Corporates run for kidnap cover

These are one of the most hush-hush and discreetly sold policies in extreme privacy by the insurer to the corporates.



Call it the kidnap, ransom, extortion, K&R cover or crisis coverage insurance. They 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.

But insurers said that the growth of these policies have gone up in recent times - be it for the alleged kidnapping of a corporate in Gurgaon last week or the high-profile kidnappings in Noida or a Food Corporation of India official in Assam.

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.

DNA Money spoke to a host of insurers and corporate houses to get a feel on the significance of such policies.

"We've been receiving enquiries of such policies in recent times. These are wide covers that encompass various parameters like the ransom payment, fee of the negotiator, expenses of counselling families, psychiatric care, medical help and rehab expenses. But the strength of the policy lies in the efficient claims-settling process, where professional firms generally come into the picture," Anuj Tyagi, national manager, reinsurance, ICICI Lombard Insurance, said.

"The profile of a customer is generally varied, including manufacturing, IT and civil contractors with exposure, in say, Gulf countries like Afghanistan. All these policies are largely reinsurance-driven," Tyagi said.

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).

Barun Das, company secretary, Exide Industries, said, "We have never looked at this policy. We offer a standard accident cover and covers to protect physical disability. In places like Gurgaon, there is display of lavish opulence, which leads to discontent and, hence, such incidents of kidnapping."

McLeod Russel, the largest plantation company in the country, also does not have this cover for its executives.

"I do not think it is needed for Assam, where we operate as we are adequately protected by the special police force of the state government. We are yet to consider whether we would take a call in future," K K Baheti, director, McLeod Russel, said.

According to D P Chakravarti of Goodricke, these policies were very complex and phenomenally expensive.

Source: DNA Money