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3.25.21   5:51 PM

Like a brutal one-two punch, as soon as the end of the pandemic appeared to be in sight, we were hit with the news of deadly mass shootings in Atlanta and Boulder, Colorado over the past week. One shooter targeted Asian workers at massage parlors, resulting in the death of eight people, the other a grocery store, where 10 people were killed. 

Now with schools, offices and movie theaters reopening, Americans are bracing themselves for what seems like a depressingly inevitable upswing in large-scale gun violence. Some government institutions and business owners, in preparation for grim possibilities, are also buying more insurance. 

Over the last several years, a product known as “active shooter insurance” has been developed and marketed in the U.S. It offers an added layer of benefits for victims and their families in the event of such disasters that goes beyond what standard liability policies usually provide, which also often must be hashed out through lengthy litigation.

The Business of Business spoke with one of the most well-known underwriters of active shooter insurance, Paul Marshall, managing director of McGowan Program Administrators. Here is what he explained about his business and the trends he is seeing in the market.

  • What is "active shooter insurance"


    Can you explain a little bit about the product you sell and and how and why you got started doing it?

    I started this insurance and response program about five or six years ago. There were a number of shootings that had happened. One of the first questions that people ask is ‘who will help the victims?’

    One of the main problems is that the traditional insurance that I've been a part of all my life fails to have an immediate response to help victims such as in the Boulder, Colorado shooting that just occurred. Who’s going to be helping those families with the medical bills, death benefits, life insurance, who's going to be helping the business, such as the massage parlor, and small businesses that are shut down? Who's going to be paying those business income expenses, who's going to be providing trauma counseling, trauma therapy for the victims, the victims families?

    We created a program that once one of these deadly weapon attacks happen, whether it be gun, vehicle, or bomb, money is brought to the scene. And we're there helping to heal the victims’ families and the community, Day One.

    Meanwhile, the traditional insurance is going to respond later. If there's lawsuits, and we've had plenty of lawsuits such as after the Vegas shooting, it took two years, right, before the settlement was made. We don't worry about that. All we want to do is put money on the ground and help the victims recover.

    Can you explain the mechanism by how you provide this? You have an MGA [managing general agent], right? A lot of people outside the insurance industry don't really know what that is.

    An insurance carrier like Axa XL or Lloyd's of London, they will work with a local specialist like us. And we will work with local insurance agents that insure the business communities throughout the country. And we will accept applications, we'll review the risks such as for school systems, shopping malls, cinemas, parks, events. And then we'll basically evaluate and assess a certain premium, and put the coverages together. And then basically, we send out the policies, we accept payments, and then we do all that on the front end of the insurance carrier.

    We fulfill our role as an underwriting team. We have binding authority [with insurers]. and I'm tribunalized with Lloyds of London, which is a fancy word. I get a little quill pen. We can actually sign policies on behalf of Lloyd's of London. And so there's a trust element there.

    We do a good job of evaluating the risk. A low-income housing risk that has had multiple violent events…if they're in a bad area town…as you can imagine, we may not want to insure them if they've had multiple multiple shooting events. But you know, these recent events, massage parlors or grocery stores, small grocery stories, are typically not the sites of mass shooting events. And so, you know there was a small yoga studio in Tallahassee, Florida, if you remember six women were shot there.

    Most of our clients want to insure for just worst-case scenarios. It’s never happened before, but if it did it could be pretty threatening to the business as well as to employees. 


    "Most of our clients want to insure for just worst-case scenarios. It’s never happened before, but if it did it could be pretty threatening to the business." — Marshall



  • Who buys this insurance


    I know you have some confidentiality issues, and you can't talk specifically about your clients. But can you give some idea of how big your businesses is and the kinds of entities you provide insurance for?

    Sure. Yeah. So we designed a product that every business in America and Canada can purchase, meaning our minimum premiums are can be as low as $1,500 [annually]. So picture a small church, you can get a million dollars in coverage for $1,500. And so pick the small coffee shop, yoga studio, massage therapy, the small little markets, church, etc. We get a lot of that business, because our price point is designed to be affordable.

    We also have some very large clients, some of the largest corporations, very large shopping malls, or housing or apartments or condos or events. Some very large pride parades, or rodeos, or public political events, we've insure with millions of people in attendance. So it can be very small and very large.

    We’re typically binding over 100 policies a month, which for a new program, a lot of people say, wow, that's, that's a lot. But if you look at our price point, and what we're offering, we'll probably be doubling that business by the end of this year. And so I say we insure thousands of businesses and school systems and daycare centers and auto dealerships, cinemas all around the country.


    "If you look at our price point, and what we're offering, we'll probably be doubling [our] business by the end of this year. " — Marshall


  • Impact of the pandemic and reopenings


    With the pandemic, how did that affect business and has that changed? Did it have an effect on shootings and violence? And how are things looking now?

    The fact that a lot of people don't have to go to work or were laid off from work — you have all this energy pent up…some people overreact. There's been a number of shootings at retail outlets and stores and restaurants that we didn't see in the past. We didn’t have shootings in the school systems. But they seemed to pick up [in other industries]. I mean, everyone was running around fighting for toilet paper, right. Or there was just a big fight in Bed, Bath and Beyond. 

    What we’re seeing in USA Today, I sent you the article just published, going back 10 or 20 years, and it does show a big uptick in the number of shooting events specifically during the COVID months.

    So now we have the reopening of America. Right. We have this whole process of, you know, now we have businesses reopening and employees coming back to work, maybe they don't want to come back to work. Now we have universities opening schools opening, daycares opening, and concerts are opening. We’re kind of back to these aggression issues.

    If there's evil, if there's a bad person, and they want to inflict harm, it's going to be very difficult to stop them, as we saw in Boulder, Colorado. A young man, I think 21, who seemed to be have an issue with anger acted out on that. And you know, we'll see all the details, but it's kind of disturbing to read some of the facts that and just the inability to possibly stop those events from happening.

    So are you seeing more interest and people saying, ‘hey, we're reopening, we we probably should do this now?’

    We've been very busy since the start of the program, and it's becoming more of a commonplace cover in health care systems and nursing homes, daycares. You know, a lot of agents, retail agents are now asking the question, you have your general liability, you have your cyber insurance, right? That was about 10 years ago. And now they're asking ‘do you have workplace violence, deadly weapon attack, active assailant, active shooter coverage,’ really, for the first time. The buying public is getting educated, and they're saying, ‘wow, I never knew we could have a crisis response policy that would drop a million dollars or $5 million on the ground to help us recover from an incident like this.’

    Are there a lot of competitors in this space and has it become more competitive?

    Not really, in comparison to other industries. One of the questions you have to ask is if you want to be competitive in this space, you need to have the wherewithal in the ability to respond to these events. So, you know, 10 people shop in a shopping mall or a yoga studio, or, you know, you need to have the expertise internally to deal with that. And as you can imagine, there's not many companies that can do that.

    So we're one of the few companies that are out there, let alone can underwrite, and then manage the policy issuance. So it's a pretty unique skill set. Similar to kidnap/ransom. That's another product line. In the world of insurance, property, you know, auto, well, you get down to kidnap/ransom. Very, very few carriers and underwriters and program managers have the skill set to manage those coverages and those type of things.


    "If there's evil, if there's a bad person, and they want to inflict harm, it's going to be very difficult to stop them, as we saw in Boulder, Colorado. " — Marshall


  • Can anything stop the market from growing


    It does certainly seem like a benefit and a good thing to be able to get money help to victims and their families. But I think we can all say it's kind of sad that that your product has to exist. I know you're an insurance expert, you're not a public safety expert. But what what do you think would have to happen in America for your market to disappear?

    Yeah, I think they've been asking that for kidnap/ransom insurance. Or terrorism policies that emerged a long, long time ago when people were attacking in an ideological, political manner. And so just as those coverages will probably never leave, unfortunately, because our cover is more deadly weapon attack, where you also have machetes, bomb, or vehicle attacks. Our coverage, unfortunately, will probably never go away. Unless we all create some Nirvana lifestyle, which if you look globally, it doesn't exist.

    Even Canada is very strict regarding weapons, that kind of stuff. They've had some pretty rough summers with the vehicle attacks and bomb attacks. Or if you look overseas, whether it be Sweden or Switzerland, I don't think there's any place on earth that is immune to to a violent attack of some nature just because, well, that's human nature.

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