By Anthony Rodriguez, Vice President, Excess Casualty Underwriter, Munich Re Facultative & Corporate

News reports on crime, active assailant incidents, and large fires in commercial settings are disturbing, but regardless of whether trends are rising or falling, taking action to mitigate these risks is prudent risk management. Premises security, occupant safety, and property protection — and the liability risks that can arise from failures — should be key concerns for corporate property owners and managers.

The responsibility of maintaining safety and security on commercial properties has never been more critical, as recent data from the Federal Bureau of Investigation reveals a troubling rise in aggravated assault, robbery, homicide, and rape in 2023. The FBI’s Quarterly Uniform Crime Report showed violent offenses decreased by high single-digit percentages in the second quarter of 2024 from the same period a year earlier. Even though the FBI is still gathering more recent data, the reality is that violent crimes continue to occur nationwide.¹

The FBI also tracks active shooter events. In 2023, the most recent year for which data is available, the bureau designated 48 shootings as active shooter incidents. These occurred across 26 states and represent a 60% increase in frequency since 2019. Settings vary for active shooter events and most appear random. Less than half of such incidents, 42%, involved an identified connection between the shooter and the location or victims, and in 58%, no connection was found. Most active shootings take place in public or commercial settings: 58% occurred in open spaces, such as a parking lot or outside an office building; inside a commercial space, 14%; education, 6%; health care, 4%; residential, 2%.²

In the past decade, attackers have used vehicles in ramming attacks, often when public areas are most crowded, with deadly consequences for pedestrians, according to the Cybersecurity & Infrastructure Security Agency (CISA).³ Regardless of the weapons used, attacks on employees, customers, and others can create liability exposures for businesses.

In addition to crime, fires cause significant loss of life and property damage annually. According to the US Fire Administration, 110,000 nonresidential fires resulted in 130 deaths, 1,200 injuries, and more than $3 billion in losses during 2023. Overall trends for nonresidential building fires and losses for the 10-year period of 2014 to 2023 show a 19% increase in fires, 70% increase in deaths, and 10% increase in dollar loss.⁴

Trends in nonresidential building fires and losses (10-year period 2014 to 2023)

For property owners, crime and fire can lead to human tragedy as well as expensive first- and third-party losses. All states require property owners to maintain a safe environment for visitors to the property. Failure to do so can result in costly litigation.

Adding to these litigation costs, legal system abuse is contributing to the growing phenomenon of “nuclear verdicts,” those valued at $10 million or more. These large judgments are spread across various types of liability cases, according to the US Chamber of Commerce’s Institute for Legal Reform (ILR). Between 2013 and 2022, premises liability cases accounted for more than 14% of nuclear verdicts.⁵

Property owners are seeing more litigation result in nuclear verdicts and large settlements, along with expanded premises liability to include “reasonably foreseeable” criminal conduct of others on or near their property. For example:

• A jury in 2019 awarded almost $43 million to a man who was robbed and shot in the parking lot of a pharmacy that was in a high-crime area of Atlanta. The Georgia Supreme Court not only upheld the award in 2023 but also found the business 95% at fault for the shooting, ruling the pharmacy was responsible to ensure the safety of its premises. Notably, employees testified at trial that they considered the parking lot unsafe, had poor lighting, and the business had previously employed security guards but discontinued security services to cut expenses.⁶
• In 2024, a Florida property owner, manager, and security firm settled a wrongful death lawsuit for $21 million. Each of the defendants faced litigation following the murder of a tenant in the parking lot of his apartment complex. The victim’s family filed a lawsuit alleging premises liability and negligent security.⁷ 

Corporate property owners, real estate managers, and risk professionals can take steps to deter crime and mitigate premises liability. Steps that can help mitigate liability risks for property owners and managers include:

Perform property audits. Conducting a thorough audit of security and maintenance practices at all owned properties is a smart way to identify problems and prioritize corrective action. A large corporate property owner might have 100 or more different locations, making consistent practices a considerable challenge. Questions to ask in such property audits include:

• What security measures are in place at each location?
• How can those be improved?
• What procedures exist to prevent unauthorized access to the premises?
• Are protective equipment and safety systems in good working order?
• What resources are available on-site to address problems and malfunctions in safety and security systems?

Analyze location data. Properties located in areas where thefts, robberies, assaults, and other crimes are known to occur generally have heightened liability exposures. Studying location data, along with prior premises liability claims, can help property owners and managers implement appropriate security practices. Courts in multiple jurisdictions have held that foreseeability of crime plays a significant factor in a property owner’s duty of care to provide a safe environment.

Ensure life safety equipment is up to date. Fire detection and suppression equipment, such as sprinkler systems and extinguishers, should be maintained. Equally important for property owners is making sure evacuation routes are clearly marked.

Conduct employee training. One of the most important ways property owners and risk managers can protect people and property is through continuous employee training on safety and security practices. For example, encourage reporting of suspicious or anomalous visitors and incidents, and ensure employees understand their options during an active assailant scenario. A commonly recommended approach such as “run, hide, fight” should be practiced, similar to periodic fire drills.

Implement emergency communication and notification systems. Confusion and lack of information during emergencies can be fatal. Property owners should explore communication technologies such as mobile apps that enable employees and tenants to receive alerts and report emergencies. Many other innovative tools exist, including those that can detect the sound of gunfire and automate access control.

Deploy surveillance equipment. Open areas such as parking lots and perimeter areas can be difficult to monitor closely. Surveillance cameras may deter criminal activity, but property owners must also develop plans for how they will use security cameras and respond to situations their surveillance captures.

Use adequate lighting and vegetation management. Proper lighting around entrances and spaces frequented by employees and customers is sensible. In addition, maintaining vegetation to minimize concealed spaces can enhance site safety for employees, tenants, and invitees.

Install fencing and signage. Non-public areas of a property should be cordoned off with fencing or barriers and marked with warning signs. Barriers placed strategically may prevent vehicle ramming attacks. Directional signs and road markings also are useful to guide visitors to and from public-access areas of the property.

Specify prohibited items on-site. Hazardous substances and equipment that could cause a risk of explosion and/or fire, such as lithium-ion batteries in e-bicycles and e-scooters, should be specified in signs prohibiting them from entering the property. New York, for example, enacted legislation to require certain standards and specifications for lithium-ion batteries to reduce fire risks.⁸

Hire experts. Qualified, experienced contractors in security, public safety, and life safety systems can help property owners select, install, and maintain appropriate equipment to meet regulatory requirements.

Sources:

¹ Federal Bureau of Investigation, September 30, 2024, “Quarterly Uniform Crime Report”; https://cde.ucr.cjis.gov/LATEST/webapp/#/pages/explorer/crime/quarterly

² Federal Bureau of Investigation, June 24, 2024, “Active Shooter Incidents in the United States in 2023”; https://www.fbi.gov/file-repository/2023-active-shooter-report-062124.pdf/view

³ Cybersecurity & Infrastructure Security Agency; https://www.cisa.gov/sites/default/files/2022-11/Vehicle%20Ramming%20-%20Security%20Awareness%20for%20ST-CP.PDF

⁴ US Fire Administration; https://www.usfa.fema.gov/statistics/nonresidential-fires/

⁵ “Nuclear Verdicts: Trends, Causes, and Solutions,” September 2022, U.S. Chamber of Commerce Institute for Legal Reform; https://instituteforlegalreform.com/wp-content/uploads/2022/09/NuclearVerdicts_RGB_FINAL.pdf

⁶ Supreme Court of Georgia, Georgia CVS Pharmacy LLC v. Carmichael, S22G0527, decided June 29, 2023; https://cases.justia.com/georgia/supreme-court/2023-s22g0527.pdf?ts=1688072589

⁷ “Companies settle negligent security lawsuit by tenant’s grieving family for $21 million after Broward murder,” Local10.com, July 10, 2024; https://www.local10.com/news/local/2024/07/10/companies-settle-negligent-security-lawsuit-by-tenants-grieving-family-for-21m-after-broward-murder/

⁸ “Governor Hochul Signs Legislation to Encourage the Safe Use of E-Bikes and Lithium-Ion Batteries to Protect New Yorkers,” New York State, July 11, 2024; https://www.governor.ny.gov/news/governor-hochul-signs-legislation-encourage-safe-use-e-bikes-and-lithium-ion-batteries-and