New insurance policy targets the fearful
Posted on Wed, Jun. 04, 2003 The Miami Herald, BY HARRIET JOHNSON BRACKEY hbrackey@herald.com
Turning today's fear into tomorrow's cash flow, Chubb Group will soon start selling homeowner policies in Florida that cover child abductions, home invasions and stalking threats.
For a price of $85 a year, the coverage can provide, in the case of a missing child, as much as $300,000 to hire a forensic expert to gather evidence, a public relations expert to mount a publicity campaign and a security consultant to help with the search. The policy will replace lost wages for parents, pay for family psychiatric counseling and the insurance firm will post a $50,000 reward.
''Customers were concerned about these kinds of crimes -- in particular child abduction and home invasions,'' says Peter Spicer, Chubb's new products manager. He cites national statistics that show 1.4 million stalking cases a year, 1.3 million home invasions and 58,000 child abductions that are not family-related.
The policies come with strings, however.
For child abductions, the coverage applies only to children under the age of 13 who are taken by non-family members.
''That is an extremely small segment of what we deal with,'' says Nancy McBride, executive director of the Florida branch of the National Center for Missing and Exploited Children. She estimates there are only 100 such abductions a year nationwide that are not resolved or in which the children are killed. That compares to 200,0000 estimated abductions by family members annually.
''This a parent's worst fear and I will say there are a lot of products out there that market to this fear. This is certainly one of them,'' she said.
The policies turn terrible events into mundane terms of coverage and exclusions. For example, stalking coverage applies only if you have a restraining order in effect. The coverage is also portable. That is, if someone busts into your hotel room in New York City, that could be considered a home invasion for a Florida policyholder, but the policy exempts travel to places on the State Department's watch list, such as Colombia or Venezuela.
A spokesman for State Farm insurance said the company had no plans to offer the unusual riders to homeowners. State Farm insures about 20 percent of Florida homeowners, or 975,000 policies, compared to Chubb's 20,000.
However, kidnapping coverage has long been available, but not as part of homeowners insurance. It's been sold mostly to corporations for their key executives or employees working in foreign countries.
Wealthy families, too, tended to buy the so-called kidnapping and ransom coverage. Since 1996, AIG has sold child abduction policies as an add-on to that coverage or as part of a high-net worth family's personal insurance. The child abduction policies from AIG would cover $5 million in costs to search for a child. The annual premium is $1,000 to $5,000.
Chubb's product is far less pricey and includes more than child abductions. Its home invasion coverage, unlike typical burglary insurance, would pay medical expenses as well as replace lost salary during a period of rest and recuperation.
Typical burglary coverage ''does not provide psychological counseling to families to get them emotionally centered again and comfortable in their own home,'' Spicer said. ``The coverage is aimed at people and not just their property.''
Stalking coverage has unusual provisions, too. The homeowner can get up to $3,000 to cover the cost of installing a security system and up to $5,000 to cover the cost of temporarily relocating while the stalker threatens.
Chubb began rolling out the new riders state by state in 2000. One of its initial states was Colorado, which suffered by the infamous murder of JonBennet Ramsey.
All told, 6,000 such riders have been sold in six states plus the United Kingdom, Chubb's Spicer says. Whether any claims have been filed is proprietary information that the company will not disclose.
Chubb began selling the homeowners' riders in Pennsylvania last Monday, where the cost is $110 a year.
On June 26, the coverage will become available in Florida.
Who needs these latest insurance coverages?
The answer's not clear.
The Florida Department of Law Enforcement reports that overall violent crime dropped 1.9 percent last year, but two of the covered categories have experienced recent sharp increases.
Stalking cases in Florida jumped 16 percent to 797 in 2002 from 684 the previous year.
Robberies at residences -- which would include home invasions -- are on the rise. FDLE reports there were 5,051 of these crimes reported last year, compared to 4,714 in 2001.
Statistics on child abductions are difficult to ascertain, although crime experts seem to agree that abductions by family members are far more common than those by strangers, which are covered under the new homeowners' riders.
The 58,000 annual nationwide total that Chubb cites is a figure from the Department of Justice. McBride says that in most of those cases, there is a sexual motivation and the child is usually relased soon thereafter, ``if not unharmed, then certainly alive.''
As for other services provided under the Chubb policy, McBride notes that in the last 20 years, a great deal of resources have been made available to parents of missing children. For example, her organization will organize a massive distribution of flyers. It also supports Team Adam, which consists mostly of retired law enforcement officials who mount a SWAT team effort when a child disappears. Both services are provided free of charge.
What's more, media coverage, McBride says, is guaranteed in most cases. And nationwide Amber Alerts, reporting a missing child quickly after the disappearance, are now part of the law.
''I just don't want parents to do something based on fear,'' she says. Of course, she notes, no product can prevent child abductions or murders.
Chubb's Spicer said the company hopes to make the policy riders available in four or five more states by the end of this year, and next year, in much of the nation.
Contact Chubb for more information at www.chubb.com or 908 903-2000.