Arson fastest growing crime related business insurance claim

The latest findings from the AXA Business Crime Index show a 3% increase in the number of overall crime related insurance claims by businesses in the second quarter of 2006 compared to the first three months of the year.

The Index, which is based on AXA’s own claims data, also reveals that over the same period, the number of arson claim settlements increased by an alarming 12% while malicious damage claims, such as graffiti and smashed windows increased by 11%. However, incidences of theft, which accounts for the majority of crime related insurance claims by businesses, fell by 1% between the first and second quarter. Despite this, theft remains one of the most common reasons for insurance claims made by businesses, accounting for over 10% of all insurance claims.

While arson accounts for a relatively low number of crime related insurance claims (4.2%) its impact on business can be devastating. The average claim settlement amount for a case of arson was around £40,000 in the second quarter of 2006 and it accounted for around £4 in every £10 insurers paid out in crime related insurance claims during this period. Across all crimes, the average insurance settlement amount is now £4,024.

According to the Arson Prevention Bureau Arson is the single most common cause of fire in business and that in the vast majority of cases arson attacks are down to opportunistic vandalism. 45% of all serious fires are a result of arson and up to 80% of businesses never fully recover from a serious fire. The Bureau also reports that each week; there are 2,213 arson attacks, arson kills two people, 53 people are injured by arson and 360 businesses and public buildings are damaged or destroyed by arson.

Douglas Barnett, Risk Control Strategy Manager, AXA Insurance said: “Businesses really do have to take the threat of fires seriously and they should protect against all types of arson. For example, they should be aware that arson can be as simple as a lit cigarette being deliberately disposed of in rubbish holding facilities or outside storage where they can smoulder and set light to the business and attached dwellings. In addition businesses should be particularly vigilant around this time of the year – at the end of October the clocks go back bringing darker nights and the around the month of November fire hazards such as fireworks are readily available to buy.”

Commenting on the overall findings of the AXA Business Crime Index, Neil Mercier, property insurance manager at AXA said: “Much of the focus surrounding the issue of crime is on the individual while the impact on the business community is often overlooked. We estimate that British insurers pay out around £1.9 million in business crime related claims per day; the true cost of crime to British business is likely to be far higher as not all crimes are reported. Indeed, one in five claims we process on behalf of businesses is a result of criminal activity which highlights the severity of the problem.

“We therefore urge businesses to do what they can to protect themselves against criminal behaviour. Our website www.axa4business.co.uk contains a range of guides for SMEs including on how to protect themselves from criminal activity.”

Quarter two 2006 findings from the AXA Business Crime Index

Arson is the most financially crippling crime small businesses can face; between April and June 2006 it accounted for 40% of crime related insurance payouts to businesses despite accounting for just 4% of crime related claims in the same period. Theft is the most common claim and accounts for the largest share of business crime related insurance settlements.

UK business crime by city

Derby tops the city business crime table this quarter, with 27.41% of claims settled between April and June being a result of criminal activity. Birmingham (25.55%) sees a 2% decrease compared to the previous quarter and drops to second place. Newcastle (13.85%) experienced a 5% decrease compared to the first quarter to become the city with the lowest proportion of crime related business insurance claims.