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. We have seen corporates with operations in Maoist-infested areas buying these policies, said G Srinivasan, chairman and managing director, United India Assurance.
Hit by piracies on the high seas, shipping companies, too, are now buying K&R policies, said a senior official of ICICI Lombard General Insurance.
We have seen demand for K&R policies from shipping companies picking up, he said. Normally, international shipping companies take these covers, but, of late, Indian companies, too, are buying them, said Srinivasan.
There has been a discernible increase in the average ransom payment in the recent years.
The number of kidnappings has also risen. Insurers say that while, earlier, hardly 100 such policies were sold in a year, now the number has crossed 300. Companies which offer such policies are New India Assurance, United India Assurance, Tata Aig General Insurance and ICICI Lombard General Insurance. State-owned Coal India, NTPC, owners of tea gardens and leading multi-national companies are among those who have bought K&R policies for their employees. Coal India has taken the policy for covering its employees working in mines.
Benefits and services, which are typically available under an K&R insurance policy, include ransom/extortion money, expenses associated with the crises, loss of ransom money in transit, legal liability for alleged negligence in not preventing a kidnapping or incompetence in handling the crisis, death or dismemberment, medical cost and interest on loan for ransom payment.
General insurers say contrary to the perception that K&R insurance is only a ransom-benefit policy, these are issued on a reimbursement basis. Most policies include limits per loss as well as the policy aggregate.
Policies are underwritten based on the exposures a company faces in the places where it does business. The premiums depend on the perceived risk and the underwriter takes into account a variety of variables while deciding the price. These include geographical location, number of employees in a particular location, employees travel details, and past kidnapping and ransom incidents.