Kidnap, ransom, cyber attacks and terror. Not your average insurance claim. And this is exactly why one insurance company has the monopoly of this whole sector.
Hiscox started out in one small office, but they’re now the global leaders in specialist insurance.
They pride themselves on policies covering hard-to-measure insurance claims, for example a terror threat. Terror is generally infrequent, so there isn’t the same data as there is around something like a car crash. As the Chief Executive of Hiscox, Bronek Masojada says, the infrequency makes it hard to price up the cost of insuring against it.
Bronek Masojada told 5Live:
“Yes it is a bit arbitrary but people want the cover. It isn’t the sort of thing like car accidents where there’s lots of them and you can work it out,”
“We don’t want lots of terrorist events.”
And it’s this thought process that has allowed them to become the leading insurer for kidnap and ransom.
Hiscox provide two-thirds of the world’s kidnap and ransom insurance.
Their insurance covers extras such as evacuation from hot spots if there’s a coup. Their client base covers high risk areas such as Egypt and Libya, although they won’t reveal specifics about the people they cover.
QBE, AIG, Alfagate and CJ Insurance all provide similar K+R insurance, but they’re yet to reach the same scale of client base as Hiscox.
Another specialist area that Hiscox has been developing is cover against cyber attacks. The company recently hired GCHQ’s former director of intelligence, Robert Hannigan, to help assess the cyber-threat to businesses.
Mr Masojada believes cyber attacks are one of the hardest to counter:
“At the moment cyber’s really hard. It changes more rapidly than something like kidnap because technology’s moving so fast.
“And when it’s uncertain you put in a margin for safety. We may look back in time and think that was too high a price, but for today it’s the uncertainty that matters.”