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SYDNEY, Australia-Insurance policies covering kidnap, ransom and extortion for corporate executives and their families are taking on new importance for Australian companies after the alleged kidnapping of a Sydney business executive's wife.

New South Wales police are still searching for Kerry Whelan, 39, wife of Bernard Whelan, managing director of Sydney-based Crown Equipment Pty. Ltd., which supplies fork lifts, pallets and other heavy moving equipment.

Ms. Whelan has been missing since May 6, when she failed to show up for an appointment with her husband at his business.

The next day, her husband received a ransom demand for $1 million Australian ($761,600) There has been no further communication from the kidnappers, nor has Ms. Whelan been found.

Australian kidnap, ransom and extortion underwriters have confirmed that Ms. Whelan is covered for up to $1 million under her husband's company policy, but they will not say who the underwriter is.

KR&E underwriters say the incident has prompted risk managers whose corporations have no coverage, or coverage only for incidents outside Australia, to ask for premium quotes.

A Melbourne-based spokes-woman for Chubb Insurance Co. of Australia Ltd. said the Whelan case is raising risk managers' awareness of kidnap risks.

"A lot of people don't think about KR&E insurance, but recent cases, including the Whelan case, have created more awareness about the incidence of KR&E in Australia," she said.

Kevin Toll, Australian manager of the crisis management division of Melbourne-based American Home Assurance Co., a unit of American International Group Inc., said the incidence of kidnap and ransom cases have increased in Australia over the past two years.

Geoff Wegg, New South Wales Police Service superintendent, said the number of kidnap incidents has increased, and that those involved are more likely to report them to police.

He said the increase could be partly attributed to copycat crimes.

Ken MacGregor, a senior executive with the Sydney office of Sedgwick Ltd., said he expects more corporations to buy KR&E coverage now, but added it is already common for major corporations to buy the insurance.

"It is very common. . .especially when the corporation is a multinational," he said. Coverage for expatriates is frequently purchased, especially for employees working in South America and southeast Asia.

AIG's Mr. Toll said there were 600 kidnappings reported in southeast Asia in 1995 alone.

Chubb doubled KR&E insurance sales each year over the past two years, according to the insurer's spokeswoman, but she would not say how many policies the company has.

While there are no statistics on the number of major Australian companies that have purchased KR&E coverage, the Chubb spokeswoman said: "There are still a lot of uninsured, publicly listed organizations."

She said the increase in policies is partly because more Australian companies now have operations in the Asia-Pacific region.

Risk managers based in the United States are far more aware of the potential risk, she noted. "A lot more polices are purchased in the United States than in Australia because United States companies are more aware of their exposure."

Mr. Toll said that while most corporate KR&E policies give company directors, officers and their employees 24-hour coverage when traveling, he expects corporate risk managers to consider wider coverage for incidents occurring in Australia.

"What we have seen will cause corporations to look at the cover they have in place," Mr. Toll said.

Many "corporations have limited cover for kidnap and ransom under travel insurance, but I think some companies will consider taking on a broader cover."

Until the Whelan kidnapping, Australian risk managers perceived kidnap, ransom and extortion as a relatively low risk, Mr. Toll said.

In May, a Sydney man was jailed for six years for an attempted kidnaping of a 6-year-old boy.

Last November, Melbourne-based shopping center owner John Gandel, a multimillionaire, was the intended victim of a kidnapping attempt. Mr. Gandel was not home, but his home's caretaker was temporarily abducted.

Underwriters say many other incidents are never publicized.

Some companies prefer to deal with kidnappers' demands themselves to avoid adverse publicity, even though that can leave them open to further extortion, Mr. Wegg said.

"We try to reinforce to companies that they need to implement crisis management measures," he said. "They should have them in place and keep them up-to-date."

Companies with sound risk management policies are better equipped to deal with kidnaps and can manage a crisis more effectively, he said.

The policies, which usually do not carry a deductible, are relatively inexpensive.

A policy that provides $1 million in coverage would only cost about $8,000 Australian ($6,093), according to Sedgwick's Mr. MacGregor.

AIG's policy indemnifies the insured against the loss or disappearance of ransom money in-transit, covers extortion or ransom money paid, consultants' costs, some legal costs, and death or dismemberment benefits, Mr. Toll said.

Some legal costs that can be paid result from a claim for damages against the insured corporation from a covered executive, relative, or guest, who alleges negligence or incompetence of the company arising from a kidnapping, extortion or wrongful detention, he said. Details of AIG's policies, including the fact that a company purchases them, must remain confidential to avoid encouraging KR&E risks, said Mr. Toll.

Some underwriters of KR&E coverage, in fact, will cancel coverage if a policyholder publicly discloses that it is insured for the risk.

However, Chubb's spokeswoman said Chubb does not use confidentiality clauses, nor would the insurer refuse to pay if the policy became public knowledge and a kidnap or extortion attempt resulted. But she said it would be "rare to find anyone, bar the highest management echelon, who would know if a company had cover."

AIG extends its benefits to "guests and family" of the policyholder, which Mr. Toll admits is unusual. "The amount of cover comes down to what the company perceives the level of risk to be," he said.