The deadliest mass shooting in modern U.S. history is adding tosoaring costs for insurance companies, which are already taking abeating this year from an onslaught of hurricanes, earthquakes andwildfires.

The industry may have to shell out more than $1 billion for theLas Vegas massacre, insurance executives say. Acts of a sologunman, who killed almost 60 people and injured about 500 otherswhen he fired into the crowd of a country music festival lastmonth from his Mandalay Bay hotel room, have resulted in multiplelawsuits. Victims have accused the hotel and its owner, MGM ResortsInternational, and concert promoter Live Nation Entertainment Inc.,of failing to protect people at the event.

The shooting will drive up man-made disaster costs for insurers,after losses for such incidents worldwide totaled $7.8 billion in2016, according to data from reinsurer Swiss Re. Brokers andlawyers expect claims related to the Las Vegas incident from lifeand health insurance, and class-action lawsuits, to continue foryears.

“It doesn't take long to get to a large number” in claims, saidHeidi Lawson, a lawyer at Mintz Levin who specializes in insurancelitigation and investigations. “There was a failure to oversee, afailure to supervise, a failure to set up internal securitymeasures.”

Costly Season

Long-term costs insurers face for incidents like the one in LasVegas include physical damage, hotel and event planner liability,workers' compensation and festival refunds, according to PeterWilliams, global leader for live events at Allianz SE's globalcorporate and specialty unit.

Live Nation declined to comment other than to say the company isfully cooperating with the FBI. MGM expects its insurance to coverliabilities tied to the lawsuits, the company said in a filing. CEOJames Murren said on a conference call last week that MGM saw aspike in cancellations after the Las Vegas incident and bookingsinitially declined.

Liabilities from the massacre add to an already costly insuranceseason. The industry is facing as much as $120 billion from claimsrelated to hurricanes that raked the Southeastern U.S. thisquarter, according to catastrophe modeling firm RMS. Wildfires thatstruck Northern California in October may cost insurers as much as$10 billion, Imperial Capital credit analyst David Havens said in anote to clients.

While insurers have plenty of experience trying to predict thosenatural disasters, modeling the motives of perpetrators who cansingle-handedly cause catastrophes is a much greater challenge forthe industry, said Nick Beecroft, a former emerging risks managerat Lloyd's of London.

Terrorism Insurance

The Las Vegas incident was the second for Live Nation to resultin mass casualties this year. In May, more than 20 people werekilled in a terrorist attack at an Ariana Grande concert inManchester, U.K.

The U.S. Treasury Department has a terrorism insurance programto help shield insurers from losses, but President Donald Trump andthe Department of Homeland Security have not declared the Las Vegasshooting to be an act of terrorism. The Sept. 11, 2001 attacks, thefirst to be covered by the program, resulted in $43.6 billion ofproperty, life and liability claims. It was the second costliestinsurance event after Hurricane Katrina, which totaled $49billion.

Events like the Vegas tragedy “touch a number of policies, someof which you don't necessarily see immediately,” Allianz's Williamssaid. “It takes time to work out exactly what it'll reallycost.”

From: Bloomberg News

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