Every year, insurance companies in Canadian and the U.S. pay out over $8 billion in claims year related to auto-theft and
damage resulting from theft. In 2008, $200 to $400 of each policy was attributed to risks associated to vehicle theft, stolen
property stored in the vehicle, fraud, and vehicle damage related to theft. Statistics such as these mounted over the years
and spawned a growing industry for anti-theft devices amongst original equipment suppliers and the aftermarket. New devices
as well as a much more conscientious vehicle owner reversed the theft trend. Vehicle thefts across North America continue
to show a declining trend. The FBI's Uniform Crime report indicates that U.S. motor thefts have declined since 2004 and between
2006 and 2007 thefts fell an additional 8.1 percent, but if you own one of those whose vehicle that was recently vandalized
or stolen, this is little comfort.
Insurance rates are comprised based on algorithms that account for a multitude of factors related to the attributes of:
- the vehicle owner
- the driver's past record
- geographical region where the vehicle resides
- vehicle attributes
Vehicle attributes account for approximately 9 percent of a total premium's value, so changing the attributes of a vehicle
does not have much impact on your insurance premium, especially if the technology is leading edge. It can be difficult for
the automotive industry and the insurance industry to isolate the effectiveness of a particular technology to determine its
effectiveness at either preventing collisions, protecting occupants, or preventing theft. So there is often a lag between
the introduction of a new technology and recognition of its effectiveness by the insurance industry. That recognition has
begun and in 9 U.S. states regulations are in place that require insurers provide car owners with discounts as high as 20
percent on comprehensive insurance for anti-theft devices. Discounts do vary based upon the type of system installed and can
reach as high as 36 percent when multiple systems are installed. Legislation such as this has helped to grow the industry
and the declining theft trend has more states offering or considering offering discounts on a voluntary basis.
New vehicles are not as desirable to thieves, but because of advanced OE installed systems that immobilize the ignition, engine,
or wheels. It is easier to steal the owner's keys through pick pocketing or a home break-in and simply drive away rather than
attempt a high-risk vehicle entry. Most of these vehicles are taken in the middle of the night providing ample time for the
thieves to move the vehicle out of the country or disengage tracking devices such as OnStar or LoJack. As a result, thieves
have put a stronger emphasis on later model vehicles produced in high volumes. Being late models, their security systems are
well known or possibly dysfunctional and there is a high demand for the vehicle's parts. Although theft rates have been on the decline, concerns are that with the slow economic recovery and mounting unemployment,
more people could turn to crime and vehicle theft. Since these will likely be first timers and low-tech thieves, the risks
are mounting for late model vehicles. In 2008, topping the list of vehicles most at risk were:
- 1995 Honda Civic
- 1991 Honda Accord
- 1989 Toyota Camry
- 1997 Ford F-150
- 1994 Chevrolet C/K 1500
Interestingly, of the top 5 vehicles stolen in 2008, none were less than 10 years old. A lot of these vehicles are hot commodities
because they have long life expectancies with demand being created by the rising interest in vehicle modification. Across
the spectrum of general vehicle owners, approximately 8 percent of owners installed alarms or vehicle security systems in
2008. This is up 2 percent from 2006. These devices tend to be favored by high income luxury vehicle owners.
Frost & Sullivan continues to track the developing modification market and amongst those who added 3 or more modifications
to their vehicle across a 12 months period, 37 percent installed alarm and/or security systems. This percentage remained steady
since 2006. Security system products typically are a "tier 3" modification; one that is done as a 3rd or 4th step modification often in year two of ownership. As the vehicle owner adds more modifications, the vehicle garners more
attention and becomes more attractive to thieves and potential joy-riders. At some point, the vehicle hits a tipping point
where the owner must invest in a security system as a means of protecting his/her investment. Aftermarket add-on security
devices are low cost visible deterrents and make sense for the older vehicles, those with fewer mods, and those with limited
funds. However, on a weighted basis the average dollars spent by enthusiasts on modifications is in excess of $3,000 annually
and with that type of investment, many are seeking advanced security systems. Eighteen percent of all modification enthusiasts
report having their alarm/security system installed at the dealer. They are doing so largely because they value the quality
of the product and installations received through this channel.
