San Bernardino. Colorado Springs. Roseburg, Oregon. The number of US cities added to the long list of sites of workplace violence has increased in just a few short months. Now, more than 700 people die every year and an average of 13 people are injured every day as a result of violent attacks in the workplace.
The financial toll is significant as well. Between missed workdays, property damage and lost wages, such violent incidents cost the US economy an estimated $36 billion a year. And both government officials and insurance companies have taken notice.
In at least seven state legislatures, gun rights and regulation have collided in the issue of firearm liability insurance – a proposal that would require gun owners to purchase liability insurance. In four of these jurisdictions (Hawaii, New Hampshire, New York and Los Angeles County), violators could face fines of up to $10,000 for going without proper coverage.
While the question of gun liability insurance shutting down a spree shooter is widely dismissed, some have hoped it may deter gun violence in general.
Professor Peter Kochenburger of the Insurance Law Center at the University of Connecticut Law School has said that while a gun liability insurance proposal is “so fraught with obstacles that it seems to be unworkable,” nevertheless “the stakes are too high to rule it out.”
“Proponents argue that when engaged, the insurance industry will have the financial incentive to research and improve firearm safety; to utilize risk-based pricing in assessing, accepting (or rejecting) and pricing risk for individual gun owners; to create privatemarket incentives for safe storage and use; and to compensate gun violence victims,” Kochenburger says. As a comparison, he
points to the role insurers played in promoting the safer design of cars, homes and other insurable products.
However, he also highlights two major problems with the proposal. First, there’s the nature of gun violence – just 1.5% of firearm deaths are classified as accidental. Second, not all shooters will have insurance – especially those who are most likely to injure others.
For these and other reasons, individual firearm liability insurance is widely considered to be a non-starter. What may be more promising is the increase in offerings of workplace violence coverage from insurance companies. To industry professionals, workplace violence represents a growing economic cost that can be addressed with the right coverage.
Willis Group, for example, began selling active shooter insurance during the waning months of 2015. It was originally marketed to universities, but 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.
“While recognizing that perfect security is not achievable, we also provide risk management guidance to help organizations protect people from this risk,” said a company spokeswoman with
Beazley, an affiliate of Lloyd’s of London currently underwriting workplace violence coverage.
The company confirmed that it is offering coverage to address potential gaps in liabilityinsurance protection that organizations may face in the event of a violent incident, but was unable to provide data on uptake rates and whether they had increased in recent months. The market for the product is still quite small; Beazley is reportedly the only insurance firm currently underwriting the coverage.
Insurers have not reacted measurably to the recent rash of mass shootings – workers’ comp rates have not increased as a result, as shootings are still a statistically small portion of the causes of workplace injuries. According to the Department of Labor, more than 4,600 people were killed in the workplace in 2014, largely due to accidents. The AFL-CIO estimates that just about 773 workplace deaths were the result of violence, out of 3.8 million reported injuries that year.
Yet the time may be ripe for a new coverage. Awareness of the threat is rising, and risk managers are eager to learn more about prevention and mitigation strategies.
“There’s been widespread interest in the product,” says Willis executive vice president Wendy Peters of the company’s active shooter coverage.
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