High-Tech Car Theft – A Claims Perspective
In July Fiat Chrysler recalled 1.4 million vehicles after Wired Magazine released a video (see the end of this blog) showing one of its car models being hacked remotely.1
Earlier this year, London’s Metropolitan Police revealed that more than 6,000 cars and vans stolen in the British capital last year were a result of cyber theft.2 That’s an average of 17 vehicles stolen every day using technology.
Nick Harrington’s blog examining how technology is increasing the risk of car theft raises some interesting questions about how this worrying trend is affecting claims. As a global reinsurer privy to claim exposures worldwide, Gen Re has observed a spike in high-value automobiles, with a marked increase in Land/Range Rover thefts in Eastern Europe in the last 12 months.
Our data on these thefts show that often they are not stolen by petty criminals or “joyriders”, but by organised crime linked to the drug trade. Gangs target high-value vehicles with devices such as jammers to steal those cars and use them as “currency” to pay for drugs, making the prospects of recovery slim, as these are highly organised gangs that are able to move or “chop-up” the stolen vehicle quickly. Local police stations may have limited resources and capabilities to fully investigate the scale of this increasing area of criminal activity. As a result, once the vehicle is stolen, reported to the police and a legitimate claim submitted, there is little a claims adjuster can do to reduce or mitigate the loss. Since the vehicles are usually not recovered, there is no salvage value to deduct from the amount claimed. The claim will be for the full sum insured minus an agreed value for depreciation (if any).
Reducing the impact of these claims on an insurer’s motor portfolio requires changes at the underwriting stage. Prior to offering cover, underwriters should examine the security of the vehicle - a topic that will be examined in the next instalment of this blog series.
For added protection and greater underwriting and risk control, an insurer can include a warranty or condition requiring additional security protection.
Fortunately, technological advances designed to prevent theft or assist in recovery, which could greatly reduce the cost of claims, are happening every day. This topic will be explored by Stuart Anderson in our next blog in this series. Watch Wired Magazine's video of a Jeep being hijacked remotely.
In the meantime, if you would like assistance with any of the issues raised in this blog, contact us.