Orlando mass shooting sparks interest in terrorism insurance

Despite its stringent restrictions, terrorism insurance is more popular than ever, and the deadliest mass shooting in US history is causing even more to consider coverage

Insurance News

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Despite stringent policy terms, terrorism insurance is more popular in the United States than ever before. Nearly 60% of companies have coverage, according to a 2015 Marsh and McLennan report, and that number may climb after a recent surge in interest following Sunday’s mass shooting at an Orlando nightclub.

The attack, which left 49 dead, was the most serious of its kind in US history. Already, the tragedy has caused many businesses to look for protection, industry experts said.

“The reality in America today is that any business anywhere can become a victim of terrorism,” Robert Hartwig, president of the Insurance Information Institute, told WSOCTV.

Though businesses are buying, however, coverage isn’t automatically triggered with each terrorist event. An incident must be determined to be terrorism by the United States Treasury, which only happens after it meets a $5 million threshold for property damage.

That’s a rare occurrence. Sunday’s tragedy is highly unlikely to meet the strict stipulations, and neither did incidents in San Bernardino or during the Boston Marathon.

What’s more likely to be triggered is workplace violence, or active shooter, insurance – another form of coverage that has surged in recent months.

Willis Group, for example, began selling active shooter insurance during the waning months of 2015. Originally marketed to universities, widespread interest and the proliferation of attacks at hotels and hospitals have prompted Willis to expand the product, which covers the liability companies have if they are found not to have taken needed precautions to prevent gun rampages. It also covers “on the scene” costs of an attack, and kicks in when victims require counseling or consulting as a result of the incident.

The policy insures businesses for up to $5 million, Willis says.

The virtue of an “active shooter” product is that it offers additional coverage outside of workers’ compensation policies, which traditionally cover the medical costs of employees who are injured as the result of a shooting.  And while covering all outcomes is not possible, insurers in this space say there is a great deal of value in relevant risk management.

A company spokeswoman with Beazley, an affiliate of Lloyd’s of London currently underwriting “violence incident” coverage, said, “While recognizing that perfect security is not achievable, we also provide risk management guidance to help organizations protect people from this risk.”

Despite the rise in interest, the market for the product is still quite small – Beazley is reportedly the only insurance firm currently underwriting the coverage.


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