The marketplace for Kidnap and Ransom (K&R) insurance remained stable and competitive through 2018. Premiums are as low as $400 per million limit for companies with limited foreign exposure (locations or travel). For companies with higher exposures including foreign travel and locations, premium is around $1,000–$3,000 per million of coverage limit. Coverage is broad, but broker expertise is needed to ensure the policy contains all applicable enhancements, such as Workplace Violence, Child Abduction and Cyber Terrorism. Response firm relationships remain stable, and the largest response firm, Control Risks, maintains their primary relationship with Hiscox, as well as being accessible through Great American and Zurich. Other leading markets/response firms include AIG/NYA International and HCC/Unity.
Exposures for Kidnap and Ransom policy are on the rise, both in the United States and around the world. Domestically, companies are concerned with extortion demands, bomb threats, active shooters and other workplace violence incidences. Companies may have extortion coverage on a Cyber policy, but the K&R policy may offer coverage with no self-insured retention and faster response time than the Cyber policy; making it the preferred source of coverage in some cases. However, some insurers now impose a retention for cyber extortion on K&R policies. Internationally, kidnap for ransom risk is high in Mexico, Colombia, Libya, Syria, Nigeria, Iraq, Afghanistan and the Philippines, among other countries. Mexico and other countries continue to see high incidence of virtual kidnapping—which occurs when there is a purported kidnapping that has not actually occurred that includes a ransom demand. Virtual Kidnapping is generally covered under a standard K&R policy.
The most talked-about coverage in Kidnap and Ransom policies in 2017 has been Assault Coverage or Active Shooter Coverage, which is offered as an optional extension for 20–50% additional premium. This coverage offers crisis response, and costs and fees associated with a violent incident at the workplace. For schools, restaurants and other businesses that have nonemployee exposure, the policy can be broadened to include students, patrons or guests as insureds, and provides coverage for medical expenses, rest and rehabilitation, security and liability. In addition to the coverage extension, insurers/response groups are offering training and support, including workshops, risk reviews, workforce training and incident response planning.
In summary, the Kidnap and Ransom marketplace is offering broader coverage at stable and competitive premiums with as expiring coverage. Premiums are rising for the companies that choose to purchase enhanced coverage for the active shooter/assault exposure. Policies continue to have no self-insured retentions (with the exception of the newly developing Cyber Extortion retentions), and crisis response consultant fees are generally unlimited. Insurers are generally not requiring any specific country exclusions, and we do not anticipate seeing these added to policies in 2019. With premiums low, it is generally recommended to purchase stand-alone K&R coverage, which can be bought on a three-year policy period, versus adding it onto a package program which often provides significantly less coverage. An experienced Gallagher management liability broker can assist with proper K&R policy placement, making sure there are no gaps in this life-or-death insurance coverage.
Important Note: This paper is not intended to offer legal advice. Any descriptions of insurance provided herein are not intended as interpretations of coverage. An actual insurance policy must be consulted for full coverage details.