With increasing cases of kidnaps insurers have found a new business line for them in the form of Kidnap-&-ransom (K&R) insurance policy. Demand of such policies have risen among corporate as earlier insurers use to sale 100 such policies in a year but now this number has increased to 300 per year.
K&R insurance provides coverage for abduction and other events through a combination of financial compensation, including paying the ransom and extortion money, and expert crisis management service.
Benefits of K&R insurance policies include ransom/extortion money, expenses associated with crisis, loss of ransom money in transit, legal liabilities for alleged negligence in not preventing a kidnapping or incompetence in handling the crisis, death or dismemberment, medical cost and interest on loan ransom payment.
K&R insurance policies are ransom-benefit policies; these are issued on reimbursement basis. Most policies have limits on each loss and limit on aggregate loss as well.
Basically shipping companies who have fear of sea pirates and companies who have exposure in maoist-infested area buy such policies.
Companies who offer K&R insurance policies include New India insurance, United India assurance, TATA AIG general insurance and ICICI Lombard general insurance.
Companies who have bought K&R insurance policy include Coal India, NTPC, owners of tea gardens and leading multi-national companies.
Such policies are underwritten on the basis of geographical location, number of employees in a particular location, employees travel details and past record of kidnapping and ransom incidents.