Bombing sends ripples throughout insurance industry
The Boston Marathon was held in Massachusetts earlier this week and served as the scene for a gruesome attack that claimed the lives of three people and left over one hundred wounded. Three bombs went off at the finish line of the Boston Marathon fairly late into the event. U.S. officials are still investigating the event, hoping to unearth details leading to the apprehension of the responsible party. While the investigation may not have an immediate solution, the Boston Marathon bombings may have a powerful impact on insurance coverage for sporting events.
RMS expects disaster to affect price of insurance coverage
Risk modeling agency RMS claims that the event is likely to send ripples throughout the insurance industry, affecting the cost of coverage for sporting events. Doctor Gordon Woo, a catastrophist with RMS, notes that the explosions themselves likely caused less than $1 million in property damage. The explosions did, however, leave more than 150 people injured, with many having to hand limbs amputated due to trauma. The medical costs associated with the event, therefore, would eclipse that of property damage.
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Terrorism insurance market expected to shift
Terrorist attacks rarely cause damage to a singular target, such as property. As such, these events are multi-faceted for the insurance industry, as insurers must process and manage the risks and costs associated with other damages that could have been caused by such attacks. The seemingly chaotic nature adds more complications to the terrorism insurance market, a market that has received significant attention over the past decade.
Boston attack, though small, could have major impact
According to Woo, the damages caused by the Boston Marathon bombings are expected to increase the overall cost of insurance coverage in the terrorism market. This is partly due to the fact that the event occurred in a city that is not considered a high value target for most known terrorist groups. Woo suggests that the perpetrators likely chose Boston because higher-profile targets like New York City are typically on high alert during sporting events.