Insurance industry feels brunt of car theft

During the past week the issue of stolen vehicles has been featuring prominently in the press. Firstly, there was the story of police officers travelling to Japan to meet with their counterparts to deal with the multi-million dollar car-theft racket where stolen vehicles were allegedly shipped to Trinidad and Tobago. Then only a couple days ago the Police were priding themselves with having seized some 20 vehicles that they believed to have been stolen resulting in the arrests of four persons and the speculation that further arrests were imminent.

Motor vehicle thefts have always plagued the insurance industry. There was a time when the crook-lock (the contraption that hooked the brake pedal to the steering wheel) was considered as an acceptable anti-theft device. The alarm system then became a requirement in order to obtain theft coverage under a full comprehensive motor insurance policy. Now many makes of car alarms do not meet the required standard and it is important that you check with your insurer before installing any alarm system. Car thieves have become hi-tech and can breach many alarm systems hence the reason that many insurers have had to revise their list alarms that they are prepared to accept as meeting their standard. However, the better the level of protection, the higher is the cost to the motor vehicle owner.

Yet, all of this protection and deterrence can amount to naught in view of the increased incidence of car jacking. It requires no skill to engage in car jacking. All it takes is a criminal mind, brute force and the intent to kill if there is any resistance. In fact the “car jacker” is only one step away from being a murderer and therefore there is very little precaution or risk management technique that can be employed. The only real and effective strategy is the installation of the vehicle tracking system which has a relatively high up-front cost in addition to the annual continuing payment for the service. Naturally, this tracking system will cost many times over the cost of the car alarm which is a one-time charge and it is for this reason that car owners find it more attractive to install alarms.

Statistics are cold facts. Roughly 1800 vehicles stolen annually with a recovery rate of approximately 30 percent-35 percent means that 65 percent-70 percent are never recovered. Car jacking has clearly been on the increase. In fact only a couple of days ago I was given an account of a car jacking attempt or more realistically a kidnapping attempt of someone whom I have known for many years. It is the classic where the criminals come alongside at an intersection at night and then hit your vehicle since you are the target. He was saved because another vehicle fortunately arrived at the same time causing these criminals to drive off. As expected the car was carrying false number plates!

The stealing of vehicles is a lucrative business. Consider 1,800 vehicles at an average cost of $40,000. It does not take rocket science to calculate that the economic loss is a whopping $72 million. If even only 1,500 are insured against theft, then the loss to the insurance companies will amount to $60 million. There is no attraction to the criminals unless there is a market and clearly there are people who are willing to buy stolen property. The insurance industry has been at the forefront of lobbying for legislation that will dent the car stealing racket but even after some ten years or more there has been no progress.

The issues of the licensing of garages, inventory of major parts, and change in the way licence plates are manufactured have all been under consideration but sadly to no avail. In fact, criminals have the upper hand. They believe that they can beat the justice system and the reward is high since stealing cars is a very lucrative business that brings in a fast turnover. There is the belief that car stealing is of low priority as there are always the insurance companies that will pay!

The only way forward is to take the profit out of crime. This means swift justice and stiff jail sentences especially where a firearm or weapon is involved in the commissioning of the crime but that requires legislative amendments. It requires leadership and action. As a people we are good at talking and analysing but implementation and action are not in our vocabulary. The time has come for action on all fronts so that criminals will pause rather than being brazen since they feel that they will not be caught and if perchance they are caught they will escape though incompetence or a loophole.

The public is quick to cast blame on the insurance industry since it is normal industry practice to wait 4-6 weeks before settling a theft claim in the hope that the vehicle will be recovered. The recovery rate is very low and it is without doubt that the police unit responsible for stolen vehicles is undermanned. If even the vehicle is recovered the insured may not want back the vehicle because he/she feels violated and that creates a dispute with the insurance company. The trauma and inconvenience are not factored nor the actual cash loss to the vehicle owner in the form of the policy excess. It is clear that the authorities must view auto theft as a serious crime requiring stiffer penalties as well as reforms if we are to dent this thriving criminal activity.

It is the cumulative effect of all these criminal activities and the belief that “crime does pay” that have us in the kind of despair that the country feels. The time is long past for being tough on all aspects of crime. Car stealing alone accounts for at least $72 million in economic waste that the country could do without.

E-mail: daquing@cablenett.net