4 trends to watch in security risk management for 2019

In many ways, the news story of 2018 was security. From social media privacy and data breaches to active assailants and nuclear threats, the country has been engrossed in conversations about safety and security risks.

Not only have these discussions affected the world of security professionals, but they have changed the insurance and risk management landscape for the industry. In 2019, we expect at least four trends to continue influencing this market.

1. A hardening market for active shooter risks.

It’s difficult to get a handle on exactly how many active shooter incidents and mass shootings occurred in the United States in 2018. According to the Gun Violence Archive, there have been 334 mass shootings for the year, though the FBI estimates here were 250 active shooter incidents between 2000 and 2017. But no matter how we tally them, these tragedies are having a pronounced effect on the public’s sense of safety, our laws — and on how the insurance industry addresses related risks.

Active shooter incidents are a catastrophic loss for security professionals, if they are held responsible for these claims. In almost every instance, these losses reach the policy limits. Thus, the insurance market for security professionals is hardening with coverage available from fewer carriers and to fewer risks.

Underwriting guidelines also are tightening for “soft targets” with significant active shooter exposures, including malls, arenas, religious institutions, and schools. In addition, underwriters are paying attention to whether or not a security firm has an active shooter protocol in place for officers.

2. …and for other high-risk security environments.

We are seeing a reduced risk appetite in other areas as well, particularly around healthcare. Hospitals continue to be dangerous work environments for security officers, particularly emergency departments where guards are called on to address violent patients and visitors. In hospitals and other risky environments, training and experience go a long way. Underwriters look more favorably on officers with law enforcement or military experience.

Marijuana dispensaries, medical or otherwise, remain a legal grey area. Because marijuana remains illegal at the federal level, these businesses do not have access to banking resources—which means they retain large amounts of cash in what is essentially a retail storefront. They often contract armed guards, who are in the position of guarding high-value merchandise and lots of cash. Clearly, this is not a favorable condition from an underwriting perspective.

3. Industry growth with a focus on information technology.

The security industry is growing. Over the past several years, we have seen more and more start-up firms and consultants emerge in the market, particularly those who specialize in information technology security. Firms and consultants with this specialty are asked, for example, to consult with companies on preventing data breaches.

Security firms are also using an expanding array of technological solutions to support their work, from drones to robots to advanced security systems.

Taken together, these trends mean the security workforce is changing. At one time, many security professionals had a background in law enforcement or the military. Now, they are increasingly being drawn from IT companies, the FBI and other specialized law enforcement branches. Because experience and training go a long way towards effective security risk management, these changes are important to keep an eye on in 2019.

4. The continued pressure of commercial auto.

We are all well-versed in the commercial auto markets’ woes, and the security industry is not immune to it. Thanks to trends such as distracted driving and the increasing costs of auto repairs, this line of coverage has become synonymous with frequent claims, large losses and strict underwriting guidelines.

There is some good news: over the past several years, we have seen some improvement in outcomes in this line of coverage. The insurance industry’s push to encourage safe driving practices as part of risk management and loss control has paid off.

However, insurers are still applying tight underwriting guidelines for this line. For insureds in the security industry — particularly those who offer 24/7 vehicle patrol services — we must continue to monitor the loss experience and, when issues become apparent, help them implement preventative measures. All businesses with a large number of drivers should have a fleet manager, a driver training program and a manual of driving policies and procedures.

This next year will surely bring with it a new host of challenges and opportunities for the security industry. But insurance for security professionals will likely be driven by these long-term trends for years to come.

Tory Brownyard, CPCU, is president of Brownyard Group and spearheads the Brownguard security guard insurance program. He can be reached at TBrownyard@brownyard.com.