Saturday, March 30, 2019

Insurance—"The business of kidnapping: inside the secret world of hostage negotiation"

From The Guardian:
Official policy in the UK and US – unlike in many other countries – is to never make concessions to kidnappers. Those taken sometimes die as a result. Is it time to rethink?
In 1982, a British insurance broker named Doug Milne set out in search of new markets. His speciality was kidnapping and ransom insurance, known in the industry as K&R. Milne enrolled in a Spanish-language course in London, and a month later, with rudimentary skills and only one or two solid contacts on the ground, he boarded a flight to Bogotá. On his first day in the Colombian capital, Milne was walking to a meeting with a potential client when, he recalled, “a guy pulled up alongside and this chap who was walking in front of me, his head just exploded”. It was a drive-by assassination.

Milne cancelled the meeting and spent the afternoon in a bar near Bogotá’s entertainment district. “I missed my meeting and I think I left there about 11pm after having drunk a couple of flagons of Tres Esquinas rum,” Milne told me. He was, of course, horrified. But he also realised that he’d come to the right place. While he knew nothing about the victim or the motive, the murder drove home to him the extent to which Colombian society was at the mercy of criminals and guerillas. His clients needed what he had to offer.
Kidnapping and ransom insurance was created in the 1930s, but it wasn’t until the 60s that it began to really catch on, following a spate of kidnappings in Europe by groups such as Eta in Spain, the Red Army Faction in Germany and the Red Brigades in Italy. The appeal was simple: in the event of a kidnapping, the insurance would provide reimbursement for ransom payment.
There were caveats to prevent fraud and to ensure that the existence of the policy did not actually increase the risk of kidnapping. The first was that the policy had to be kept secret. In fact, it could be voided if its existence became public. The concern was that if the kidnappers knew of the policy, they would demand more money.
The second principle is that the policy will only reimburse the ransom once it is paid. The insurance company never fronts any money. In order to raise the cash, the victim’s family will probably have to liquidate assets – mortgage the house, sell stocks, pool money from other relatives. This process makes the negotiations credible by dragging them out. This is not just about minimising the payout by the insurance company. Quickly making good on a large ransom raises the expectations of future kidnappers. It can make hostage-taking more lucrative and more common.

When K&R insurance first came on the market, the policyholders were left on their own to negotiate with the kidnappers. But in the mid-1970s, an insurance broker named Julian Radcliffe came up with an idea that would revolutionise the industry. Along with a few colleagues, Radcliffe convinced their company to set up a subsidiary focused on hostage response. The subsidiary, which they named Control Risks, would hire security experts – mostly former military and police – to handle negotiations. The cost of hiring the consultant was included in the policy and borne by the insurance company. In 1982, Control Risks became an independent company.

By the early 80s, hostage-taking was on the rise in Latin America, particularly in Colombia. When Milne arrived in Bogotá, he discovered a vast, untapped market. As an insurance broker, he sold a variety of policies offered by different companies available through the Lloyd’s exchange in London. The job of the broker is to serve the client and to advocate for their interests in the event of a claim. The underwriters represent the insurance companies. Specialised, high-risk policies were placed on the Lloyd’s insurance exchange, and Milne would field offers from different underwriters. He would select the policy that best suited his client.

To his South American clients, Milne was as quintessentially British as James Bond. He attended boarding school in Scotland, and dresses in tailored suits with a perfectly positioned pocket square. He enjoys a stiff drink, sometimes two. “When I went to Colombia, everyone wanted to see me,” Milne told me. “I started with a few contacts, but it grew like Topsy. All their friends at the golf club wanted to meet. It suddenly became a viable business.”

Some grumble that in an industry that values discretion, Milne is a bit of self-promoter. But no one denies his success. By the time he wrapped up his stint in Latin America in the 1990s, he had sold hundreds of new policies, recruited a specialised team in London focusing on the Latin America market, and developed a new service to provide risk mitigation – a “preventative training” programme that educated clients on how to reduce the risk of kidnap and how to respond if it does happen. He then convinced insurance companies that they should foot the bill. (After all, both insurance companies and their clients have an interest in reducing the likelihood of a kidnapping.)...

There are other approaches that also appear to be efficacious.
In 2014's "ISIS Personally Threatens Putin, Vows Caliphate in Chechnya" I retold a story:

...This may be an eror on the part of ISIS.
Back in 2010, during the height of the Somali ship hijackings, we posted "Dealing with Pirates (and terrorists) Russian Style":
While the BBC was reporting last week: "UN backs tougher stance against Somali piracy" yesterday's headline at the Moscow Times said "Somali Pirates Seize State-Owned Tanker".
Uh oh.

If the Somali pirates were up to speed on their history they may have remembered the name Arkady Katkov.

Starting in 1982, and continuing for the remainder of the decade, approximately 100 people were kidnapped in Beirut by various factions of Hezbollah ('the Party of God').
William Buckley, for example. He was the CIA station chief, kidnapped on March 16, 1984.
He was tortured to death. They did it slow, he died in June 1985.

The U.S. did the same thing after his kidnapping that they did after the Marine Corps barracks at Beirut International Airport were bombed in October 1983, killing 241 Marines and Sailors.

On September 30, 1985 four Soviet diplomats were kidnapped and Arkady Katkov was shot in the head by Hezbollah's head of security, Imad Mughniyeh.

The Soviets gave the kidnappers 48 hours to return the hostages and dispatched some guys they call Spetsgruppa A (Alfa Group).

The kidnappers and their relatives were identified by supporting KGB operatives working with the Druze militia, and some of the relatives were taken hostage.

Following the standard policy of 'no negotiation', Alfa proceeded to sever some of their hostages' body parts and sent them to the perpetrators with a warning that more would follow if the Russian hostages were not released immediately. The tactic worked and no other Russian national was taken hostage in the Middle East for the next 20 years, until the 2006 abduction of Russian diplomats in Iraq.

Among the body parts was a decapitated head and some testicles ...