KIDNAP AND RANSOM INSURANCE COVERAGE FOR EXECUTIVES
The brazen assassination of the chief executive of a large health insurance company on a sidewalk in Manhattan has caused companies worldwide to take a hard look at their efforts to protect the safety of their executives, particularly those under specific threat. That scrutiny should in turn bring with it a focus on a specialised and often underappreciated commercial insurance coverage: kidnap and ransom (K&R) insurance.
K&R insurance is designed to cover certain risks that no organisation wants to think about – the targeting of its executives by those intent upon bringing harm to them. K&R insurance is often described as having been developed in the aftermath of the 1932 kidnapping and murder of renowned aviator Charles Lindbergh’s baby, but it arguably is ultimately rooted in the coverage for piracy at sea that has been offered for centuries through the London marine insurance market.
The terms ‘kidnap’ and ‘ransom’ are illustrative but not a fair or complete description of the coverage provided by a K&R policy. The K&R insurance market traditionally has been a smaller one. The covered perils are obviously serious, but they also occur relatively infrequently. As a result, premiums have historically been low compared to the coverage limits provided. A not unsurprising consequence is that insurers have continued to broaden K&R coverage terms in order to attract continued and new business. As a result, modern day K&R policies extend well beyond the shorthand of ‘kidnap’ and ‘ransom’. Today’s policies commonly cover at least four major categories of perils: kidnapping, extortion, detention and hijacking. All of these terms are defined – often broadly – in the K&R policy.
Apr-Jun 2025 Issue
Jenner & Block LLP