Will new kidnap legislation planned in the UK affect insurance cover?

22 January 2015

Towards the end of last year, the UK government announced that it intends to amend the 2000 UK Terrorism Act. Will that make a difference for victims of kidnap? And how does it affect kidnap and ransom insurance?

Proposed changes to UK law

Bellwood Prestbury has had a number of enquires about how the changes announced by UK Home Secretary Theresa May in the proposed Counter-Terrorism and Security Bill might affect cover offered by our kidnap and ransom insurance.

Simon Shipway, Head of Compliance at Bellwood Prestbury says that the government are simply clarifying the position that has always been inherent in kidnap and ransom insurance. 

“The new Bill states that it will be illegal for a kidnap and ransom policy to reimburse any ransom payment to known terrorists, i.e. any organisation or individual on a designated UK Government list. This is no different than the current position. It has long been illegal for any UK citizen or organisation to fund terrorist groups. Our policies have never been used in this way.”

The benefits of kidnap and ransom insurance

Simon explains that the benefit of kidnap and ransom cover is to help people working in risky regions to avoid kidnap situations or to achieve a negotiated release. 

Simon says: “Our policies are designed to help people avoid the situation arising, with security briefings and expert advice before people travel to known kidnap regions.

“Should the worst happen and someone is taken, the policy pays for expert negotiators and local support to help people get released. Facilitation fees are often paid to local negotiators working on behalf of hostages. These people understand the local area, the background, the culture and the motivation behind the kidnapping. They are often key to achieving a release. This is the kind of expenses that are covered by a K&R policy. We have always been prohibited from supporting payments to terrorists. Nothing has changed in that regard.” 

Lloyd’s reacting to the proposed legislation has stated: “Lloyd’s and the London Market have been in dialogue with the UK government concerning this issue for some time now. The Bill is unlikely to have any practical impact on the Lloyd’s Market, as UK insurers, like any other UK "person", are already prohibited from providing funds to terrorists.  The new bill will remove the ability for insurers to be able to refund a person or company who has paid a ransom to a designated terrorist organisation. The law, up to now, has been ambiguous on the legality of the reimbursement of ransoms paid to terrorists and this bill is therefore looking to clarify that – although there has not been any indication that Lloyd's underwriters have ever made such a payment.”

To find out more about the benefits of kidnap and ransom insurance, please take a look at our kidnap and ransom insurance pages or call our experts for a confidential chat on +44 (0) 207 305 5650.

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Categories: Kidnap & ransom, Kidnapping insurance

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