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The 72 hostages being held in the Japanese Ambassador's residence in Lima, Peru are just a few of the more than 1,000 people taken by rebel or criminal groups in Latin America in 1996, say security experts.

Unlike many of the other captives in the region, though, no amount of money will aid the release of the hostages in Lima.

The fate of the hostages will be determined by political machinations whereas the fate of kidnap victims in Latin America is usually determined by hard cash.

Increasingly, rebel groups and criminal gangs in the region are kidnapping wealthy individuals and employees of large companies for money.

As the ransoms paid grow, rich families and corporations are more often turning to kidnap and ransom insurers for both advice on prevention and coverage to pay the kidnappers' demands.

The audacious takeover of the Japanese Ambassador's residence in Lima by Tupac Amaru rebels in December 1996 has drawn the attention of the world but is not typical of kidnappings in Latin America, said Christopher T. Marquet, senior managing director at Kroll Associates, a security consultant in New York.

"It's a complete anomaly because it is politically motivated," he said.

While other groups in Latin America, such as the FARC (Revolutionary Armed Forces of Columbia), a political group in Colombia, have political motivations, their kidnapping activity is purely a means of raising money, whereas the Marxist rebels in Peru are trying to secure the release of imprisoned comrades, Mr. Marquet explained.

The hostage crisis in Lima also bucks the trend of the general decrease in the number of kidnappings in Peru as President Alberto Fujimori has cracked down on terrorist groups, such as the Tupac Amaru and the Sendero Luminoso, or Shining Path, in recent years, Mr. Marquet said.

In contrast, government forces in Colombia have done little to curb the kidnapping rife in the country, Mr. Marquet said.

Consequently, Colombia is home to the most kidnappings in the world, he said.

Of all of the kidnappings that took place in the world last year, 75% were in Latin America. Half of the Latin American abductions occurred in Colombia, Mr. Marquet said.

An estimated 1,000 to 1,200 kidnappings took place in Colombia in 1996, said Sean McWeeney, president of Corporate Risk International, a security consultant in Fairfax, Va.

"But that is just those that are reported. A lot of the people who are kidnapped don't want the information to get out," he said.

The kidnappers in Colombia are efficiently organized, Mr. McWeeney said. Victims are held in prison-like conditions with armed guards; they are regularly fed; and the kidnappers have designated negotiators who handle the ransom deals, he said.

"It's like a business," he said.

Other countries with a high incidence of kidnapping include Mexico, Brazil and Guatemala, according to Mr. McWeeney.

In Mexico, kidnappings are increasing as poor people perceive a growing gap between themselves and the country's rich, said Mr. Marquet. The problem is exacerbated by often corrupt and ineffective law enforcement agencies, he said.

And ransom demands are increasing in the country as kidnappers and potential kidnappers learn of huge amounts being paid to secure the release of victims. For example, Mamoru Konno, president of Sanyo Video Component Corp., a Sanyo Electric Co. Ltd. subsidiary in Tijuana, Mexico, was freed after nine days last August for a $2 million ransom, Mr. Marquet said.

The payment followed the trend of increasingly large ransoms being paid for the release of prominent Mexicans in recent years, he said.

And as locals become more concerned with security, foreign businesspeople, who take less stringent security measures, become more attractive targets, Mr. Marquet said.

Guatemala, too, is seeing a rapid rise in kidnappings as the country becomes more volatile following recent political changes, said A.H. Manson, a director at Kari Corp., a Washington-based K&R insurance brokerage and security consultant.

"There was a time last year when there were eight kidnappings a day in Guatemala," Ms. Manson said.

Kidnappers in Guatemala usually seek ransoms in the hundreds of thousands of dollars rather than millions, Ms. Manson said.

In addition to increasing in number, kidnappings are becoming more complex in Latin America, she said.

For example, in Colombia, kidnappers often take more than one victim and demand separate payments for each victim, Ms. Manson said.

"That is almost always the way they do business now," she said.

And kidnappings are now unrestricted by borders: Colombian groups operate in Ecuador and Peruvian groups operate in Bolivia, Ms. Manson said.

"They are looking for new markets and points of vulnerability," she said.

In Peru, while "orthodox" kidnappings have fallen in number, there is a resurgence in secuestro al paso incidents, or short-term kidnappings, Ms. Manson said.

Expatriate foreign businessmen are just as vulnerable as locals to these types of attacks in Peru, she said.

Typically, victims are carjacked or bundled into another car. The victims then are either forced to use their bank cards to empty their accounts, or their relatives are called and told to make a money drop to secure the release of the victim, she said.

The ransoms have to be paid quickly from readily available cash.

The increase in kidnapping in Latin America has led to an increase in demand for kidnap and ransom insurance and in the number of insurers offering the coverage.

For example, one day after the Tupac Amaru rebels took over the Japanese Ambassador's residence in Lima, American International Group Inc. bound coverage for a Japanese client, said Jean McDermott-Lucey, vp at American International Underwriters, an AIG unit in New York.

"We had a quote out for the U.S. subsidiary of a Japanese company and it was bound the next day," she said.

However, the overall increase in kidnapping elsewhere in Latin America is generating more interest in K&R coverage than the crisis in Peru, Ms. McDermott-Lucy said.

And while some AIG clients are being held hostage in Lima, it has not yet received a claim, she said.

Any claim would likely be substantially lower than most K&R claims, as no ransom payment is likely to be paid, so insurers would only pay smaller items, such as the lost salaries of the hostages.

Claims from the Lima siege are likely to be limited in number, as many of the hostages are diplomats,and they are not usually covered by K&R insurance. Also, many of the hostages are Japanese; it is illegal to sell K&R insurance in Japan, though their foreign subsidiaries can buy the coverage.

But companies with operations in Colombia, Mexico and Guatemala are increasingly buying K&R coverage, and there is a growing interest from companies with operations in other safer countries, such as Venezuela, Ms. McDermott-Lucey said.

"Business people are traveling more, they are aware of the risks, and there is less of a feeling that 'it can't happen to me.' Just about everybody I meet in Latin America knows somebody or knows of somebody that has been kidnapped," she said.

In the United States, more and more companies are buying coverage because of kidnapping exposures domestically and in Latin America, said Albert M. Van Wagenen, senior vp at Professional Indemnity Agency in Pleasantville, N.Y.

About 75% of Fortune 500 companies buy the coverage, he said.

"There is tremendous interest in the coverage, and there is a tremendous amount of claims activity, but it is still profitable," Mr. Van Wagenen said.

Claims filed with the Hiscox syndicates have increased 20% over the past year, said Robert Davies, K&R underwriter for syndicate 33 managed by Hiscox Syndicates Ltd in London.

And often the claims are coming from foreign corporations with operations in Latin America, he said.

"Especially in Colombia, foreigners are being picked off more than ever before," Mr. Davies said.

But as the claims increase, so does the premium volume. In 1996, insurers worldwide wrote K&R premium of about $110 million, compared with $90 million three years ago, he estimated.

The increase in insurance coverage does not lead to an increase in kidnapping, Mr. Davies said.

"We've never had a loss where people are picked off because they are insured. For one thing, the policyholder cannot disclose the coverage, and even if a kidnapper did know you were insured, he would not be more likely to kidnap you, because he would know that he would be up against professional consultants," he said.

And the coverage is not often abused, Mr. Davies said. In 12 years, the Hiscox syndicates have paid 350 K&R claims; only two of those were suspected to be fraudulent, he said.

"In one case, we didn't pay the claim and we heard nothing more about it, and in the other case, we did not have enough proof that it was fraudulent, so we paid," Mr. Davies said.

The growing demand for K&R coverage encouraged CIGNA Corp. to enter the market last year, said Jeffrey Malkovsky, vp at CIGNA International in Philadelphia.

"We know that we have a growth opportunity. With the increase in the globalization of business and trade pacts, assembly lines are being located wherever there are lower costs," he said.

And as executives travel to or work at the new sites, the incidence of kidnapping and the demand for K&R insurance will likely increase, Mr. Malkovsky said.

Most of the insurers that cover kidnap and ransom risk use the services of security consultants to handle negotiations with kidnappers if a policyholder is taken.

For example: Kroll is affiliated with American International Underwriters; Corporate Risk works with Professional Indemnity Agency Inc., an underwriting agency in Pleasantville N.Y.; Control Risks International contracts to provide services to syndicates at the Hiscox Group in Lloyd's of London; and Pinkerton's Inc. in Encino, Calif., contracts with by CIGNA International, a unit of CIGNA Corp. in Philadelphia.