1. Forms
2. CR
3. CR-00-41

What the form is

The CR 00 41 Kidnap/Ransom and Extortion Policy is an Insurance Services Office (ISO) stand-alone monoline insurance policy designed to protect businesses against financial losses arising from kidnapping, extortion, and detention or hijack. Unlike the CR 00 40, which is a coverage form designed to be part of a larger commercial package policy, the CR 00 41 is a self-contained policy that incorporates its own terms and conditions, including those typically found in the Common Policy Conditions (IL 00 17). It indemnifies the insured for the direct loss of property (such as money, securities, or other tangible property) surrendered as ransom or in response to an extortion demand. The policy also typically covers related expenses, such as negotiator fees, medical costs for a released captive, travel expenses, and lost salary.

Classes of business it applies to

This policy is particularly relevant for businesses and organizations that face a heightened risk of kidnap, ransom, or extortion threats. This can include:

• Multinational corporations: Companies with employees who travel frequently to or are based in regions with high kidnapping rates.
• High-profile organizations or individuals: Businesses or executives who, due to their wealth, public image, or nature of their industry (e.g., financial institutions, energy companies), might be targeted.
• Companies handling sensitive information or valuable assets: Where extortion could be used to demand payment in exchange for not releasing data or damaging property.
• Non-governmental organizations (NGOs): Operating in unstable regions.

Real-world example: A global manufacturing company has an executive kidnapped during a business trip to a high-risk country. The kidnappers demand a significant ransom. The CR 00 41 policy could cover the ransom payment made to secure the executive's release and also reimburse the company for expenses like crisis response consultant fees and the executive's subsequent medical and psychological treatment.

Real-world example: A retail chain receives a credible threat that its stores will be damaged unless a large sum of money is paid. The CR 00 41 policy could cover the extortion payment if made to prevent the threatened damage.

Special considerations

• Monoline Policy: As a stand-alone policy, it provides specific coverage that might not be included or adequately addressed in standard commercial crime or package policies.
• Insuring Agreements: The policy typically includes several key insuring agreements, such as Kidnap/Ransom and Extortion–Direct Loss, Kidnap/Ransom and Extortion–Expenses Incurred, Detention or Hijack, and In-transit Delivery of Property. Each agreement will have specific terms and limits.
• Covered Persons: The definition of an "insured person" is critical and usually includes employees, directors, officers, and often their relatives or guests.
• Territory: While earlier editions may have had territorial limitations, the '07 edition revised the policy to be applicable worldwide unless endorsed otherwise. It's important to verify the territorial scope in the specific policy issued.
• Notification and Cooperation: Policies typically require prompt notification to the insurer and law enforcement agencies in the event of an incident. Cooperation with the insurer and any designated security consultants is also usually a condition.
• Exclusions: Common exclusions might relate to acts by the insured (unless under duress), war, or governmental actions.

Key information for agents and underwriters

• Risk Assessment: A thorough assessment of the applicant's exposure is crucial. This includes evaluating the geographic areas of operation, travel patterns of key personnel, the company's public profile, existing security measures, and any history of threats.
• Limits and Deductibles: Determine appropriate limits for direct loss and expenses, considering the potential scale of a demand and the insured's financial capacity. Deductibles will also apply.
• Policy Wording: Pay close attention to definitions of "kidnap," "extortion," "insured person," and "loss" within the policy.
• Security Consultants: The policy may require or provide for the use of specialized security consultants in managing a crisis. The declarations page might even name a specific security firm.
• Comparison with CR 00 40: Agents should be able to explain the difference between this monoline policy (CR 00 41) and the CR 00 40 coverage form to help clients choose the most suitable option.
• Pricing: Premiums will be based on the assessed risk, chosen limits, industry, geographic exposure, and the organization's security posture.
• Endorsements: Various endorsements may be available to modify coverage, such as those related to specific territories or types of threats. For example, endorsement CR 04 03 (Extortion–Commercial Entities) provides a more restricted form of extortion coverage and is not used with the CR 00 41 but rather with general commercial crime forms.