By Henry Gale

Jan 10 - (The Insurer) - The killing of UnitedHealthcare CEO Brian Thompson in December has prompted insurance companies to reconsider their spending on security, which has previously varied widely across the industry.

“There’s been a huge spike in demand,” Glen Kucera, president of enhanced protection services at security firm Allied Universal, told The Insurer. Allied Universal says it works with over 80 percent of Fortune 500 companies.

Some insurance companies reached out to security firms for 24/7 protection in the immediate aftermath of Thompson’s shooting, Kucera said. Organisations in other industries also pushed to tighten protection quickly.

Companies’ heightened interest in executive security has continued into the new year. Kucera explained that the focus of many is now on conducting fresh assessments to understand what measures they need.

“Prior to 4 December 2024 people usually did a security assessment and established a security protocol when the board of directors demanded it or when they had a change to their chief security officer … they didn’t touch it for years,” Kucera said.

“That event on 4 December has changed that whole process,” he said, adding that there has been “probably a hundredfold increase in the number of companies taking this seriously.”

To date, some insurance companies have adopted much more security than others. Since listed companies are often required to disclose security spending on their bosses, The Insurer has reviewed the filings of the largest property and casualty insurers, reinsurers and brokers to analyse their security expenditure.

The US Securities and Exchange Commission requires companies to classify personal security measures, such as home security systems, as perquisites, even if they are provided for business purposes. Because only personal security measures need to be disclosed in compensation filings, these figures do not include other costs such as protection while executives are conducting business or security measures at company offices.

Insurers’ spending on executive protection to date

For several insurance companies, the main security-related expense disclosed in their filings for 2023 was executives’ use of private aircraft for personal travel.

The boards of AIG, American Financial Group, Chubb, Progressive and WR Berkley all required or encouraged their bosses to use corporate aircraft for all air travel. Security was the common justification, although they variously cited other reasons such as confidentiality and productivity.

The CEOs of Marsh McLennan and Travelers also used corporate aircraft for personal travel for security reasons, while yet more firms recorded the practice without citing any reason. However, not all companies foot the bill.

Aon and Markel’s top executives fully reimbursed their employers for personal flights on chartered aircraft in 2023, while some companies’ CEOs received private air travel as a benefit. In other cases, the costs were split between firms and their bosses.

Another benefit listed by some firms as a security measure is personal use of a company car, sometimes with a private driver too. A security study commissioned by Marsh McLennan in 2023 recommended that its CEO’s driver have certain “security training credentials”.

Just a handful of insurance firms recorded any personal security expenditure beyond air and road travel. The highest expenditure was by Berkshire Hathaway, which provided over $300,000 worth of personal and home security services for Warren Buffett.

Buffett’s personal security costs are often compared to those of other high-profile CEOs, such as Meta’s Mark Zuckerberg, whose employer spent more than $23mn on his security in 2023. While Meta makes Berkshire Hathaway look frugal, the tech firm is something of an outlier.

In financial services, BlackRock is one of the biggest spenders, with its president and CEO benefiting from residential security measures worth more than $800,000 in 2023, in addition to $590,000 in personal use of corporate aircraft.

AIG and Travelers also recognised spending on their executives’ home security in 2023 filings. Travelers noted that it had a security policy for its CEO periodically reviewed by an external consultant, who had recommended certain security upgrades.

Inconsistent and insufficient?

The variation is stark. Many large listed (re)insurance companies are missing from the table above because The Insurer could find no mention of security in their executive compensation filings (for those outside the US, this could reflect different disclosure requirements).

The type of spending disclosed ranges from company cars and aeroplanes to chauffeurs specialised in protection and home security systems. Some firms spend nothing on certain measures, while others spend hundreds of thousands; this disparity could soon disappear in wake of increased focus on security risks.

One of the aspects that could change is who is protected. Of the companies that pay for personal security, most protect just the group CEO. The killing of Thompson, CEO of UnitedHealth’s insurance arm, highlighted that not only group CEOs are at risk. According to Kucera, “anybody that’s public-facing” should have a security assessment.

“There’s a lot of companies that didn’t even have a security protocol, or didn’t even consider getting executive protection for their key executives,” Kucera said. Sometimes executives themselves pushed back against their boards imposing security measures they disliked or thought they did not need.

“Now what’s happening is the investment board and the board of directors are saying, 'No, you will have this if you are going to be an executive in our company,'” Kucera said, highlighting how attacks can damage companies’ brands in addition to the human cost.

“I’ve got over 100 calls where people have called me saying, 'Our CEO is dead-set against this.' Now they don’t have a choice.”