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Patty Hearst kidnapping sparked U.S. interest in K&R insurance


Kidnap and ransom insurance was introduced by underwriters at Lloyd's of London in 1932 in response to the kidnapping and murder of the infant son of famed aviator Charles Lindbergh.

However, the policies did not gain widespread appeal among corporations and individuals until the mid-1970s after the kidnapping of newspaper heiress Patty Hearst.

Today, most Fortune 500 companies include K&R coverage in their insurance portfolios, and a growing number of middle-market firms are purchasing it as they expand internationally, experts say.

K&R coverage limits generally start at $1 million, but can go as high as $100 million if multiple insurers are involved. Premiums vary based on the amount of the exposure.

Though Lloyd's continues to be the K&R insurance market leader, either insuring or reinsuring 80% of K&R policies written, numerous domestic insurers also offer this type of insurance. They include New York-based Chartis Inc., Warren, N.J.-based Chubb Corp. and Liberty International Underwriters, a unit of Boston-based Liberty Mutual Insurance Group.

K&R coverage is essential to protect against reputational damage and assure the safety of employees while traveling internationally, said Chris Holt, consulting director of crisis management in Towers Watson & Co.'s London office. He recommends that companies purchasing K&R insurance extend the coverage to all employees, not just directors and officers.

“If someone is unwell while traveling in Germany, it doesn't attract the same attention or potential for reputational damage as something like a kidnap or the way an organization responds to a terrorist incident,” Mr. Holt said. “It also goes a long way toward maintaining the confidence of the workforce.”