In recent years, a seemingly endless trend of mass shooting incidents has devastated communities across the United States. These incidents, from school shootings to large-scale massacres at seasonal gatherings, nightclubs, and music festivals, have resulted in the tragic deaths of hundreds of people. These shootings have also changed the way event promoters and venue owners have approached the concept of liability insurance. The role of liability insurance is to protect against losses from expected and unforeseen risks, and must adapt to meeting evolving risks. Traditional insurers have been slow to adapt. Captive insurance programs, however, are on the rise. Captives may represent a viable insurance solution as demand for active shooter coverage grows in the U.S. and beyond.
According to statistics compiled by the Federal Bureau of Investigation (FBI), 250 active shooter incidents took place in the time period between 2000 and 2017. In the earlier part of that time period, the average number of incidents was just under seven per year; between 2014 and 2017, the average jumped to approximately 22 per year.
Many event organizers and venue owners have relied on traditional insurance policies like general liability, commercial property, or even terrorism insurance to protect their assets from the costs associated with attacks. Unfortunately, these traditional policies rarely provide coverage against active shooting incidents. In fact, many such policies specifically exclude active shooters from policy coverage. This has left insureds scrambling to find solutions that provide the highly-specialized coverage necessary to protect property owners, event staff, and promoters from the losses associated with mass shootings.
A.M. Best, a leading clearinghouse of information for the insurance industry, published a report entitled “Insurers Create New Types of Coverage for Mass Shooting Attacks”. In the report, statistics from the FBI and the Advanced Law Enforcement Rapid Response Training (AALERT) program indicated that common locations for active shooter incidents include:
Captives may offer flexible coverage for active assailant incidents in ways that traditional insurance solutions cannot. Because active assailants are not politically or ideologically motivated, may utilize any number of weapons, and exhibit no specific patterns of victim, these incidents are often excluded from coverage under terrorism policies. Captives, on the other hand, may be tailored to provide coverage for a broad range of active assailant threats, including mass shooters.
The A.M. Best report continues with a look at how organizations are using captives as a means of providing enhanced insurance protection. In particular, the report notes that many schools are using captives by pooling liability exposures with each other.
A number of insurance entities are now offering policies to organizations and property owners, with policy coverages ranging from $1 million to $50 million or more. These policies take several names, including violent event response insurance or active assailant coverage. Captives typically provide some form of pre-incident security/risk vulnerability evaluation as well as after-event victim support services, including trauma-related counseling for survivors. Captives can also add coverage for property damage, loss of attraction, and brand rehabilitation – features that many traditional insurance policies typically do not cover.
Active assailant incidents continue to plague communities throughout the United States, with shooters targeting some of our most vulnerable institutions and events. With captives serving as a viable insurance alternative, the financial devastation associated with these events can be better managed, and insurance industry analysts believe demand for captive insurance will continue to grow in the coming years.
Caitlin Morgan Captive Services provides clients with captive insurance solutions supported by years of experience in establishing the successful formation and implementation of a wide range of captives. To learn more about how we can help you, please contact us at (317) 575-4440.