One insurer told The Independent that his annual pay-outs consistently amounted to more than $10m (pounds 5.9m) because of a huge increase in the incidence of kidnapping.
The view of successive governments is that yielding to the demands of terrorists, hijackers and kidnappers serves only to heighten future vulnerability. The abduction of three Britons and a New Zealander in Chechnya this week has highlighted the dangers of working in emerging markets.
However, the policy of not negotiating with kidnappers extends only to government departments and cannot be forced on individuals or companies, who believe insuring against abduction is necessary to protect their employees. As a result, the number of "kidnap and ransom" policies underwritten at Lloyd's has more than doubled in the past 10 years.
Exact figures are not available as underwriters shroud their business in secrecy, but the largest kidnap insurer in the world, the Hiscox Group at Lloyd's, is issuing about 5,000 policies a year, amounting to 60 per cent of all world business.
"Margaret Thatcher used to say you should not even talk to terrorists, but if you don't talk then you can't solve the problem," said Robert Davies, the lead kidnap and ransom underwriter at Hiscox.
"However public-spirited you are, if a member of your family were kidnapped, you would pay money to get them back. It would take a brave government to physically prevent anyone from paying that money. Responsible companies simply want to safeguard their employees, and it is our job to make sure that people who are kidnapped get home safely."
Hiscox refuses to say who it insures or how much it has paid out. However, Mr Davies said: "If I paid out less than $10m in any one year, then I would be a happy underwriter."
He said the company and its advisers, the security company Control Risks, expected to become involved in 30 to 40 kidnappings a year. In most cases, a ransom is paid. Mr Davies said sums ranged from about $50,000 in Pakistan or Guatemala to one case - which was not insured - of $30m in Mexico.
On average, one in ten of the people kidnapped is subsequently killed. Where Control Risks has been involved, that figure falls to fewer than one in 100.
The second-largest insurer against kidnapping is the American International Group (AIG), which said it, too, had experienced a huge increase in such business. Asked how the business was reconciled with government policy, Edward Owen, its vice-president of marketing, replied: "We have a simple rule of thumb: we want to work with our insureds to secure their safe release."
As part of AIG's service, negotiators from the security firm Kroll Associates are dispatched at a moment's notice to the kidnap scene, money is made available for transport and legal costs, for a ransom and for subsequent counselling of victims and their families.
The level of premiums varies, and depends upon the number of people insured and the length of their stay in a danger zone.
According to Mr Davies, low-risk insurance may cost as little as $1,000, while company policies may run into hundreds of thousands of dollars.
He said he would not insure workers venturing into Chechnya, although there are more dangerous areas. According to Hiscox research, the most dangerous country for kidnapping is Colombia, where 4,040 people have been kidnapped since 1991. Next comes Mexico on 656, Brazil on 523, the Philippines on 460 and Pakistan on 435.
The Foreign Office said it did not condone payments to kidnappers, but it could not stop them.
"We cannot turn round to anyone and say it is illegal to pay ransoms, but we will point out that Her Majesty's Government never gives in to the demands of kidnappers or terrorists," said a spokesman. "Once you pay, you never know when they will come back for more."
Number of people kidnapped, 1991-1998
1 Colombia 4040
2 Mexico 656
3 Brazil 523
4 Philippines 460
5 Pakistan 435
6 Guatemala 170
7 Venezuela 107
8 India 85
9 Nicaragua 41
10 Peru 41
All other countries 608
Source: Hiscox Group
y Use non-stop flights on well-known airlines.
y Never flag down taxis or use taxi "touts". Get a colleague to meet you at the airport or get your hotel to provide a taxi. Unload all your luggage before you pay the taxi.
y Check in with company HQ as soon as you can. Keep copies of all your important travel documents. Keep your money in separate amounts and split up your credit cards.
y Never wear expensive jewellery or carry around electronic equipment in poor areas. Don't show your hotel details on your luggage. Never accept invitations from people you don't know.
y If you have kidnap insurance, don't tell anyone. That would make you a target.Reuse content