Expert Commentary

Lessons from Equipment Thefts in 2003

In January 2004, the National Equipment Register (NER) published its first annual report on the problem of equipment theft in the United States. Its results are interesting and reveal areas where the theft of heavy equipment could be prevented.


Equipment Theft Prevention
February 2004

Last month the National Equipment Register (NER) published its first annual report on the problem of equipment theft in the United States. The report analyzes the thousands of thefts reported to NER in 2003 in order to help insurers and equipment owners focus risk management efforts most effectively. The report also uses past years' loss reports and data from the Insurance Services Office, Inc. (ISO), to establish trends. For greater detail, see the full copy of the report.

In Part 4 of the first IRMI series on equipment theft prevention, "Technology in the Fight Against Equipment Theft," the first step in assessing appropriate technology was described as an individual risk assessment. In this commentary, the author of the NER report gives IRMI readers a unique view of the report and draws on the results to give further advice on how to prevent and respond to the theft of heavy equipment.

Equipment Is Stolen from Everywhere

The most frequently requested and quoted statistic about equipment theft is the list of the "Top 10" states for theft. The report reflects the commonly held view that the top 10 states account for much of the equipment stolen in the United States. In fact, the top 5 states (Texas, North Carolina, Florida, California, and Georgia) account for 33 percent of thefts reported to NER in 2003. This does not, however, mean that a single machine is more likely to be stolen in North Carolina than New York for example. It is mostly a reflection that there is more equipment in North Carolina than New York. Whilst the states with high levels of construction may attract professional theft rings, it is of note that NER received theft reports from every state.

Conclusion: Wherever there is equipment, there is equipment theft. Do what you can to protect yourself wherever you live.

Protect Your Equipment as Well as Your Worksite

Losses reported to ISO by insurers since 1995 show that the majority of thefts occur not from the premises of the policyholder but from someone else's premises. This largely reflects where equipment spends most of its time but also underlines the limited control that an equipment owner might sometimes have over the security of a worksite or simply that some worksites are impossible to completely secure.

Conclusion: Take measurers to protect your equipment as well as your worksites.

... Particularly Your Skid Steer

Whilst an electric drill saw may be easy to steal and a large wheel loader may be the most desirable, the equipment most often reported stolen to NER is equipment that is both valuable and easy to transport—most notably skid steer loaders. A new skid steer loader can sell from as much as $45,000 and may be carried on the back of a small truck or even a pickup.

Conclusion: When securing equipment, do not just protect the most valuable pieces and position less mobile equipment to immobilize smaller pieces.

Exhibit 1

position less mobile equipment to immobilize smaller pieces
Use larger pieces to protect more mobile equipment

Where Does It Go?

The report also analyzes recoveries made by law enforcement assisted by NER. The type of equipment recovered and the states in which it was recovered closely followed the trends for theft. It was noticeable that whilst much stolen equipment seems to leave the state from which it was stolen, very little moves beyond the bordering state. This reflects thieves' high level of comfort in selling stolen equipment in an unregulated used equipment market. In one instance, the thief was renting out the stolen equipment.

Conclusion: Work with local associations such as the Construction Industry Crime Prevention Program of the Pacific Northwest (CICP)—and law enforcement to circulate theft alerts locally and in neighboring states.

Help Law Enforcement Help You

Law enforcement officers are unlikely to be equipment experts and are increasingly being asked to do more with less. The least that a theft victim can do is to report a theft correctly, i.e., with the correct Product Identification Number (PIN) or serial number that uniquely identifies a machine. There is now clear evidence that too often these numbers are missing or inaccurate when thefts are reported. Over 35 percent of the recoveries that NER helped law enforcement make in 2003 had no PIN or an inaccurate PIN associated with the theft report—the recovery was made because the equipment had been previously registered on the NER ownership database.

Conclusion: Help law enforcement help you. Keep a full record of fleet identification numbers and ensure that the correct PIN for the correct vehicle is used in any theft report reported to the police and your insurer.

Theft versus Other Risks

A great deal of the time of engineers and risk managers rightly focuses on major losses such as crane collapses because they are of high value, are often preventable, and have significant safety implications. By analyzing data from ISO since 1996, the report compared the various causes of equipment loss by frequency. In every year, theft losses accounted for more claims than all other types of loss combined. The cumulative effect of this meant that even by value, theft losses outweighed any other single type of loss.

Conclusion: Even if theft cannot be prevented in every instance, risk managers should take a regular look at what can be done and discuss these efforts with their insurer or agent. For their part, insurers should arm themselves with knowledge of theft trends and what equipment owners can do.

"It's Okay, I'm Insured"

The recent hard market and increasing reliance on the sharing of risk has reduced the frequency with which this statement is uttered. Insurers are also increasingly providing incentives for equipment owners to adopt effective equipment protection and recovery mechanisms. Some good advice for equipment owners who are insured was recently given in the January edition of Equipment World.

Conclusion

Equipment owners are at risk to theft in every corner of the United States and should look at ways to better protect their worksites and equipment and to discuss this with insurers to make these efforts improve profitability. These efforts will reduce equipment theft, but not eliminate it. When a theft does occur, it is vital to report the correct details to the right agencies quickly. Very few recoveries have been made single-handedly. It requires a combined effort by owners, insurers, and law enforcement.


Opinions expressed in Expert Commentary articles are those of the author and are not necessarily held by the author's employer or IRMI. Expert Commentary articles and other IRMI Online content do not purport to provide legal, accounting, or other professional advice or opinion. If such advice is needed, consult with your attorney, accountant, or other qualified adviser.

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