July 11, 2018

Active Shooter Coverage Making Its Way to the Marketplace

According to The Gun Violence Archive, 346 mass shootings occurred in 2017, causing the issue to catch the attention of risk managers as more entities scramble to deal with the aftermath, states Caroline McDonald, a writer for Risk Management Magazine. While there are many different insurance products that could potentially provide coverage after a shooting—Workers Compensation, General Liability, and Property, for example—companies may still face devastating gaps in their coverage. Robert Hartwig, clinical associate professor of finance and co-director of the Risk Management and Uncertainty Management Center at the University of South Carolina’s Darla Moore School of Business, points out,

“A number of states allow individuals to carry concealed weapons…. so it’s not necessarily the case that, just by entering the premises with a weapon, individuals are violating the law. Therefore, a business is not necessarily negligent by allowing an armed individual to enter its premises.”

Hartwig continues to say, “that’s where there are difference of opinion and why there are products emerging that would seek to ensure that there are no coverage gaps.”

Active Shooter Coverage is beginning to creep into the marketplace; McDonald informs readers that one insurer introduced a policy to cover an organizations liability for a shooting incident if it is found not to have taken proper precautionary actions. The policy covers entertainment complexes, i.e. hotels, casinos, healthcare providers, churches, and retail establishments, and includes litigation costs with high limits of up to $20 million. The coverage is underwritten by Lloyd’s and is not subject to a deductible. Additionally, the policy provides an initial risk assessment of the insured locations and a 24-hour crisis management service to help the insured develop proactive and productive methods for averting and dealing with a potential active shooter situation.

Although coverages are being developed, Hartwig states that “the vast majority of businesses do not have this coverage,” but with the frequency of mass shootings rapidly increasing, policy forms are continuing to develop, and markets are beginning to look at coverage more frequently and critically as the risk potential for these incidents can be substantial.

What Can Companies Do to Avoid and Prepare for Such Incidents?

According to the Active Shooter Prevention and Response Playbook, the FBI conducted a study of active shooter incidents from 2000 to 2013 and found that 45.6% of shootings took place within different commerce channels, and 14.4% of those shootings occurred in businesses that are closed to pedestrian traffic.

Within the 14.4%, the incidents almost exclusively involved employees: 14 active shooters were current employees, 4 were terminated the day of the shooting, 3 were former employees, and 1 was a suspended employee.

The cost associated with these devastating incidents can be astronomical—ranging between $5 billion and $36 billion annually for American businesses.

Although the statistics can be frightening, there are measures companies can take to prevent active shooter situations:

  • Encourage a respectful, inclusive workplace-culture free of bullying, harassment, or discrimination
  • Educate employees on identifying warning signs amongst peers
  • Provide individuals with safe channels for discussing suspicious behavior, concerns, or problems
  • Provide remedial services for distressed employees.

Additionally, the Active Shooter Prevention and Response Playbook lists the three basic strategies for surviving an active shooter event: run, hide, and when the first two are impossible, fight. The average active shooter incident lasts 5 to 7 minutes, so the goal is to remain safe until the authorities arrive and take over.

If your organization wishes to begin taking actionable steps to mitigate these potential situations, remember the SWOT analysis: identify your strengths, weaknesses, opportunities, and threats. The analysis should include physical security, identifying and establishing company policies and practices, addressing employee issues or concerns, and consulting your insurance agent.

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