Beyond the $800 Million Settlement How Localized Catastrophes Can Have Global Consequences
I n early October of 2020, nearly three years after the horrific Las Vegas Strip shooting, a court approved a settlement from MGM Resorts International and their insurers that totaled $800 million, which was to be dispersed to more than 4,400 relatives and victims. During the Oct. 1, 2017, tragedy, a lone gunman fired into a crowd of 22,000 concertgoers from the window of the Mandalay Bay Hotel using military-grade weapons. Hundreds of people were injured, and 58 died. A civil complaint, which included a 170-page list of all those who considered themselves victims of the shooting in some way, accused MGM Resorts of negligence, wrongful death, and liability in the shooting. MGM Resorts did not acknowledge liability but did agree to pay $49 million as a part of the settlement. The other $751 million came from MGM Resorts’ insurance companies.
Though it took over three years after the shooting to come to this settlement, it is a big deal. $800 million is a lot of money. However, since $751 million of the settlement was paid out by insurance companies, subsequent increases in insurance prices will affect people throughout society. Most insurance companies purchase reinsurance, which is insurance from another insurance company that the first insurance company can use to insulate itself from financial risk in the wake of a catastrophe, like the Las Vegas Strip shooting. When insurance companies pay out mega- settlements to victims, their reinsurance premiums go up, and these costs get spread out among all insurers. Rates go up everywhere for everyone. So, even though it’s a good thing that the victims are receiving some recompense for their losses, it’s good to keep in mind just how major events like this can affect the big picture.
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