The insurance and alarm industries have been linked for more than a century to help prevent and minimize losses resulting from fire, burglary and other forms of “mayhem.”
Make no mistake, the relationship has always been a financial one. For decades, the insurance industry offered premium discounts for facilities that had monitored alarm systems in place because there was monetary incentive to do so.
But not any longer. After decades of declining effectiveness to minimize losses, the insurance industry is rethinking its wholesale policy of discounts for alarm systems. Large companies like State Farm and Allstate have already eliminated the “alarm deduction” in Florida, and underwriters are moving to remove it from their contracts nationwide because they can no longer afford what has become a “marketing device” that has no impact on reducing claims.
This is due to high levels of false alarms and low arrest rates, as well as the insurance industry’s near collapse when the financial markets melted in recent years. In short, the insurance industry is transitioning back to focus on loss control instead of market investments.
To re-establish the alarm industry’s effectiveness, installers need to stress the loss-reducing capabilities of monitored video systems.
Comparing Apprehension Levels
A recent Department of Justice publication titled, “The Impact of the Economic Downturn on American Police Agencies,” stated that more than 10,000 officers were laid off nationwide in 2011. One example community, San Jose, Calif., reduced its force by 20%. As Chief Chris Moore said, “Responding to all audible alarms does not accomplish” the intended goals of policing. “In 2011, San Jose had 12,450 alarm calls, and of those, there were only two arrests,” he added.
As a result, this department moved to a verified response policy, which has been coined “broadcast and file,” a politically friendly term that means dispatchers announce that there is an alarm at a certain location but there is no obligation to respond to it.
Video Helps Police Make Arrests
To be clear, insurance companies do not support “broadcast and file” response to alarms, as it does nothing to minimize losses. Their preferred approach is “video verification,” which hastens response.
A recent case study published in Police Chief magazine documented the effectiveness of video verification in 30 vacant Detroit Public School buildings that were targeted for vandalism and copper theft. During the 2010-11 school year, there were 101 burglaries in these facilities and the police closed 70 incidents with arrests of 123 people. That is a phenomenal 70% arrest rate compared to the typical 12% rate for a “good department,” according to the report.
The results are not unique — video intrusion alarms are delivering arrests across the country and saving insurers millions of dollars. Those arrests actually have an exponential impact because putting one burglar in jail prevents an additional 30 burglaries they would have committed on the street. Plus, it eliminates the cost of the entire claims process incurred by the insurance company.
The insurance industry is looking to alarm companies to help promote loss minimization tactics, specifically video verification. Their point of view is that effective loss control means that video clips of burglaries are sent to your central station where they are immediately reviewed and dispatched as a crime-in-progress.
I encourage your company to be leaders in this effort so that we can show the value of our industry’s collective services to minimize loss. Closer to home — meaning your customers’ homes — there is no better way to show the value of an alarm system than to halt a crime in progress and aid in the arrest of the perpetrators.
Kevin Lehan is Manager of Public Relations for Des Plaines, Ill.-based Emergency24 Inc. He also serves as executive director of the Illinois Electronic Security Association (IESA).