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Two FBI agents, Carlos and Roger, accept help from a prisoner named Chuck to catch a serial killer. They allow Chuck to meet his old girlfriend Kelly as per his demands. Kelly also knows a little bit of information about the serial killer. Kelly is married to another man.

Carlos: Sir, I was thinking maybe we could use the Kelly woman as insurance in case Chuck gets happy feet.

Roger: Listen, however he plays it, we play it straight. Kelly's involvement remains classified.That means nothing in the report. No name, no location, nothing. Got it?

Carlos: Yes sir.

I know the FBI doesn't usually ruin people's lives to catch serial killers. What does insurance mean here?

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It means that somehow they could use Kelly's involvement to persuade Chuck to stick with the plan.

Without broader context it's hard to say how, we can just speculate, but assume that Carlos doesn't want to do anything illegal. In that case it could be that Kelly's information actually links her to the serial killer or maybe she's involved in some other serious crime, and he wants to tell Chuck that if he cooperated, he, Carlos, could help Kelly to get an excellent lawyer or even "pull some strings" to help her, otherwise he does nothing and she will probably spend her life in jail.

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