Is Arson an Insurance Security Risk?
The Random House Webster’s College Dictionary 1996 defines arson as “the malicious burning of another’s property or sometimes one’s own property as in an attempt to collect insurance.” The same source defines fraud as “deceit or trickery perpetuated for profit or to gain some unfair or dishonest advantage.” Arson is crime that is generally categorized as a felony. The civil and criminal aspects of the offense are a major financial security risk for insurance companies.
In U.S. criminal law means, motive and opportunity are three points that have to be addressed in a criminal proceeding. Means is the ability to commit the crime. Motive is the reason to commit the crime and opportunity is the chance to commit the crime. Just to be conservative quoted herein is a defensive website that states that, “there are 500,000 structure fires a year; 75,000 of them are labeled suspicious … the accuracy of fire investigators is at best 80 percent.” That means, at the high end, up to 60,000 fires may be related to arson. See http://truthinjustice.org/arson.htm.
What can structural fires damage? The answer is every single facet of the structure itself with all of its contents, including neighboring structures inclusive of all of their contents, etc. Personal injury and death increases a company’s financial risk.
With the economy sputtering, arson exposes insurance companies to payouts that become more unpredictable as they become more ubiquitous. While arson may be committed by business people, it should not be thought of as a white-collar crime. The reporting of a fire as accidental, when it is known to be arson is a crime. Just one very important point: “Washington law has long recognized the presumption that a fire is accidental, unless proven otherwise,” meaning that the insurance companies have a hill to climb to prove arson. See the web site http://areyoucovered.com/arson.htm.
In addition to the insurance companies two of the other stakeholders, due to arson, become the public that seeks fire or loss insurance coverage and the firefighters that risk their lives to suppress the fires. Stereotypically, the arsonist is thought of as someone igniting gasoline or some other accelerant to cause a fire. The simple fact is that any sufficient heat source placed among even a modicum of combustible materials can be used to ignite a fire. The effectiveness of the arsonist is related to his/her being away from the scene at the time of the discovery and causing the envisioned damages necessary to justify the crime.
What are some of the more effective means of prevention and what can you do? In corporate settings, prevention includes locking of doors (where applicable fireproof doors) in addition to the monitoring of keys, the use of surveillance cameras and updated and regularly tested sprinkler systems in conjunction with effective smoke and heat detection systems, etc.
What happens when the business owner is the perpetrating arsonist? In this instance, fire investigators need to work hand-in-hand with law enforcement and the criminal justice system. Many law enforcement agencies utilize expertly trained investigators with advanced knowledge of fire science and engineering to analyze the mechanism of fire and to track down the perpetrators.
Here are three examples of how business owners have set fire to their place of business: by disconnecting the alarm systems and setting up an appliance to appear as if it faulted, by placing a heat producing device within a wall and then placing an accelerant between walls proximate to the device and by making it appear as if track lighting burst over a sofa.
Reviewing the numbers can be very illuminating. “In 2005, an estimated 323,900 intentional fires were reported to U.S. fire departments. These fires were associated with losses of 490 civilian fire deaths, 1,500 civilian fire injuries, 7,600 firefighter on-duty at-scene injuries, and $1.102 billion in direct property damage. In 2005, 18 percent of arson offenses were cleared by arrest or exceptional means.” See http://www.nfpa/assets/files/MbrSecurePDF/OS.arson.pdf.
The aforementioned can be extrapolated to mean that as many as 82 percent of perpetrators walked away in 2005. With businesses still struggling, and in some instances laying-off disgruntled employees and some people still out on a limb trying to make mortgage and other debt payments, the constructs for acts of desperation resulting in arson as a form of fraud are ripe for expansion. It should also be noted that historically a large percentage of arson fires are started by emotionally disturbed children and adults.