Key Benefits of Active Shooter Coverage
When a catastrophic event occurs, impacted organizations contact two people: their insurance agent and their attorney. Active Shooter coverage offers a one-stop solution to a tragic situation.
Even the most proactive organizations with environmental design and state-of the-art security measures in place remain vulnerable to an active shooter. While every organization today is at risk, organizations can take steps to be ready if a tragic event occurs.
Planning for an attack can help an organization limit its liability and reduce fatalities should an event occur.
Carriers writing this coverage provide other critical services. These may include special counseling post-event, around-the clock crisis management response teams and access to a panel of seasoned event responders, including highly experienced public relations personnel. While subject to sublimits, these benefits can help an organization minimize its income loss and help its employees return to a new normal faster than an organization facing these challenges alone.
While most organizations have little or no experience in training employees how to respond if an event occurs, a risk assessment at key locations offered by some carriers may recommend reinforcing doors, improving environmental barriers and training staff in appropriate response. These steps may save lives and reduce liability.
Written on a claims-made basis with coverage available to $35 million and up, policy forms may provide defense within limits. Agents should always ensure that their clients understand this provision. The impact of these events lingers for years and so will the litigation. In the Mandalay Bay shooting, a victim filed the first lawsuit only ten days post-event. By November 2017, hundreds of victims had filed suit. It will take years for the organization to resolve the problems arising from this tragic occurrence.
Policies offer either a self-insured retention or a deductible. Most carriers’ forms cover property damage for a small sublimit. There are active shooter property policies that will cover insureds for damage to their owned property and for their business income exposure.
Active Shooter is an emerging coverage, and as new exposures arise, insurers will attempt to address them. Some policies will cover miscellaneous expenses that might occur, including relocation of key personnel, loss of attraction income and employee retraining costs. Some employees will be unable to return to the venue and some forms will help defray the costs to rehire and retrain.
The New Face of Liability Insurance Coverage
Insurance coverage evolves to meet the needs of the society it protects. We have already seen that evolution in Cyber and Terrorism coverage. Active Shooter coverage is the new face of emerging liability insurance. As incidents of this nature continue, demand for this type of policy will rise. Initially, healthcare systems, larger school systems, and high-focus events like concert venues purchased this coverage. Today, submissions are “off the charts” according to one insurer representative, and bind ratio is high. Organizations are not simply shopping the coverage, they are also purchasing it. According to one carrier’s representative, “It’s evolving to almost main-street coverage.”
For the average small risk such as community churches, auto dealerships, small restaurants, or retail shops, premiums can be low for the breadth of coverage the policies provide. Risks such as concert venues, school districts and municipalities that are more vulnerable to an active shooter attack will see higher premiums.
Retail brokers who work in the hospitality or the public sectors should be sure they offer this important coverage to their clients now.
Charter and other schools, summer camps, stadiums and concert venues are not only looking for coverage, they are seeking a fully rounded solution before an event occurs. Active Shooter coverage can help risk and event managers plan for the worst-case scenario event, hoping it will never occur. This type of pre-planning can save lives and reduce liability.
The Underwriting Submission
Because Active Shooter is an emerging coverage, underwriting concerns will change as events continue to occur in the US. Ten years ago, for example, no one could envision going to a movie theatre only to encounter an active shooter. Underwriting scrutiny heightened and grew as the threats from domestic terrorism increased.
Today’s underwriters look at a variety of factors.
- What are the hours of operation of the organization?
- Where is the risk located, and what are the crime rates in that area?
- How many locations are involved?
- Are there large amounts of cash on hand?
- Does the organization have guards on site, such as school security officers?
- What environmental design elements such as secured entries and bollards may reduce the likelihood of an event?
- What is the organization’s human resource culture?
- Does the organization have a robust internal system for tracking employee behavioral changes?
- How does the organization handle terminations? Are terminations well planned and designed to preserve dignity?
- What is the management structure?
Perhaps more so than other insurance submissions, the organization’s risk management approach will be a critical component of successfully underwriting these risks. No organization is immune today, yet few organizations have a solid plan in place to deal with these events. With the help of Active Shooter coverage, an organization can better protect itself with effective pre-planning.
Benefits of Offering This Coverage
While no one can predict the future of these events, carriers who write Active Shooter coverage are proceeding on the belief that these events will continue. Coverage will improve as claims occur and forms respond to emerging risks and new damages. First-look services will dovetail with emerging risks.
With coverage, recovery will be much less chaotic for insured organizations when an active shooter event occurs.
Reputational risk exposures will continue, but the public relations teams will carve new paths through post-incident media management.
Offering this coverage can reduce the possibility of an errors and omissions claim. It can also allow you to grow your base, using this unique coverage as your foot in the door of new business. What you offer is a unique, emerging coverage that all parties hope will never be used post-loss.
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