[Extensions of Remarks]
[Pages E977-E978]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

MONEY TO BURN

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HON. TOM LANTOS

of california

in the house of representatives

Tuesday, May 9, 1995
Mr. LANTOS. Mr. Speaker, as I am sure you know, Arson Awareness Week,
commemorating the end of the Los Angeles fires set during the 1992
riots, just ended, with communities all across the country focussing
public attention on the terrible costs in lives and money from arson
for profit. Arson Awareness Week has the support of firefighters around
the Nation, many of whom have organized with consumers, government
agencies and insurers to combat this form of insurance fraud through
public information and the advocacy of such groups as the Coalition
Against Insurance Fraud. The coalition recently published in its
newsletter the following article, ``Money To Burn'', which I would like
inserted in the Congressional Record in recognition of our firefighters
and the arson problem:
Money To Burn

(By Michael E. Diegel)

arson-for-profit and its many faces are a dangerous--sometimes deadly--
form of insurance fraud

In 560 cases in 1993, someone's world ended just as
biblical writers predicted--in a blaze of fire.
The 560 dead were the victims not of apocryphal wrath but
of arson.
For at least 80 other people living in apartments above a
New York warehouse, salvation came in the form of
investigators who unearthed a plot to burn the warehouse for
the insurance money.
There's no way to know how many of the 560 were killed in
cases of arson for profit, but experts believe at least 15
percent of reported fires are deliberately set for several
reasons, including insurance fraud and other profit-seeking
motives.
``It's as difficult, or perhaps even more so, as
determining the level of [other types of] insurance fraud,''
said Rick Gilman of the Insurance Committee for Arson
Control. ``It's perhaps more difficult because arson covers a
wide variety of motives where generally insurance fraud is
strictly for profit.''
He defines arson for profit as ``an intentionally set fire
to recover some financial gain. Maybe it's financial gain
through insurance proceeds, maybe it's financial gain through
reducing the competition, maybe it's financial gain through
some other avenue.
``There isn't any information as to how common it is,''
Gilman continued. ``The whole issue is one that's very
difficult to find out anything about because there hasn't
been an effective study of that aspect of arson for over a
decade.''
A 1982 study of closed claims files from 1980 was conducted
by the Insurance Research Council's organizational
predecessor, Gilman said.
``In general, what they found in the voluntary [insurance]
market, the percentage of
[[Page E978]] arson cases was 15-17 percent, but when you got
into the FAIR [Fair Access to Insurance Requirement] plan
market, they found [arson cases were] upwards of 40-50
percent,'' Gilman reported.
What is known are recent cases that illustrate the variety
of arson-for-profit schemes, such as:
A seven-person ring operating in Florida for at least six
years. Participants torched houses, usually under the guise
of renovation or construction projects. The group also burned
cars and at least 15 insurance companies.
A New Jersey couple accused in February of setting fire to
their home after it languished on the real estate market for
more than a year.
Three San Francisco men were arrested in March and accused
of buying a house in 1990, enhancing its value by presenting
a fictitious lease-to-purchase agreement and filing a claim
after setting the house afire. Investigators said one of the
men had been pursued since the late 1970s for suspected
arson, but this was the first time they'd gotten enough
evidence to charge him.
A Prince George's County (Md.) man who owns a topless bar
recently was accused of
hiring others to set fire to the county's only other topless
bar.
While large commercial arson cases and homeowner arson-
related fraud is fairly common, arson for profit crosses all
socioeconomic groups. Investigators in Buffalo, N.Y., report
a rash of arson fires in apartments occupied by people on
public assistance. Officials cited one woman who had fires
break out in five separate apartments over three years.
Relatives of hers experienced at least three fires.
In these cases, burned out welfare clients move into public
housing. They refuse to pay any rent and eventually are
evicted. Then the apartment is torched, usually after all
belongings have been surreptitiously removed. The client
moves into a hotel, which is paid for, gets all her meals
paid for, and collects on claims for the ``destroyed''
belongings.
Typically, the ``victim'' can collect around $3,000 plus
pocketing what would have gone to rent. Fire investigators
believe that more than a third of the city's more than 300
arson fires can be attributed to the scheme, which they say
is increasingly popular. In a couple of blatant cases, they
report welfare clients related to each other had fires at the
same time.
Cases like these earn headlines or are part of the
anecdotes told among arson investigators. So, too, are tales
of arson by juvenile or serial offenders. Usually these cases
aren't fraud-motivated arson. Residential fires, too, are
less likely to be suspected arson for profit.
``It may be that the grease fire in the kitchen may have
been intentionally set,'' Gilman said, ``but it's the local
fire department and the local homeowner that maybe they know,
[so] I think there may be less of a tendency to investigate
residential fires unless it's glaringly evident--multiple
ignition sights or other glaring evidence of arson.''
Gilman also suspects investigators are less likely to look
closely at residential fires because there's not as much
money involved as in commercial arson fires. Again, he
lamented, ``There's all too few facts in this arena.''
Still, he added, companies are investigating fires more
than in the past.
``The same intensity that is being addressed to insurance
fraud is being found in the arson investigation arena,''
Gilman said. Companies are creating and expanding special
investigation units, using resources such as property loss
databases and public records, trying to identify patterns and
motives. They also go low-tech.
``Some companies train arson dogs and give them to local
fire departments,'' Gilman said, ``Nationwide has its own
arson dog they use for their investigations, which I think is
kind of neat.''
Passage of arson immunity laws has helped, too. All 50
states and the District of Columbia have some form of arson
immunity to protect insurers who give information to law
enforcement.
In some cases, the law's scope is limited. For example, 14
states do not allow reciprocity; law enforcement cannot share
information with insurers. Most insurers support full
reciprocity in immunity laws and also would like to see
legislation protecting insurer-to-insurer information
sharing.
And there is good news. The number of suspected arson fires
has dropped for three straight years and there was a reported
11 percent drop in arson cases in cities with more than 1
million residents. However, the cost of those fires was up in
1993 by more than $350 million.
The National Arson Forum, a group of companies and
organizations concerned about arson, developed Arson
Awareness Week (the first week of May) to bring the cost of
this crime to the attention of the public. It also
commemorates the end of the Los Angeles fires set during the
1992 riots.
While the dollar costs are something that's borne by all of
us, it's also a good time to remember that some of us pay
with our lives.

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