Insurers struggle to determine rate for kidnapping risk

Chuks Udo Okonta

Getting a workable rate for kidnapping risk, is giving insurance operators sleepless nights, Inspen can report.

It was gathered that the complexity in arriving at appropriate rate for the risk, stemmed from failures by victims to disclose what they pay as ransom to secure freedom.

Former President Chartered Insurance Institute of Nigeria (CIIN) Sunny Adeda, who spoke on the challenges, presently faced by operators, said insurers are having difficulties in putting statistics on the risk.

He noted that the public, especially victims often refuse to disclose the ransom paid to secure freedom, adding that unless people state the ransom they pay, it will be difficult to determine the premium that should be charged on the risk.

Adeda noted that the Police also have a role to play in determining the rate, as they are often privy to the ransom paid by victims. He therefore suggested that insurers should work with the police to evolve a suitable rate for the risk.

 He said: “It is a pity that people are kidnapped almost every day and insurers are unable to provide cover for victims. Insurers are having difficulties in putting statistics on the risk. The challenge of marketing the risk is also enormous, as only few people may be interested in it.”

The Nigerian Insurers Association (NIA) in a bid to explore the risk has mapped out measures that would enable underwriters take advantage of the opportunity provided by the ransom paid by victims.

Director-General NIA, Sunday Thomas, said the association has organised a training program to sensitise insurance and reinsurance companies on the need and relevance of kidnap and ransom insurance in the country.

He noted that the umbrella body of underwriters is hoping that insurers would soon begin to provide covers for these categories of risks.

 “The Secretariat has organised a training program to sensitise all insurance and reinsurance companies on the need and relevance of kidnap and ransom insurance in our environment.

“We expect that members will leverage on the training to enable them grant cover on these lines of businesses,” he said.

The Managing Director of an underwriting firm, who would not like to be named, said: “People talk of emerging risks kidnapping and terrorism, when insurers develop products along these classes of risks how many Nigerian would buy them. Note that insurance thrives on a large number, if only few individuals buy these policies the aim would be defeated.”