School districts that go on with allowing teachers to be armed will still demand insurance. As less companies will be willing to provide such insurance, the price will increase thereby creating incentive for insurance companies on the margin to go ahead and offer coverage. Further, I would predict that over time such schools would show themselves to be less vulnerable to Sandy Hook type events. Historically, it has been demonstrated that when an armed civilian is present to address the threat, mass shooting attempts result in less than 5 deaths per event while those where no one is armed result in ~15 deaths per event.
Insurance companies are suppose to be in the business of calculating risk and establishing prices accordingly. The current revelation seems backwards, and I believe the market will eventually flush it out.
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