P&C Insurance

Up in flames: Failing businesses think fraud is the answer

Arson remains one of the hardest major crimes to solve overall despite advances in forensic science.

Most business owners operate in highly competitive marketplaces. Odds of failure are high, thus compounding the pressure to cheat with insurance arsons. Generally, about nine of 10 startups fail and only about half of startup companies stay open past four years. At least 75% of venture-backed startups fizzle.

Most bankrupt entrepreneurs get back up and try again. Yet a small minority can’t stand the heat so they create their own: They seek the easy path back to solvency by incinerating their businesses for insurance payouts. An investigation of major-city fires by the Scripps Howard News Service reveals that up to 75% of arson cases overall go unreported. Lurking in that finding may be many unreported “scorchings” of businesses for insurance. Much of the $1.5 billion insurers paid out for arsons overall — including the business arsons for profit — thus remains uncontested.

Click here to read about arson cases for insurance money gone wrong.

5 major changes in P&C insurance since Hurricane Katrina

The single largest insured loss event in world history caused more than $41 billion in insured property damage.

In the early morning hours of August 29, 2005, Hurricane Katrina struck the Gulf Coast of the United States, resulting in more than $41 billion in insured property damage, with total economic damage topping $100 billion. The fallout from Katrina has led to significant changes within the insurance and risk management industry. 

According to the Marsh report, "10 Years After Hurricane Katrina: Lessons in Preparedness, Response, and Resiliency," changes over the past 10 years in the property and casualty insurance industry were all influenced by Hurricane Katrina, as well as Hurricane Ike and Superstorm Sandy. The report reviews how property insurance, claims, analytics, risk engineering, and crisis management have changed since Katrina—and explains what has been learned from Katrina and other disasters about protecting people, property, and profits.

Click here to read about the 5 major changes in the P&C insurance industry that are a direct result of Katrina's immense destruction and shocking aftermath.