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.