What a start to the new year for the insurance industry.

January 1 saw two separate incidents that drew attention from the insurance industry as the threat of increasing political and terror risk continues to affect individuals and businesses worldwide.

A terror attack in the early morning hours of New Year's Day killed 15 people in New Orleans when Shamsud-Din Jabbar drove a pickup truck into a crowd on Bourbon Street. In a separate incident that same day, Matthew Alan Livelsberger was killed when his truck exploded at the entrance of Trump Las Vegas hotel. The blast caused minor injuries to surrounding people but no damage to the hotel. Both vehicles were rentals through the car-sharing app Turo.

An increase in terror-related events could lead to more triggered coverage in commercial property terrorism endorsements, terrorism insurance, or active shooter policies, said Sridhar Manyem, director, industry research and analytics at AM Best, in an Insurance Journal article. Manyem added that demand could rise for solutions to cover these risks as risk managers and businesses look over their own policy terms and conditions. Standard business policies do not cover losses from terrorism.

The effects of these incidents can be substantial and involve multiple coverage areas, including workers' compensation, event cancellations, business interruption claims due to business closures, and other potential liability issues, Manyem noted.

But property risks aside, the real risk is in liability, with "some unexpected new exposures for insurance companies," wrote Ian Gutterman in a recent article on Carrier Management, Insurance Journal's sister publication.

"We're not used to thinking of terror as a liability risk, but in our nuclear verdict culture, there are some significant exposures here and much less cover is bought," he writes. For example, a victim of a car chase in Chicago was recently awarded an $80 million judgment because the Chicago Police were found to be negligent for initiating the chase. "So, if one death is an $80 million judgment, what is the cost of ten deaths caused by a terrorist?" Gutterman wrote.

Then on January 7, another event brought the spotlight on insurance again when five different wildfires fueled by unprecedented Santa Ana winds scorched the Los Angeles area. To date, the fires have caused the deaths of at least 25 people and destroyed more than 12,000 structures. The destruction left from this wildfire event is likely to end up as the most expensive wildfire insured loss in US history, with estimates of total losses at roughly $40 billion as of press time.

At least early hurricane predictions for 2025 seem "normal" as the first Atlantic hurricane season forecast predicts only 15 tropical storms, with 7 named storms, according to Tropical Storm Risk (TSR). The forecast is better than 2024, which saw 18 named tropical systems, 11 of which were hurricanes, including five that intensified to major hurricanes (Category 3 or higher).

Needless to say, it's been a busy start to the new year for insurance professionals.

WRITTEN BY
Andrea Wells

Andrea Wells is vice president of content for Wells Media Group Inc., overseeing coverage for its multiple print and digital platforms. She is a veteran insurance journalist with more than 20 years’ experience covering the property/casualty industry. She has won several awards from the American Society of Business Publication Editors (ASBPE), including awards for original research for her work on Insurance Journal’s annual salary survey of retail insurance agencies and its annual survey of young insurance agents. She can be reached at: awells@wellsmedia.com.