The kidnap and ransom (K&R) business recently got the Hollywood treatment in Proof of Life, with Meg Ryan and Russell Crowe dashing off to South America to try to free Ryan's husband, who was being held by anti-government forces. The film bombed, with people far more interested in the couple's off-screen chemistry than the on-screen storyline.

But the K&R business probably didn't need the publicity. The market has been growing at 20% a year for each of the past five years, according to Alex Gordon-Shute, a spokeswoman for leading K&R insurer Hiscox. She says most of the business is from the corporate sector, with 75% of the premium volume coming from companies and 25% from individuals. Estimates put the annual premium income for K&R insurance at around $130m (£92m).

“The corporate sector is really driving the growth,” Gordon-Shute says. “There is an increasing realisation among companies of the responsibilities they have for their employees.” Insurance is not just being taken out by large multinationals, but also by companies of all sizes.

Hiscox's premiums start at $1,000 (£710) and rates depend on who is travelling and where they are travelling to, the length of the intended stay and what they will be doing there. For instance, energy activities in Colombia incur very high premiums.

Cover includes kidnap, bodily injury, extortion, products extortion, property damage extortion, hijack and malicious detention. Detaining a company's employee is seen by some as a useful bargaining tool until quibbles with a contract are sorted out. And according to John Collyear, active underwriter at Euclidian, extortion is also on the rise. “Terrorists think of it as a tax, as often they see themselves as a government in waiting,” he says.

Thinking ahead
Bernie De-Haldevang, underwriting director at Wellington, agrees that there is more awareness among companies of the dangers their employees face when working overseas.

He says companies face a number of risks. “The family of the victim may sue the company for not looking after him, the company loses a lot of income and the shareholders may sue for not providing adequate security.”

De-Haldevang also disagrees with the view that encouraging people to take out K&R insurance encourages kidnapping. “It's like saying we should stop household insurance as it will stop people burgling houses,” he says.

If someone does have the misfortune to need to use their K&R policy, the insurance companies do not act alone. Hiscox, for instance, has links with consultants Control Risks Group (CRG). One of the leaders in the field, CRG's kidnap response team has dealt with 1,200 kidnap cases in the 25 years it has been in business.

CRG dispatches two consultants to deal with a case within 24 hours of the kidnap. One will be sent to the place where the incident occurred and another to the company's head office, or to the hostage's family if it's not a business-related case.

The most common places for abductions in the 1990s were Colombia, Mexico, the former Soviet Union, Brazil, the Philippines, Nigeria, India, Ecuador, Venezuela and South Africa.

Nicola Hudson, a spokeswoman for CRG, says: “It's all about making sure they know what is happening, how to deal with the situation, how to deal with the press.”

Delicate business
Jeffrey Green is chairman of K&R brokers and crisis management company Asset Security Managers. The strength of the K&R business was highlighted recently when the company was awarded a Queen's Award for Enterprise for international trade.

Green says established kidnappers will expect to be dealt with a particular way and it is a mistake to pay the ransom asked for immediately, as this will lead not to the release of the hostage, but to a demand for more money.

“People feel they have no option,” he says. “We explain to them that they are going to do a deal. The kidnappers know you are going to buy and that you are the only buyer. There is a going rate and that needs to be negotiated. All sides have to be satisfied.”

Green says the negotiator should be someone local, perhaps the local company lawyer or if it is not a business case, someone like a banker or a lawyer. What is important is that the negotiator does not have the final say on the ransom amount and so cannot be backed into a corner.

But while K&R insurance is on the increase, it is not seen as the answer by everyone. Rachel Briggs, of think tank The Foreign Policy Centre, says there is widespread confusion over who is responsible for the security of people working abroad.

Briggs says insurance is part of the solution, as risk management is often part of the package, but she recommends that the government sets up international health and safety guidelines to establish employers' duty of care to their employees when working overseas.