Interest in active assault insurance coverage has increased among a growing range of organizations in the wake of several recent mass shootings.
The biggest demand comes from businesses and organizations in the United States, which has seen high-profile shootings in New York, Texas, Illinois and elsewhere in recent months. American policyholders account for 80% or more of the coverage purchased, experts say.
The insurance products, which were often called active shooters when they were launched about seven years ago, have been expanded and broader definitions applied as attackers used different methods including knife and vehicle attacks.
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There is “absolutely”
; more interest in this coverage, said Morgan Shrubb, New York-based head of terrorism for Axa XL, a unit of Axa SA. Her team now offers active attacker coverage on all of its terrorism insurance quotes and the take-up rate has doubled this year, she said.Beazley PLC deployed a four-person team to the US earlier this year to market its active assault insurance product and brief potential policyholders and brokers, said Chris Parker, head of terrorism and lethal weapons protection for the insurer in London.
“It’s never been harder,” said Mr. Parks. With the number of shootings in the U.S. increasing each year, “there’s more interest in the product,” with both inquiries and commitment, he said.
Policy language varies, but exposures covered by the policy can include property damage—in some cases including rebuilding costs for schools or other buildings demolished after an event—business interruption, legal liability, loss of attraction or access, and various response-related costs. There is no standard coverage form used by the market (see related story below).
Purchased limits in the $1 million to $2 million range were available when Beazley coverage was introduced in 2016, but the average limit has risen to between $3 million and $5 million, Parker said. The largest limit available — which covers nearly every insurer in the market — is $100 million, which Beazley writes for two policyholders, he said.
Aspen Insurance Holdings Ltd. offers a maximum limit of $25 million, and the average limit purchased is $7.8 million, said Tim Strong, London-based head of crisis management at the insurer.
Mr. Strong said inquiries and submissions typically increase about 15% to 20% after an event, “but given the steady frequency of events in the United States, the number of submissions has been pretty constant,” he said.
Interest in Hiscox Ltd’s active shooter and malicious attack coverage has increased in line with the increase in attacks, said Atlanta-based Elise Barton, head of war, terrorism and malicious acts at Hiscox USA.
The types of organizations looking at active attackers are also increasing. When the coverage was first offered, many of the buyers were schools, municipalities and other public bodies, sources said. Recently, interest has grown in the corporate sector, says Jo Holliday, president and global head of crisis management for Willis Towers Watson PLC in London.
“Particularly in the last six months, there has been a real increase and difference in the types of clients who are asking about and tying the coverage,” she said.
Beazley’s Mr. Parker said there is no industry category where an organization does not have tied coverage.
Historically, municipalities and schools had been buyers of coverage from Axa XL, but coverage is increasingly being purchased by private companies, Shrubb said. Those buying active seizure insurance include apartment owners, condominium associations, hotels, retailers and entertainment companies, she said.
The broad interest reflects how many places are potential targets, including religious organizations and others, Hiscox’s Ms. Barton.
The risk management community is also showing growing concern and awareness of the issue.
“As risk managers, I think it’s important for us to raise these topics with our managers,” said Kristen Peed, corporate director of risk management at Cleveland-based CBIZ Inc. and a board member of the Risk & Insurance Management Society Inc.
“We need to have the proper training for our employees to know how to react if they are faced with this,” she said. “We can’t ignore what’s happening because the events are happening it feels like on a more regular basis, so we have to look at and address the risks.”
RIMS has an active shooter report and is increasingly incorporating active shooter programming into its events and educational efforts, according to a spokesman for the organization.
As with other real estate coverages, the cost of active attack coverage has increased, said Jennifer Rubin, New York-based director of terrorism for Liberty Specialty Markets, a unit of Liberty Mutual Insurance Co., which offers the coverage as a sub-limit for war and terrorism policies.
The active attacker market is smaller and less mature, making it less accessible and thus subject to higher prices, she said.
Lack of standardized forms, exclusions a challenge for buyers
The active attacker insurance market is still in its infancy, and there is still a lack of standardization in policy language and forms among insurers, experts say.
“The carriers’ offerings are all differentiated; there is no standardized form,” said Morgan Shrubb, New York-based director of terrorism for Axa XL, a unit of Axa SA.
Insurers have different definitions of coverage and triggers, and policy terms and language are often updated as the market evolves, Shrubb said. “It’s still such a new product on the market, the markets are still adjusting and developing their formulation,” she said.
Organizations should be careful when choosing insurance products because of the differences in policy language — including exclusions — among the different forms on the market, said Kristen Peed, corporate director of risk management at Cleveland-based CBIZ Inc.
“Risk managers should really be aware of these differences and exclusionary language and make sure to purchase the right type of coverage for their business,” she said.
Building a larger, more established marketplace to allow brokers and policyholders to better and more quickly understand their choices will likely require greater standardization of language and terms, said Tim Strong, head of crisis management in London for Aspen Insurance Holdings Ltd.
“Taking the market forward will require more syndication,” he said.
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