Arson Fire Happens A Lot More Than Reported, Study Shows

A recent study from Scripps Howards News Service highlighted just how underreported the crime of arson is in the United States. According to the news service’s findings, the vast majority of arson cases are not called in to the National Fire Administration’s National Fire Incident Reporting System (NFIRS), a primary source of tracking such fires throughout the country.

In all, approximately 75 percent of arson fires were not identified as such to the US Fire Administration. To highlight the problem, Scripps reported the following examples:

  • New York City saw only 19 acts of arson in building fires in 2010, even though the city’s Bureau of Fire Investigation identified at least 1,486 intentional building fires the same year.
  • In 2011, Chicago claimed only 61 building arson fires to the NFIRS, but Scripps found evidence of 192.
  • Also in 2011, Houston had 224 intentional fires vs. 25 reported, Indianapolis had 216 vs. none, and New York had 1,347 vs. 11.

While most cases could be traced back to acts of vandalism unrelated to the owner of a property or vehicle, there did seem to be a growing trend in vehicle owner “give-up” fraud as it relates to vehicle arson.

“Owner give-ups are defined as vehicles that were reported stolen by their owners when the owner is in fact making a false theft report,” the Insurance Information Institute (I.I.I.) explained, adding that many vehicles involved in this kind of insurance fraud are burned to delay or prevent identification.

The state of New York’s fraud bureau reported that give-ups rose by about one third in 2008. Miami, Florida, and the state of Wisconsin also showed increases in inquiries about suspicious vehicle thefts.

Auto arson claims were up from 13 percent to 18 percent in Indiana, Michigan and New York and by six percent in the United States as a whole from 2007 to 2008, the I.I.I. added.

All these issues are something insurance companies need to be aware of as the economy continues to stagnate, placing more individuals in desperate situations.

Here are some simple steps that insurers can take to help reduce the amount of arson fraud experienced each year.

First, have the right mindset.

Getting in the habit of questioning vehicle or property damage by fire is a start. Considering that so many of these crimes are not reported, an agent can guard against the issue by questioning everything. It doesn’t mean you should mistrust all of what a claimant says, but it is important not to let national statistics lull you into a false sense of security.

Secondly, investigate.

A city’s Bureau of Fire Investigation is a great place to start for determining the validity of a claim since it is that organization that works the closest with the scene of the fire. Another thing to look at is the insurance customer’s claims history. If there is more than one suspicious occurrence — and it doesn’t even have to involve a previous fire — it can be an alert to possible fraud thus warranting closer examination of evidence in the present claim.

Finally, strive for accurate reporting data.

The harder an insurance company works to understand the warning signs, motivations, and statistics behind the issue, the more effective it will be in combating arson fire and other frequently occurring fraudulent claims. This will also contribute to a powerful partnership between industry and law enforcement personnel as they work together to stamp out these types of insurance crimes.

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