| Trend | Range | |
|---|---|---|
| Special contingency risks – kidnap and ransom |  |
-5% to +5% |
Key takeaway
While the prevalence of cyber exclusions will send insureds looking for other solutions to cyber extortion risk, kidnap and ransom products are being increasingly sought out for active assailant risk cover. Insurers are also beginning to restrict coverage for exposure in Belarus, Russia and Ukraine.
The pandemic has so far not had a direct impact on this insurance sector, but it has changed the nature of the risk.
- As restrictions and lockdowns have eased, the incidence of kidnap activity has returned to pre-COVID-19 levels in several countries. While the decline in international travel has led to a perceived reduction in risk, our data shows an increase in the numbers of local nationals kidnapped.
- Moreover, criminals have continued to invest in schemes, such as virtual kidnaps (efforts to extort quick ransom payments when kidnappings have not actually occurred), to exploit the current environment and maintain a cashflow to fund further illicit operations.
- Cyber extortion has also continued unabated, as many technology-related crimes are not impacted by lockdowns or reductions in social and business interaction. Indeed, the steep rise in people working from home has presented cyber criminals a wider range of softer targets.
- Many believe that the economic downturn and lingering financial impact of COVID-19 could lead to increased security threats and higher rates of criminality globally as groups/individuals become more desperate.
Insurers are tightening policy language pertaining to cyber events that could be considered part of a ransom scenario.
- Insurers have almost entirely introduced blanket exclusions for cyber extortion, applying the exclusion on all new and renewal business.
- For those few programs with cyber extortion coverage, very small limits will apply to crisis response fees and expenses, or the policies will carry high self-insured retentions coupled with small aggregate limits.
Coverage restrictions for Russia, Ukraine and Belarus:
- Insurers are beginning to issue exclusions for these countries on new business and renewal quotations.
- Coverage exclusions range from being specific to expatriate and travel security evacuation endorsements to blanket across the entire policy.
- Insurers’ coverage exclusions will likely be tied to the security developments in these countries for the immediate and mid-term future.
Interest in active assailant coverage is growing.
- In addition to traditional K&R policies, the special risks market continues to develop and promote policies that respond to a broad range of security-related perils.
- We have seen special risks insurers, as well as other specialty insurers, show greater interest in active assailant coverage and offer increasingly customized solutions (either via endorsement or stand-alone policies) with a focus on post-incident crisis management support, legal liability, business interruption (as a result of both physical and non-physical damage) and indemnification of a variety of incident-related expenses.
- These solutions go beyond traditional terrorism and/or political violence coverage and are increasingly being used to complement traditional policies.
