Kidnap and Ransom Insurance

A kidnap and ransom policy (K&R) basically provides coverage in the event of a kidnapping. These are one of the most hush-hush and discreetly sold policies in extreme privacy by the insurer to the corporates. A typical K&R policy includes the following:
• Kidnap and ransom coverage: Pays ransom and most policies insure ransom money while it's in transit ("delivery coverage"). Also includes payment of security company fees.
• Extortion coverage: Protection for threats against company property, contamination of products, and computer systems.
• Expense reimbursement: Includes travel expenses for security consultants, family members, and the kidnapped employee. Also covers the abductee's lost salary, and legal services.
Kidnapping and ransom insurance is really important to purchase for companies who have frequent business travels to the following countries and also for the companies in these countries. The top 10 countries in total kidnappings:
1. Brazil
2. China
3. Colombia
4. El Salvador
5. India
6. Malaysia
7. Mexico
8. Philippines
9. Russian Federation
10. Venezuela

Indian perspective
K&R policies are gaining much ground these days and enquiries of such policies are said to be going up by 15-20 per cent. Once supposedly opted by companies for kidnap-prone areas like northeastern India, and, more recently, for Naxalite- and Maoist-prone areas, Indian corporates are opting this cover for their executives travelling or working internationally in countries like Latin Amercia, Gulf countries or Africa. Insurers and corporates are extremely tight-lipped when it comes to disclosing the names of companies taking this cover. Coporate houses are also secretive about these policies- that seems obvious as disclosing any information would put them in the public domain. Companies like Tata AIG, ICICI Lombard, National Insurance and Bajaj Allianz have devised these policies.
The growth of these policies have gone up in recent times - be it for the alleged kidnapping of a corporate in Gurgaon or the high-profile kidnappings in Noida or a Food Corporation of India official in Assam. Data reveal that just in the year 2005 as many as 23133 such cases were reported out of which 1000 were for ransom.
Being very sensitive, a K&R policy is issued in strict confidence with only the top-level officials in insurance companies and corporate houses knowing about it. About 100 policies were sold in India last year.
The premium depends on a number of risk features and broadly this could vary between 2-5 per cent of the limit of the liability. While there are no upper or lower limits, the policy cover may vary between $1 million and $5 million (about Rs 4-22 crore).
These policies in general are very complex and phenomenally expensive. There are no general advertisements for these policies and these are generally sold to corporates who have a relationship with the insurance companies.
Tips for traveling executives to avoid kidnapping
• Don't think you're immune because you're not rich. The most frequent kidnapping targets are middle-class execs and their families.
• Maintain a low profile when traveling abroad. Leave flashy jewelry, clothes, and cars at home.
• Vary your routines. Don't travel the same road or jog the same path every day.
• Use official taxi stands.
• Steer clear of isolated or rural areas.
(Source: Assurex, a risk-management and commercial insurance brokerage)