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Current Arson Issues - A Position Paper - Insurance Industry Recommendations for Effective Legislative and Regulatory Measures To Fight the Crime of Arson

NCJ Number
Date Published
51 pages
This paper surveys recent arson control activities and legislation from the insurance industry's perspective, including arson reporting immunity and penal laws, creation of State fraud bureaus, preventive insurance company procedures, and public policy initiatives.
As of December 1982, 48 States and the District of Columbia had passed some form of arson reporting immunity legislation, and surveys suggest these statutes have relieved insurance companies' concern about liability for releasing information on suspicious losses. Only five States have amended their penal codes to conform with the insurance industry's Model Arson Penal Code, although several others have strengthened their arson codes. At least four States have created fraud bureaus within their Departments of Insurance, while various industry fraud units have combated arson and other insurance fraud. The Insurance Committee for Arson Control has developed a model application to screen out risks which are arson prone and recognizes the value of dependable underwriting information in preventing arson-for-profit. Insurers also face problems in setting coverage limits for a risk and assessing damages in a claim. A review of various standards of value determination demonstrates the difficulty of adopting a single industry standard. Valued policy laws which exist in 21 States have been used by arsonists to get insurance payoffs and should be repealed. The report considers State laws setting time limits for claims settlement and lengthy notification periods for policy cancellation. It explores programs to notify insurers of code violations in buildings they cover, proposals for arson data collection systems, and public issues such as municipal liens against fire insurance proceeds and efforts to encourage policyholders to rebuild fire-damaged buildings. The report contains recommendations, a brief review of automobile arson issues, model legislation, and the model application form.


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