Insurance and risk management organizations and experts tend to be reticent to comment on the complex potential coverage or litigation implications from active investigations.
But two, seemingly unrelated, violent New Year’s Day attacks in major metropolitan cities in the U.S. — the deadly mauling of a crowd on Bourbon Street in New Orleans at around 3:15 a.m. on Jan. 1, 2025 followed hours later by a Tesla Cybertruck explosion outside of the Trump International Hotel Las Vegas — spurred a myriad of questions around public safety and more.
In the wake of these attacks, the ratings and news agency AM Best released a statement about the insurance response to terrorism and political risk:
“AM Best believes that increasing political and terror risk is an emerging threat to the insurance industry,” Sridhar Manyem, director, Industry Research and Analytics at AM Best, said following the New Year’s Day attacks. “Events such as the ones being reported on in New Orleans and Las Vegas are extremely difficult to predict… The effects of these incidents can be substantial to insurers and involve payments related to workers’ compensation for injured company employees, event cancellations, business interruption claims due to business closures and other potential liability issues that commercial entities may face related to claims of insufficient security to prevent a terrorist event resulting in injuries and/or casualties.”
The slideshow above illustrates some of nuances of terrorism insurance coverage as highlighted by the underwriting analysts at FC&S Expert Coverage Interpretation.
Any uptick in political violence may not only trigger terrorism insurance claims but may also serve as a catalyst for fresh interest in such policies and endorsements, AM Best said in its statement.
"Depending on the policy language and coverage offered in commercial property policy terrorism endorsements, terrorism risk insurance policies and active assailant insurance policies, an increase in terrorist events could lead to more coverage being triggered and we could witness an increase in demand for these types of policies as risk managers for events and business scrutinize their coverages and policy language,” Manyem concluded. “A standard business policy alone will not cover losses caused by terrorism.”
The FBI has warned that extremist groups such as the Islamic State may capitalize on the New Year’s violence in the U.S. to springboard additional attacks, according to Bloomberg.
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