Arson, the act of deliberately setting fire to a building, car or other property for fraudulent or malicious purposes, is a crime in all states. Insurers have an interest in preventing and detecting arson because such fires cause needless loss of life and property and also push up the cost of insurance for homeowners, vehicle owners and owners of commercial buildings.
Great strides have been made in fighting arson since the 1973 report “American Burning” raised awareness of arson losses and led to a decade of action that marked the beginning of a cooperative national effort to combat the crime. Some of the achievements of the three decades since are improved training in arson detection, the establishment of insurer-administered computerized databases of property claims to help identify suspicious fires, the formation of special units in insurance companies to investigate suspected arson and state laws allowing the free exchange of information between insurers and law enforcement agencies without the threat of civil suits for libel or violation of privacy.
- National Fire Protection Association (NFPA) Data: According to the NFPA, arsonists set fires that destroyed $663 million worth of property in 2013, down 62 percent from $1,061 million in 2012. These include fires at factories, residential buildings and churches and in motor vehicle and other types of vehicles.
- There were 10,500 vehicle arsons in 2013, compared with 12,500 in 2012, one of which produced $400 million in losses from a fire set aboard a U.S. submarine. Excluding the submarine loss, intentionally set vehicle fires in 2012 caused $88 million in losses, higher than the 2013 total of $86 million.
- In 2013 there were 22,500 intentionally set structure fires, down 13.5 percent from 2012 and down 38.4 percent from 36,500 in 2004. Arsons accounted for 4 percent of all structure fires in 2013. These figures do not count suspicious fires.
- In 2013 intentionally set structure fires cost $577 million in property damage, about the same as the $581 million in 2012.
- The number of civilians killed in arson fires in buildings in 2013 totaled 150, down 16.7 percent from 2012.
- FBI Data: According to the FBI’s Uniform Crime Reporting Program, law enforcement agencies in the United States reported 49,191 arson offenses in 2011, down 4.7 percent from 51,620 offenses in 2010. Only the fires that investigators have determined to have been willfully set—not fires labeled as suspicious or of unknown origin—are included in the FBI report.
- Arsons involving structures (residential, storage, public, etc.) accounted for 45.9 percent of the total number of arson offenses. Mobile property—composed of motor vehicles, trailers and the like—accounted for 23.9 percent of arsons. The rest were arsons involving other types of property.
- According to the FBI, the rate of arson was 18.2 offenses for every 100,000 inhabitants of the United States in 2011. Arson rates were highest in cities with populations of 250,000 to 500,000, at 38.6 per 100,000 inhabitants. This compares with 20.7 in all cities. The arson rate for suburban areas was 12.8 per 100,000 inhabitants.
- In 2011 the average loss value per arson offense was $13,196. For structures, arson damages were $23,918 on average and $6,580 for motor vehicles. Arsons of industrial and manufacturing structures resulted in the highest average dollar losses—$68,349 per arson.
- Arson in the nation's cities fell 4.0 percent in 2011 from 2010. The number of arson incidents in 2011 fell fastest in the nation's largest cities, those with a million inhabitants or more where arson incidents were down 7.4 percent. The number of arson incidents in small cities with 25,000 to 49,999 people fell 6.7 percent at the same time. In metropolitan counties, arson offenses fell 5.9 percent from 2010 to 2011, while arson offenses fell 9.3 percent in nonmetropolitan counties. In suburban areas arson offenses fell 6.7 percent.
- Of all major crimes, arson has one of the lowest clearance rates (either by arresting the offender or closing the case when there is evidence to identify an offender but the person cannot be prosecuted for technical reasons). The national rate in 2011 was 19.9 percent.
- Arson clearances involving juveniles (under the age of 18) were 32.7 percent in 2011.
- Vandalism is the leading cause of arson. An Insurance Research Council study indicates that only 14 percent of arson suspects are motivated by a desire to defraud an insurance company, but other studies find the percentage is higher. Between 20 and 25 percent of arson fires are drug-related.
- Children are responsible for more than one-third of the arson fires set in the United States.
 NFPA data on arson fires are defined as fires that are intentionally set. The NFPA annually surveys a sample of fire departments in the United States to make national projections of the entire fire problem.
 The FBI’s Uniform Crime Reporting (UCR) Program defines arson as any willful or malicious burning or attempting to burn, with or without intent to defraud, a dwelling house, public building, motor vehicle or aircraft, or personal property of another. The UCR Program is a nationwide statistical effort of state, county, city, university and college, tribal and federal law enforcement agencies that voluntarily report crime data.
- A Pennsylvania law that took effect in August 2014 created a felony crime of aggravated arson in cases where a person intentionally starts a fire or aids or pays someone to start a fire with the intent to cause bodily injury; knows that someone is inside the property; or starts a fire that injures a firefighter, emergency responder or civilian. The law establishes a second-degree charge of murder if the fire unintentionally causes a death and a first-degree charge if the death was intentional and imposes tougher sentences if more than three people were inside the property at the time of the fire, if the arson results in more than $1 million in damage or an incendiary device was used. The law was passed in response to a series of 30 deliberately set fires that killed a civilian, caused more than $3 million in damages and left scores of people homeless in 2008 and 2009.
- Scripps Arson Study: A year-long national investigation by the Scripps Howards News Service found that the majority arson fires are not reported to the National Fire Administration’s National Fire Incident Reporting System (NFIRS), a primary source of tracking U.S. arson fires.
- Scripps contacted fire departments in the 10 largest U.S. cities to request case-by-case records of arsons. The results of the study, released in November 2013, suggest that three-fourths of the arson cases were not reported to the U.S. Fire Administration.
- New York reported 11 arsons in 2011 instead of 1,347 it really discovered.
- In 2011 Chicago reported 61 building arson fires to the NFIRS, but Scripps found evidence of 192. The same year Houston had 224 intentional fires vs. 25 reported, Indianapolis had 216 vs. none reported, and New York had 11 arson fires vs. 1,347 reported.
Anti-arson efforts represent one of the earliest organized activities of the insurance industry in America. The National Board of Fire Underwriters, one of the oldest business organizations in the country, was formed in 1866, partly in response to the problem of arson. In 1926 the Association of Casualty and Surety Companies was founded. One of its major divisions was a fraud bureau.
Insurers have an interest in preventing and detecting arson because the cost of arson claims pushes up costs to insurance buyers. Insurers will not pay a claim if a fire can be proved to have been deliberately set by a claimant or someone acting on his or her behalf in an attempt to defraud the insurer. However, many arson fires, such as those set by vandals or for revenge, are not fraud and result in legitimate claims. Another issue of concern to the industry is that even when arson fraud is proved, the insurer may still have an obligation to pay the mortgage holder the amount of the remaining payments on the outstanding mortgage.
Arson appears to be less of problem that it was a few decades ago. In a 1982 study, the Insurance Research Council (IRC) found that, in residential fires reported by insurers, 11 percent of the fires were traced to arson. For fires at commercial sites, arson was suspected in 27 percent of the fires. (The IRC studied reported fires in structures insured in the voluntary market only, i.e., not in Fair Access to Insurance Requirement (FAIR) plans or other property plans. These plans, administered by the state, make insurance more readily available to those who live in high-risk areas.) By contrast, National Fire Protection Association (NFPA) data for 2011 show that 6 percent of all structure fires were intentionally set.
Motives for Arson: Most industry observers point to profit as the primary motive for setting fires, and have commented on the increased use of arson by organized crime and drug dealers. The IRC study found that the most frequent motive for arson in the voluntary market for residential insurance was vandalism, accounting for 53 percent of all motives. Fraud was the motive in 14 percent of the fires, followed by revenge, accounting for 12 percent of the fires, concealment of another crime, 6 percent, and pyromania, a mental illness, accounted for 3 percent of the fires. Twelve percent cited other factors.
Juveniles: In 2011, 32.7 percent of the people arrested for arson were under the age of 18. Ten years ago, the proportion of arrests of under-18 year old arsonists was 45 of total arson arrests. A report issued in 2005 by the U.S. Department of Justice, in which the existing research literature on juvenile firesetting was reviewed, noted the distinction between fireplay, which involves elements of curiosity, a low level of intent and an absence of malice, and firesetting, where young people are willful actors who use fire as an instrument of power or as a weapon. (See Juvenile Firesetting: A Research Overview, http://www.ncjrs.gov/pdffiles1/ojjdp/207606.pdf ) The report also distinguishes between child and adolescent firesetting. Child firesetting includes children age 12 or younger while adolescent firesetting ranges from age 13 to adulthood. The report also reviewed education programs and intervention and treatment strategies.
Arson Reporting Immunity: Immunity laws, in effect to some degree in all states since 1984, enable insurers and others such as law enforcers to exchange information freely without threat of civil suits for violation of privacy or for defamation. By encouraging the exchange of information, arson reporting immunity laws increase the number of arson claims denied and the number of arson arrests and convictions. According to the Coalition Against Insurance Fraud (http://www.insurancefraud.org/), by February 2013 all but five states granted immunity for reporting to law enforcers, 35 states and the District of Columbia for reporting to fraud bureaus and 28 states and the District of Columbia for reporting from one insurer to another.
"Bad Faith" Lawsuits: An additional legal problem that insurers face in combating arson is "bad faith" lawsuits. Insurers are obliged to settle claims speedily. When a claim is denied because of arson, some claimants take the matter to court, suing insurers not only for the insurance money, but also for "bad faith" or punitive damages. Even when the insurer wins, these suits consume time and money.
Insurer Initiatives: The insurance industry works to combat arson by funding organizations that were founded specifically to fight the crime. The National Insurance Crime Bureau (NICB, https://www.nicb.org//), an insurance-industry supported organization, partners with insurers and law enforcement agencies to facilitate the identification, detection and prosecution of insurance criminals, including suspected arsonists. It combats insurance fraud and crime through data analytics, investigations, training, legislative advocacy and public awareness. The Coalition Against Insurance Fraud (CAIF, http://www.insurancefraud.org/), works to control insurance costs and protect the public safety by combating arson. It represents consumers, insurance companies, legislators, regulators and others. The Insurance Committee for Arson Control (ICAC, http://www.arsoncontrol.org/), composed entirely of insurance companies, brings attention to many important fire investigation and arson prosecution issues each year and works to increase public awareness of the arson problem.
To gather evidence on claims that appear fraudulent many insurers have set up Special Investigation Units (SIUs) or outsourced their activities. By the mid-1990s, insurers said that for every dollar they invested in all antifraud efforts, which included the use of SIUs, they were recovering $27. However, by the end of the decade, these returns became harder to achieve as the more apparent fraud was uncovered, and more effort was needed to ferret out the sophisticated fraud that remained.
Insurers have other basic methods of controlling arson. They can ask prospective insureds to fill out an investigative questionnaire, known as an anti-arson two-tier application, that may alert agents and underwriters to prior fire losses, tax liens against properties, fire-code violations and other indicators of danger ahead. It also can signal to the insured that the company is aware of these problems; that knowledge, in turn, may deter an arsonist.
Federal Arson Law: The Arson Prevention Act of 1994 established a competitive grants program administered by the United States Fire Administration for states or groups of states that develop programs relating to arson control and research. Examples of areas covered by these programs include improving arson investigative training leading to professional certification; providing resources for forming arson task forces that involve all appropriate local agencies such as the fire and police departments; combating and studying fraud, civil unrest, drug trafficking, and domestic violence as causes of arson; and combating juvenile arson by setting up counseling programs.
Church Arson: Following a series of highly publicized church burnings in the 1990s, the National Church Arson Task Force (now disbanded) was formed in 1996. Also in 1996 the Church Arson Prevention Act was enacted, making destroying places of worship a federal crime and doubling the maximum penalty to 20 years.
In the late 1990s, the NFPA and the United States Fire Administration (USFA) said that the leading cause of church fires was arson, which accounted for about one out of every four reported church fires. To reduce church arson, insurers began a campaign advising churches to install good lights and burglar and fire alarms, use locks on all doors and windows, and trim shrubs and trees, especially near windows and doors. They also suggested hiring security guards, organizing a church watch, and setting up arson hotlines and education programs.
Since then, church arsons have dropped significantly. Intentional fires in religious and funeral properties fell 82 percent from 1,320 in 1980 to 240 in 2002, the last time such figures were tracked by the NFPA. There were 1,600 structural fires in houses of worship which caused $105 million in property damage on average from 2007-2011, according to the National Fire Protection Association. Fires in a larger category, religious and funeral properties, averaged 1,780 during the same five years. Among those fires, 16 percent, or about 285 each year, were intentional. However, they accounted for 25 percent of the direct property damage.
STRUCTURE FIRES IN RELIGIOUS AND FUNERAL PROPERTIES, 2007-2011 ANNUAL AVERAGES (1)
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