriter’s side on special crime insurance.
AHMED: Thank you for having me.
