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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.

Contact our office for a no-obligation review of your homeowners, renters or commercial property insurance.


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