Underwriting Against Arson

By Robert A. Corry
American Re-Insurance Company

I. Property Underwriting; The Property Insurance Industry's Gatekeeper

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This "flyer" soliciting applicants for motor vehicle insurance is real. We omitted the company's name, telephone number & address. The point is obvious.

No professional property underwriter would place his company's coverage on a risk that had a high probability of being intentionally, or negligently, burned down. Unfortunately, every day in the United States there are enormous insurance losses due to fires that could have been prevented if only the property insurers knew about, and acted on, the applicant's claim history or the conditions of the risk.

1. About Fire & Arson

An insurance underwriter's principal job is to screen incoming new business and renewals, admitting good risks and denying or placing conditions and warrantees on poor risks. Given this, there are several major things that property insurers and property underwriters need to understand about fire and arson.

• First, costs of insurance losses from fire far exceed losses from all other categories of "natural" catastrophes combined.
• Second, arson is the largest cause of fire losses in non-residential commercial buildings and is the third largest cause of residential fires.
• Third, insurance industry experts and national fire incident data agree on one point; one in every four fires in the United States today is intentionally set.
• Finally, approximately eighty-four of every one hundred confirmed cases of arson today go unsolved and only two percent of arson cases result in the offender's conviction for the crime of arson.

Eighty-four of one hundred arson cases go unsolved. Two persons are convicted for one hundred known arson cases. Every property underwriter should clearly recognize that if a criminally inclined or negligent applicant is let through the door, odds are that your company can neither prevent a fire loss nor defend itself from the fraudulent arson claim.

These disturbing facts about arson investigation are among the principle reasons interFIRE was created and underscore why effective underwriting practices are critical for the protection of property insurance companies.

This section of interFIRE focuses attention on the process of property underwriting against fire, and especially against arson losses. The information contained here was derived from underwriting training manuals and publications and from in-depth interviews of career property underwriters with ten or more years underwriting experience for primary carriers.

During our interviews we sought advice and information on the "best practices" in property underwriting today and the kind of wisdom that comes from perfect "20/20" hindsight about fire and arson losses.

Our objectives during the interviews were to learn:

• How well-informed property underwriting decisions are made concerning fire-related risks,
• The pros & cons of information sources that underwriters rely on daily to make decisions on extending, renewing or denying coverage,
• Common "red-flag" symptoms that property underwriters need to routinely screen for in the background, character & financial affairs of arson prone individuals & businesses,
• Recommendations for cost and time-effective information resources that can help a property underwriter verify information contained in an application and disclose problems with an applicant's background, solvency and insurability.
• Begin a discussion about whether it would be good business for property carriers to adopt a screening process within their underwriting unit where questionable renewals and new applicants with "red flag/' issues could be referred for additional scrutiny by a specially trained underwriter or technician with access to advanced industry and public records databases.
• Begin a discussion about whether effective property underwriting practices can measurably add to their company's bottom-line success by writing good risks and denying coverage to criminals and others who are arson or fire prone.

2. Property Underwriting, Fire Safety and Arson Prevention

Very few people in our society today are in a better position to influence fire safety and arson prevention than a skilled property insurance underwriter. For reasons explained here, the underwriter is virtually the only "player" in our system that can influence enforcement of fire and arson prevention measures on a daily basis in commercial and in residential risks.

Each community, through its local and state statutes and regulations, has an apparent capability to promote fire and arson prevention. This is obstensively accomplished through enforcement of basic fire prevention, building and sanitary codes especially with public buildings and publicly licensed commercial establishments.

In reality, civil code enforcement and fire prevention units are notoriously undermanned in most communities and typically get the "back burner" treatment from the courts. Sensible enforcement of even the most basic sanitary, utility or building codes is lax to nonexistent once the "Certificate of Occupancy" is issued in residences and smaller businesses where most of the fires occur.

One exception to this rule is after a fire has damaged or killed. At that point the construction and design of the building & its contents are often cited as "causal" or "contributory" factors. When this happens manufacturers, distributors or maintenance personnel, along with their insurance carriers, often become involved in litigation.

Certain professions and skilled trades dealing with the architecture, fire safety engineering, design and manufacture of construction, finishing materials, furniture and appliances, wiring, heating and ventilation systems and conveyances play important roles in protecting Americans in their homes, employment and transportation.

Many structural, utility and appliance designs that have stood the test of time are safe if used within reasonable limits given intended design and maintenance. In the real world, it is an everyday reality that end users of buildings and products too frequently create their own risk of fire loss by nullifying built-in safety features, by poor housekeeping & inadequate security, by disabling or failing to maintain smoke detection and fire suppression systems, or by irresponsibly running electrical or mechanical appliances past their safe life span.

Because most public safety inspectors can have limited impact on problems affecting day to day fire safety, the property insurance carrier is in an extremely influential position to promote fire safety and arson prevention when it simply acts to protect its own interest.

Risk of fire & arson is dramatically reduced when basic security measures such as adequate fencing, locks, lighting and fire and intrusion detection systems are required and reasonable minimum housekeeping, storage and maintenance standards are enforced.

3. A Majority of Insured Fire/Arson Losses

In too many arson cases today a conversation between a fire investigator and the property underwriter at the fire loss scene would begin with the question "What were you thinking to put insurance on that place or/insure anything for that particular person?"

Neither professional would disagree that, on closer look at many insured losses, the question was seldom "Will a fire occur here?" The real question to be answered was "When will the fire occur here?"

Insurance Loss Case: The owner of a derelict barn that had housed a seed plant operation a decade earlier had been seeking a demolition contractor until his local insurance agent suggested an increase in fire coverage from $71,000 to $460,000 with no betterment or plan for usage. Three days after the policy was issued the barn went to the ground. The cause was arson.

4. Underwriting; Acquire, Evaluate, Act, Monitor

How each individual underwriter performs his/her important task sets up their company to operate profitably or suffer from tremendous exposure & financial losses.

The pressures of a competitive business environment, workload, cost cutting, less than informative sources of risk information and sometimes even sloppy workmanship and poor judgment allow too many totally unacceptable risks to slip by property underwriters and gain insurance coverage every day. This fact has serious consequences for both property carriers and for society.

While each insurance application on the underwriter's desk is, in some ways unique, most applications can be grouped into broad categories enabling the underwriter to apply information from standardized rating indices and industry databases.

In many arson cases resulting in losses to property carriers, clear warning signs were present that were either ignored or missed by the underwriter who placed the business. These warning signs range from financial instability, a serious criminal background and questionable prior losses to wholesale disregard of reasonable security and fire prevention measures.

This section of interFIRE alerts property underwriters to the scope of the American fire/arson problem and identifies major warning signs that are often associated with a fire or arson prone risk.

In spite of its frequency, arson is seldom considered as an individual peril. Many underwriters feel that arson, like many other kinds of crime, is random and difficult to judge as a risk factor.

The truth in too many cases is that "the handwriting was on the wall" but was missed or ignored.

6. Key Underwriting Clues for Loss Prevention.

The following factors should be considered each time that a fire insurance applicant or policy renewal is being considered.

• Relationship of trust with the producer - Placing insurance on risks combines the science of rating exposures with the "art" of developing a valid "gut" feeling about individuals seeking fire insurance coverage. The professional judgment and "street smarts" of the agent/broker is an important link in this process. Ask yourself, has there been a history of questionable losses from clients referred by this agent/broker that makes you question their skill, honesty or common sense?
• Loss history - You need to know about each personal lines and commercial fire insurance applicant's past history of claims activity that may or may not have been settled. Today, there are underwriting databases that can provide this information in seconds and at reasonable cost. Information on these databases along with contact information is contained in this document.
• Financial condition - Is this business or individual financially strapped? Is there an impending situation, unknown to you, threatening to drive down the business or personal finances of the applicant? An inexpensive & on-line search of public record databases will often reveal evidence of deteriorated finances such as liens, attachments, suits or additional mortgages on real property or conditions affecting liquidity such as personal or business bankruptcy or costly divorce settlements.
• Years in business - Undercapitalized start-up businesses with inexperienced owner/managers, especially those entering hyper-competitive markets like small bar-restaurants or pizza stores, are notoriously prone to failure. Established businesses with sound products and a solid customer base are obviously less risky.
• Loss Control Report/Engineering Report - A qualified loss prevention inspector can often spot significant problems affecting the current and future value of a property. Structural or utility defects affecting the suitability of a risk for its intended purpose or even intangibles such as "Quality of Management" issues can have a profound impact on operations, profitability and risk of fire.
• Quality of Management - A Ford Foundation study on Arson years ago found that the number of sanitary code violations was the most significant correlation to whether a given building would sustain an arson fire. "Quality of Management" is expressed in clean & secure operations, a high level of maintenance, and other positive factors that, by themselves, tend to suppress the possibility of fire and crime.
• Implementation of Loss Control Recommendations - Prior to policy renewal, has the insured implemented each Loss Control recommendation to correct problems or deficiencies noted in the first or subsequent inspection? Does the insured resist or ignore reasonable recommendations?

The "Big Ones" - three "red flags" were cited as the most significant indicators of risk for arson based on underwriting experience. Has this insured broken the law in the past? What is this insured's financial history? What is their prior loss experience?

Screening out overly risky applicants and placing specific covenants, warrantees and stipulations on coverage extended to marginal applicants helps to control risk.

But who are the risky applicants?

Property underwriting "red flags"

a. Risky Business: The Insured.

• A criminal?
• Applicant in personal trouble? (Bankruptcy, business or job loss, recent or pending divorce)
• Questionable or extensive claim history?
• Unresponsive to engineering recommendations?
• A new business in a saturated market?
• Requests an unrealistic amount of coverage?
• Poor risk management habits? Everyone has a key to the front door & security code to disarm the intrusion detectors?
• No action taken on prior entering without breaking losses?

b. Risky Business: Insurance Application

• Unreferred or out-of-town "walk in" applicant
• Request high limits on marginal property
• Highly leveraged
• No answer or puts "None Known" in prior claims block
• Unsigned property insurance application

c. Risky Business: The Risk

• Vacant buildings or buildings in developments that are "emptying out"
• Seasonal restaurants or businesses
• Trendy, limited interest businesses
• Environmental law violation sites
• Building status (For Sale, vacant, etc.)
• Lack of "Pride of Ownership" in maintenance of the risk & other capital stock
• Troubled labor relations
• Inadequate yard/building security system
• Ignitable materials in unsecured locations at, or adjacent to, the risk
• No sprinklers/fire/intrusion detection system or a system that is inoperable or poorly maintained
• A fire/intrusion system that can be disabled at the risk location or where a maintenance contract is allowed to lapse without notification to the insurance company
• Prior fires of undetermined origin or cause.
• Prior burglaries or malicious damage losses
• Prior arson fires.
• Backed up to heavy dry vegetation or unreasonable forest fire exposure?
• Located on a barrier reef in a hurricane zone?
• Is the risk next to an "at-risk" structure such as a vacant, unsecured building?

d. Risky business: Loss Control Report "Red Flags"

• Poor overall condition
• Area with a high rate of property crimes
• Vacant, unoccupied or under-utilized facility
• Inadequate housekeeping increases hazard.
• Inadequate or inoperative:
• Sprinkler system in disrepair
• No fire protection/alarm system or an inadequate one.
• Inadequate doors/windows or locks.
• Perimeter fencing non-existent or in poor repair.
• Building/Sanitary code violations - The highest correlation predicting a future arson and any single factor was the number of sanitary code violations. Ford Foundation study on Arson.

e. Risky Business: Insurance Coverage

• A sudden jump in requested coverage
• Lapse in coverage or cancellation of the previous fire policy.
• Insurance requested is much higher that the insured's investment.
• Premium payment problems.

II. Sources of underwriting information and electronic databases

1. Construction, Occupancy, Protection & Exposure (COPE): Shortcomings with the usual underwriting data resources.

Adding by Subtracting

The best protection against insured fire & arson losses is to avoid the problem in the first place. The underwriter armed with enough quality information on new business or renewals to make an informed decision is obviously in a better position to protect their company.

Underwriting manuals typically agree on one point - "The best predictor of the future is the past." This is the true basis of the art and science of property insurance underwriting.

With these things in mind let's take a look at the pros & cons of commonly used sources of underwriting information.

• Dun &Bradstreet^TM(D & B) - Dun & Bradstreet data sheets provide information about a particular risk. The information is sometimes gathered by D&B over the telephone or by mail. The risk is not obligated to provide this information. The possibility a risk may provide false or misleading information is present. The reports may become "dated". There may be little or no reliable information on small or new businesses.
• Insurance Service Office^TM (ISO) & Rating Construction Protection^TM (RCP) Codes
• Class rates are based on factors assumed to be generally present in all similar occupancies. These rates are average loss costs for a generic class of occupancy and are not corroborated by an physical inspection of a premises. These guides address a generalized, homogeneous grouping of risks or a specific "class" of business.
• Specific rates are those promulgated by ISO inspectors upon a personal review of the property. Specific rates use as their base cost average loss cost factors developed by a general occupancy class and modified by conditions identified at the risk during an actual inspection of operations representative of average daily operations and hazards.
• To learn more about any particular risk you will need to obtain the ISO inspection date for that specific location.
• If the Guide is "dated" you may need to request another site inspection.
• These guides assume an "average" risk within its class and may not be suitable for evaluating a specific risk.
• Loss control Manual - This resource provides an overview or generalized report for an average or acceptable risk within a class of similar risks. Information from a Loss Control Manual may be a poor fit for any individual risk. Two widely used Loss Control Manuals are Best Underwriting Guide^TM and FC&S Bulletins^TM.
• Loss Inspection Report - The quality of insurance company "Loss Inspection Reports" vary with the expertise of the Loss Control Inspector. The inspector is the "eyes" of the underwriter. If the inspector is not competent, or misreads hazards at the risk, the underwriter will not recognize or identify potential exposure problems. The frequency of the Loss Inspection Reports varies based on the characteristics of the risk. In any event you need a competent inspector for that type of risk or the frequency of the reports will not matter.

2. How can an underwriter learn if the property insurance application doesn't tell the whole story?

One highly significant advance for underwriting and claims professionals is the development of advanced insurance industry computerized underwriting, claims and public record databases.

Today, a trained underwriter with a telephone or standard computer linked to the Internet can perform perfectly legal research of an applicant's past claim history or present financial status to verify representations and to reveal discrepancies and significant problems concealed in the insurance application or by inadequate information in commonly used underwriting data resources.

3. Types of Databases & Resources of value to property underwriters:

• Insurance Information databases
• Public Record databases & commercially available CD-ROM databases
• The Internet
• Government records

a. Insurance Information Databases (excerpted from interFIRE's Databases for Fire/Arson Investigation)

The insurance industry has been collecting claims loss data for many years. Today, most insurers contribute information to one or more property-casualty organizations that maintain several large insurance loss history databases. The information contained in these databases is intended for use by underwriters, claims and SIU personnel in official performance of their different functions.

There are important differences in the extent of prior loss history information between the major "Underwriting" and "Claims" databases.

The Underwriting database

An "underwriting" database is designed to enable underwriters to verify representations contained in an application for personal lines or commercial insurance before the policy is issued for new business or upon renewal.

One major underwriting database vendor (A-Plus^TM) contains information on every single personal lines or commercial claim submitted to them in the United States over the previous five years whether or not any settlement was made and regardless of the amount of the claim. This database contains submissions representing approximately 85% of the property/casualty insurance industry's loss data.

A second major underwriting database vendor (ChoicePoint^TM) can provide loss data for the past five years for approximately 80% of the personal lines property policies and 95% of the personal lines auto policies submitted to them in the United States.

Underwriters may query either database for prior loss history by supplying at least the name and address of the subject. Like any form of database research the more information provided on the subject the better and more complete the search results are apt to be.

Personal lines: (A-Plus^TM & ChoicePoint^TM)

• Current and any former name (e.g. maiden name) or alias.
• Current and former addresses.
• Social security number.
• Date of birth.
• Policy numbers.

Commercial Lines: (A-Plus^TM only)

• Current/previous business names and addresses.
• DBA (doing business as) names.
• Prior policy numbers.
• The names of one or more business partners.
• The Federal Tax ID number.
• The social security number of one or more owners, partners or corporate officers.

Information contained in the underwriting database falls under the Fair Credit Reporting Act. As such, results of queries made in the normal course of underwriting are regarded as having the same level of protection as is a person's credit history. Information received from the underwriting database can not be used for claim handling, special investigations or pre-employment screening.

Access to the underwriting database is restricted to insurers who have contributed a minimum of three to five years of loss data to the database.

There are two major underwriting database vendors; A-Plus^TM (www.iso.com) which currently contains personal lines and commercial claims data and ChoicePoint^TM (www.choicepointinc.com) that contains only personal lines claims data.

The Insurance Claim Databases (excerpted from interFIRE's Electronic Databases for Fire/Arson Investigation)

This section is included to familiarize property underwriters with existing claims databases.

The major insurance claim database receives claims information from over 1,500 insurance companies as well as 1,000 self-insureds representing 95% of the applicable premium volume. The difference between claims loss information in the underwriting database and the claim databases lies in completeness.

Whereas the underwriting database contains information on "every single claim submitted over the previous five years whether or not any settlement was made and regardless of the amount of the claim," the information contained in the claims database is dependent on thresholds set in individual insurance companies as to what they report. One company may choose to report all claims made against it where another may report only claims over $5,000 or some other arbitrary threshold.

Traditionally, insurance companies have gathered information and maintained records on specific types of claims with a significant risk of fraud such as bodily injury, property losses, worker's compensation and motor vehicle claims. This information was isolated into databases covering a particular type of loss i.e. fire claims.

Insurance fraud investigators have long wished for a single, combined database that would merge all categories of claim information into a single database to increase efficiency and save time.

The All Claims Database, promises to do just that. That database, called ISO ClaimSearch, was developed by the Insurance Services Office (ISO) and combines the AISG injury and property databases with the NICB Vehicle Database. ISO ClaimSearch combines a number of formerly independent databases. These include:

i. The Property Insurance Loss register (PILR) - PILR was established in 1980 to help insurance carriers fight arson and other fraud in property loss claims. More than 1200 property insurance carriers submit fire/arson, burglary & theft losses representing over 95% of written premium. Each year PILR receives more than 2 million new claims and issues 340,000 reports indicating prior claim "hits" by the same individual or at the same location. Today, this database includes loss information for all perils including fire, theft & burglary losses. A PILR query may reveal the following information about a loss under investigation:

• An insurer's prior claims;
• Duplicate coverage;
• Patterns of claims;
• Mortgages, partners, and other parties to the loss; and
• Potentially fraudulent claims.

ii. The Index System database - contains information on over 65 million bodily injury claim submissions. Each year participating carriers report an additional 20 million new claims. One in three submissions results in an outgoing report indicating a match between the claimant and past bodily injury claims by that same person.

iii. The National Insurance Crime Bureau (NICB) which contained 65 million auto related claims.

iv. SOS-Plus database - This will connect the end user to loss history on bodily injury and property loss claims as well as public records and consumer and commercial information.

Searches across these various lines of insurance claims will be accomplished through a single query to ISO ClaimSearch. This new database allows insurers to expedite processing the majority of legitimate claims that are filed as well as provide data for better benchmarking of claims handling performance.

This new database also makes it easier to detect patterns of fraud when they exist and to uncover both organized fraud rings and the individual opportunist. Using this database, it will be possible for an investigator working in one line of insurance, such as workers compensation, to uncover connections between the claimant under investigation and a previous auto claim or arson fire.

A basic fire/arson investigation should, as a matter of routine practice, include a check of the victim's claim history.

ISO ClaimSearch presently contains over 100 million claims including personal and commercial property as well as bodily injury claims. It is the largest database of property/casualty claims information in the United States. The database is searched on and matching claims information is returned to the company either electronically or on paper. Twenty million new claims are filed annually and the database is expected to grow to 200 million claims within three years.

The database also earmarks claims that have been determined to be "suspicious or potentially fraudulent" in nature. These claims are regularly reported to the National Insurance Crime Bureau (NICB) and are also part of ISO ClaimSearch,.

The property information that is returned can assist the investigator in determining what that individual's experience is concerning property losses.

The database will provide a 6+ year history of losses including:

1. Loss history information on the individual or business.
2. Specific past loss history information on the address where the current loss took place.
3. Information on all of the parties to the loss including spouses, lien holders, banks, mortgage companies & individuals.
4. Coverage Information including the carrier involved in the prior loss, the amount of coverage, the policy number and other important information. This query helps identify multiple or duplicate coverage's on the same building.

Matching prior claims

Matching claims in the bodily injury, property and auto areas can also be important to an investigator. The individual's overall claims experience can provide valuable insight into a potential financial motive. A determination of the claims history of the business or individual should be made as early in the course of the investigation as possible.

How this is done.

Ninety-seven percent of the information that flows into the insurance databanks is sent electronically. Some individual companies may send up to 20,000 claims a day. These are filed and indexed in various ways. Information material is sorted by social security number, address, name, former name, alias, date of accident, type of injury, location of accident. Also on file are a claimant's occupation, license number, policy number, doctor or treatment facility and vehicle identification number

To track multiple claimants the computers are programmed to look for names exactly or phonetically as well as by different variations such as in Robert, Robbie and Bob. Streets addresses may be searched in a variety of ways as in #10 Main, #10 Main St., #10 Main Ave, etc. Databases are set to red flag addresses from penal facilities as well as from Post Office boxes.

2. Public Records Database Services:

The infamous "Paper Chase" seeking information on property, probate and vital records used to involve physically hand searching voluminous deed records or index card files in various state, city and county offices. Today, thanks in large part to electronic databases specializing in "public record" information, this task can be accomplished more thoroughly in minutes and at very reasonable cost.

Databases don't represent the actual records but rather are an "index" of the records. Investigators seeking to use public records for legal purposes (trial evidence, etc.) usually will need to get certified copies from the custodian agency of the records.

Individual vendors offer access to a wide variety of database options ranging from local to national asset searches, "skiptracing" - finding someone who is "missing", or identifying liens & attachments, bankruptcies, divorce or other probate records and much more.

The better vendors offer "bundles" or "packages" of searches where simultaneous searches across a number of public record databases can be accomplished at reasonable cost.

For example, one large public record database vendor offers a $7 bundled search that, "scans over 4 billion records to create a single comprehensive report on an individual using as little as a last name. The report would include the individual's full name, any alias names, most current address, previous address, telephone number, social security number, driver's license number, date of birth, possible relatives, real property ownership, bankruptcies, tax liens, judgements, UCC filings, aircraft, watercraft, stock ownership details and other important personal details."

Once an underwriter connects into a premium public record database, the once daunting "paper chase" can often be accomplished in minutes right from his/her desk. You should be aware that many vendors are stronger in one part of the country than another & others specialize in certain types of information. Some vendors offer a greater variety of databases. Different vendors might also have vastly different cost structures, levels of service and varying quality of available information. This is one area where the expression, "Let the Buyer Beware" should be taken literally. Comparison-shopping is a must.

InterFIRE does not recommend one vendor over any other. However it is our experience that the best quality public record database vendors tend to share a number of characteristics:

• they permit a free trial run,
• they will train your personnel for free,
• their databases are updated frequently (at least every six months),
• users can either perform an on-line search themselves or have a staff expert assist them for an extra fee.

Among other information, public record databases can provide the following;

• Verification of the applicant's identity & address(es)
• Learn how much was paid for the property
• Who else is in the corporation
• Outstanding liens, suits & judgments
• The credit history & outstanding debts of the applicant (consent release required)
• Asset search
• Media search - Has the applicants name, address or company appeared in the media regionally
• Names, addresses & telephone numbers of neighbors
• Criminal convictions
• Prior employment
• Registered vehicles in the household
• State workers compensation claims
• Vital records (births, marriages, deaths, etc)

Advantages of public record databases:

• Speed
• Comprehensive information
• There is no "footprint" or audit trail since all records are in the public domain.

Disadvantages:

• Can be costly if not managed properly
• Some service providers have a regional or specialty focus.
• Quality varies by vendor.

4. CD-ROM Databases.

There are a variety of CD-ROM database programs available in office supply stores, computer software stores or through mail-order catalogues that could help property underwriters verify information. Residential and commercial telephone numbers and addresses are among the potentially useful.

One CD-ROM product contains information on 115,000,000 listed residential telephone numbers in the United States. This product permits the user to search a number of different ways to obtain information about a particular individual. For example, with the telephone "white pages" CD-ROM you can search the entire country or, limit the search to a specific state, a metropolitan area, a city or town, a telephone area code or a zip code.

You can search using a name only, an address only, or just a telephone number. The product, if it matches, will provide the full name, full mailing address with a listed telephone number.

Another CD-ROM product, designed for business users, and available commercially, will provide the following information on individuals:

Name & complete address.

Telephone numbers.

Estimated household income.

Estimated home value.

Age & gender of occupants.

Length of residence.

Another CD-ROM database lists over 10 million businesses by name & address, telephone number, employee size range and estimated sales, credit rating code, etc.

5. The Internet

a. The "Net"

Today the Internet is made up of over 80,000 academic, commercial, government & military interconnected computer networks in more than 200 countries. The "Net" is an important resource now that promises to be even more important as time goes on.

The Internet is the world's largest network of independent computer systems that have agreed to work together to provide a global communications facility. Once you are familiar with a few basic techniques you should be able to either go directly to a web site of value or "surf the net" & find what you are looking for.

There are a number of Internet services of potential value to property underwriters:

• "Web sites" - Literally millions of people/organizations/government agencies have "web sites" that a user can access with FTP (file transfer protocol) and then have the choice to read or download text, graphics/sounds, etc. into their own computer and print it out. Most of the important web sites of interest are free.
• "e-mail" (electronic mail) - Provides a user with the ability to send and receive letters & files to/from other users around the world - instantly and for free.
• "Newsgroups" - Bulletin boards that contain information and commentary from people about a specific subject (i.e. underwriting, arson investigation, terrorism, etc.).
• "World Wide Web" - An electronic interface (switchboard) that allows you to link into the Internet system.

b. Requirements

The only requirements you need to get on the "Net" are a computer, common software platforms, a modem that hooks into an ordinary telephone jack and a service contract with a local "Internet provider" or, membership in a national service such as America - Online, CompuServe or similar. Today, a one-month agreement with an Internet Provider can cost as little as $10 and may include 20 - 30 hours of free Internet access time. One-month of unlimited Internet use with one of the national providers usually costs about $20.

c. Researching on the Net

The first time you go on-line you will probably see the Internet provider's "home page." Chances are you can "jump" from there directly to other web sites that will give you the local/national news, weather, sports, events of interest and much more.

If you click on the icon for "Search the Web" you will get a screen with a blinking cursor in a text box. If you enter "underwriting" in that box and then click on "go" within seconds the "search engine" will identify more than 30,000 or more web sites that may have information for you.

The first ten or twenty sites that most closely match your topic will come up automatically. Scroll down the page reading the thumbnail descriptions until you find one that seems to meet your needs.

Just double click on the site's highlighted name to open it. If you like what you see you can read it on the computer screen or choose to save the information to your computer's hard drive or print it out.

Underwriters can use the following formats to improve their odds at getting the right web sites:

A search for... Returns pages containing...

• fire arson fire and/or arson preferring pages with the phrase fire arson
• "fire arson" the word fire next to the word arson
• +fire arson fire, maybe arson
• +fire+arson both fire and arson in the document, not necessarily next to one another
• +fire-arson pages containing the word Fire; pages with the word arson are ranked lower
• John Smith the name John Smith (Remember to capitalize proper nouns)
• John,Smith the name John and the name Smith

d. Bookmarks

If you want to be able to return to that web site sometime just click on the "Bookmarks" menu and click on "Add a Bookmark." The next time you want to return to that site simply click on "Go to Bookmarks" and then click on the name of the site and you'll be back to it in seconds.

If you are interested in speeding up research consider disabling the "graphics" from the websites you visit. To do this simply click on the "Options" menu and then see if there is a checkmark next to "Auto Load Images" on the pull down menu. If there is a checkmark next to "Auto Load Images", click on it to remove graphics. All the new websites that you open will be "text only." This is much faster.

e. Search Engines

The best way to search the web for sites of interest is to simply use one of the "search engines" supplied by your Internet vendor. Occasionally you can locate a specific major organization's website by pulling down the "File" menu click on "Open" (or, Ctrl + "O") and then entering the organization's simple Internet address & appropriate "domain."

f. Searching for fire/arson related websites

Most of these are common sense. For example, www.ford.com will take you to the Ford Motor Company's website, www.iaai.org will take you to the International Association of Arson Investigators website, www.atf.gov will take you to the Bureau of Alcohol of Tobacco & Firearms website and so forth.

Domain (i.e., zone) .com .edu .gov .int .mil .net .org

Meaning Commercial organization Educational institution Government body or department International Organization (e.g. NATO) Military site Networking organizations Anything that doesn't fit anywhere else, such as professional societies, non-profit organizations, etc.

g. InterFIRE highly recommends these websites as a place for property underwriters to start learning about fire, arson & insurance fraud.

InterFIRE Recommended Web Sites

interFIRE VR Recommended Web Sites	Contents
www.atf.gov	Bureau of Alcohol, Tobacco & Firearms, Washington DC Information on the agency, its programs, training, wanted persons, hot links to fire/arson/explosion websites & more.
www.amre.com	American Re-Insurance, Princeton, NJ Information of the company, insurance, re-insurance, Arson "Tip of the Quarter", hot links to the insurance industry, insurance information databases & more.
www.fire-investigators.org	International Association of Arson Investigators (IAAI), Louisville, Kentucky The IAAI is the largest organization of fire/arson investigators in the world with Chapters in 45 states and 30 countries. The site contains fire/arson information & hotlinks to other important sites.
www.usfa.fema.gov	National Fire Academy, Emmitsburg, MD Information about fire/arson, firefighting, fire prevention & other training programs offered by the NFA at the National Fire Academy campus (www.nfa.gov) & remotely throughout the nation. Hotlinks to major sites of interest including the Learning Resource Center, the largest fire/arson library in the world (www.lrc.gov). The library's holdings can be searched on-line. The Federal Emergency Management Agency (www.fema.gov) is the parent organization of the USFA & NFA.
www.lrc.fema.gov	Learning Resource Center, U.S. Fire Administration, Emmitsburg, MD A major collection of information on fire/arson investigation and related topics with over 60,000 volumes and more than 200 periodicals, magazines and journals with a fire focus. This site allows the user to search the library's holdings most of which can be obtained through the inter-library loan program through your local library.
www.nfpa.org	National Fire Protection Association, Quincy, MA. NFPA is a world leader in formulating and publishing codes and standards for fire safety. Its website contains information about fire protection codes, training, consultation services and hotlinks to many of the most important fire and arson investigation organization's web sites.
www.nist.gov	National Institute of Standards & Technology (NIST), Gaithersburg, MD A link to the Building & Fire Research Laboratory that conducts scientific experiments and testing of products and processes to determine fire hazard and combustion properties.
www.bfrl.nist.gov/fris/fmafris.html	Building & Fire Research Laboratory - Fire Research Information Services (FRIS). FIREDOC is a fire research bibliographic database containing 50,000 documents on nearly any fire research related subject. The user searches the database using "key words", the author's name or word(s) in a title. The service is free and can be searched from the web, the Internet or via a modem.

h. Other web sites to assist property underwriters with research

Some public records research can be done for free.

P/C underwriters can begin their Internet public record or fire incident research by using a search engine right from their Service Provider's home page. For example, if you want to see if the State of Florida put any of its public records on the Internet begin by searching "Florida + Public Records." Scroll down the "hits" to see if the type of public record you are seeking is provided. Click on the highlighted name & the site will open.

If the category of public record or fire investigation research is linked to the Internet then you can open it & search for the information there. Some of these sites provide information for free. A few may charge a nominal fee. Keep in mind that high-quality public record database vendors will generally provide a broad range of information for one low cost. Instead of searching for information incrementally consider getting "bundled" information from a vendor that includes the specific field you are looking for.

Additional public record information is available through Law Enforcement Databases and CD-ROM databases. Much of this information can be quickly obtained via "Public Record Database Services" and it is always available by going to the records custodian in person.

A specific department or organization that provides data on the web usually has a more complicated looking address because it is often a unit address within a larger organization. To examine one of these sites click on the "File" menu then click on "Open." Enter the address exactly as shown here & click OK.

i. Two hints:

If you use the web frequently for research or education you will probably find hundreds of web sites that have information that may be of value to you. Once you are on-line, organize your favorite sites by simply clicking on "Organize Favorites" and set up topic files then save each Internet address chosen as a favorite into a specific topic file.

InterFIRE will recommend specific websites of high value to fire/arson investigators to get you going quickly and so you can see the incredible value and relevance of the Internet to your work.

To reach one of these sites all you have to do is click on the "File" menu and then click on "Open." Copy the "address" of the site exactly as shown in our listing and then click "OK." The site will appear within seconds. Almost all of these sites offer "Hotlinks" to other related sites. To reach a "hotlink" website just double click on its name.

j. Web sites of interest to P/C underwriters on fire/arson, property insurance and insurance fraud

InterFIRE provides additional examples of web sites that may be especially useful for property underwriters, property claims investigators and fire/arson investigators. Every day more sites come on-line. Some of these sites may go off line at some point.

Insurance Industry & Underwriting Organizations & Information

www.acord.com

Acord^TM is a major developer of insurance industry standards & forms.

www.iii.org

Insurance Information Institute - statistics and facts about arson & fraud and other subjects affecting the industry.

www.insure.com

Insurance News Network.

www.iasiu.com

International Association of Special Investigation Units - insurance fraud information & training.

www.iaati.org

International Association of Auto Theft Investigators - information on motor vehicle fraud.

www.flash.net/~mdccull/insurance/

One thousand property & causality web links including some for property underwriting.

www.fraudcoalition.org

Canadian Coalition against Insurance Fraud - Excellent resource on insurance scams.

www.cfenet.com

Association of Certified Fraud Examiners.

www.iix.com

Insurance Information Exchange - information about underwriting & internet resources.

www.propertyandcasualty.com

Information about the Property & Casualty Insurance Industry.

www.iso.com

Insurance Services Office provides actuarial, underwriting & claims information for the insurance industry.

www.aais.org

American Association of Insurance Services - One of two national advisory organizations that develops and files state regulator forms, manuals & rating information for the P/C industry.

www.nuco.com

National Underwriter - A publication that includes information of interest to underwriters.

www.cpcusociety.org

Chartered Property & Causality Underwriters Society (CPCU) - An organization that provides training and education , a code of ethics and provides standards for the underwriting profession.

www.imua.org

Inland Marine Underwriters Association (IMUA) - national association for the inland marine underwriting association.

www.businessinsurance.com

Business Insurance Magazine - Articles of interest to P/C underwriters.

www.aiadc.org

American Insurance Association - A P/C trade association.

www.insurancefraud.org

Coalition against Insurance Fraud

www.fdn.net

Fraud Defense Network

Fire Underwriting Resources (general)

www.nfpa.org/truss.html

Truss roof collapse information

www.csu.edu.au/firenet.html

FireNet information

www.sfpe.org

Web site link to Chemical, Fire Protection, Electrical, Facility & more professional engineering societies.

www.lsc-associates.com

Lee Cole & Associates (motor vehicle fire investigation publications)

www.dot.gov

U.S. Department of Transportation vehicle recalls

www.ul.com

Underwriters Laboratory (UL) An independent, not-for-profit product testing & certification organization for over a century with U.S. & international affiliates.

www.cpsc.gov

Consumer Product Safety Council - A federal U.S. Government agency that provides information on hazardous products and more.

People & Company Locators

www.infousa.com

Database America People Finder

www.whowhere.com

Locate a person, their address, telephone number & sometimes directions to the person's house.

www.bigfoot.com

People locator.

www.companiesonline.com

Information on over 100,000 domestic companies on the web.

www.worldpages.com

Yellow & white pages for domestic & some overseas countries, US government agency locator, toll free numbers, weather & more.

www.familytreemaker.com

Search 325 million names and family relations.

www.mapquest.com

Domestic & overseas road maps & directions to find a specific location or address.

www.switchboard.com

Nationwide business & residential phone directory

Underwriting & Public Record Databases

www.iso.com

Insurance Services Office (ISO) webpage. A major supplier of statistical, actuarial, underwriting and claims information to the insurance industry.

www.iso.com Use the "Site Index" pull down menu on the ISO splash page to learn more about AISG, A-Plus^TM (commercial & personal lines underwriting database), PILR, INDEX & other vital insurance claims databases & related services are offered by this company.

American Insurance Services Group (AISG) is an industry-supported provider of insurance and public record database information for both commercial & personal lines of insurance.

A-Plus^TM advertising claims nearly 1,100 insurance companies, 84% of the industry by premium & 24 FAIR Plans, report to their underwriting database.

This provides property underwriters with 3 - 5 years of claims experience on all losses due to all perils at all thresholds. Note that only insurance companies that contribute data are allowed access to claims loss information.

www.choicepointinc.com

ChoicePoint^TM - A major supplier of personal lines, property & causality underwriting database and predictive model information to the insurance industry.

ChoicePoint^TM advertising claims its databases can provide loss data for the past five years for approximately 80% of the U.S. personal lines property market, and about 95% of the U.S. personal lines auto market.

Note that only insurance companies that contribute data are allowed access to ChoicePoint^TM claims loss information.

www.cdb.com

CDB Infotek^TM, a ChoicePoint^TM subsidiary, is a comprehensive public record database vendor in the United States. The system claims access to more than 4 billion public records at reasonable cost.

CDB Infotek^TM provides "Credit Header" information that provides a full name, alias names, full or partial DOB, SSN, current & former addresses, real property assets and some information on bankruptcies, liens, corporate affiliations, etc.

5. www.dbt.com

Database Technologies - DBT's public record database is called AutoTrack^TM. This is another large and respected public record database vendor in the United States. The system advertises access to more than 4 billion public records at reasonable cost.

AutoTrack^TM provides "Credit Header" information that provides a full name, alias names, full or partial DOB, SSN, current & former addresses, real property assets and some information on bankruptcies, liens, corporate affiliations, etc.

Individual States Public Records Files (free & fee)

An increasing number of federal, state and municipal governments are putting public records on-line. These can often be searched for free. Begin by going to the state's website (i.e. www.state.tx.us for Texas, www.state.ca.us for California, etc.) & then check the Secretary of State's Office in the jurisdiction or use an Internet search engine to query (i.e. Texas & state government) to locate the links into the governmental office that would be the custodian of the records you seek. Some states allow search of Department of Correction sites for people' incarcerated and other personal information.

www.brbpub.com

BRB Publications provides an impressive listing of free and fee municipal, county, state & federal public record search websites. This site provides links to free public record websites, hot links to public record research vendors & fee services, SSN searches, reverse directories and more.

www.publicrecordsources.com

Another BRB Publications related website containing reverse directories, maps and other useful information & links.

Pay Investigative Sites

www.llrx.com/features/dbt.htm

AutoTrack^TM

www.knowx.com

KnowX^TM Searches

www.ameri.com/index.htm

Motor Vehicle & Record searches

www.search-ndr.com

National Data Research (background)

A Final Question for Property Underwriters

Are Accidental or "Unintentionally" caused fires really "Caused Events"?

When you take a closer look at the cause of many so-called "accidental" fires in the United States today it will be clear that "accidental" too often really means negligent. A decade ago experts in the field of traffic accident reconstruction began calling accidents by their real name, "caused events." Many, if not most, unintentional fires fall into the same category.

Most experts in fire investigation and arson & fire prevention would confirm that the overwhelming majority of fires resulting in property loss and personal injury could be prevented if reasonable maintenance, housekeeping, security and due care standards were observed.

These facts have important implications for property carriers and property underwriters seeking to reduce their company's accidental and intentional fire losses.

Arson fires

When you take a closer look at arson arrest data from the Federal Bureau of Investigation's Uniform Crime Report a few facts jump right out at you.

• Most arrested arsonists are young.
• Nearly 70% of arrested arsonists are under 25 years of age.
• Juveniles under 18 years of age account for 53%of arson arrests.
• Vandalism is considered to be the most common single motive for arson for juveniles.
• The motives for setting a fire are closely related to being able to gain access to combustibles.
• Spite/revenge is the most common single motive for adults.

Security Counts!

Summary

Enforcement of adequate premises security measures such as strong doors and windows, adequate fencing and lighting, intrusion and fire detection alarms, and sprinklers in concert with reasonable housekeeping standards would stop many, if not most, juvenile and adult arsonists from ever getting to the point of fire origin.

Well -maintained & well -managed homes and businesses seldom suffer from "accidental" or incendiary fires.

Prior knowledge of unsavory character, past criminal convictions, failing business or personal finances, decrepit risk condition, poor security & fire detection & protection, outrageous insurance limits on derelict facilities or risks of depreciated value, and unreasonable claims history would rule out fire coverage being placed in most arson cases.

Prior knowledge of sub-standard maintenance & housekeeping, dangerous storage, careless use of ignition sources, prior accidental fires and poor fire detection and suppression system maintenance would rule out coverage being placed in most cases of unintentional fires.

Prevention is the key. Underwriting & public record databases open the door to the full picture.

This is where the professional property underwriter comes into play.

Reprinted with permission.