Scrap Yards and Metal Theft Insurance Claims in 51 U.S. Cities
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Scrap Yards and Metal Theft Insurance Claims in 51 U.S. Cities Kevin W. Whiteacre, Ph.D. Director Raeann Howes Research Assistant University of Indianapolis Community Research Center Research Brief #2 Presented at the American Society of Criminology annual meeting in Philadelphia, PA November 5, 2009 Community Research Center University of Indianapolis 1400 East Hanna Avenue Indianapolis, IN 46227 [email protected] 317-788-4929 ACKNOWLEDGMENTS Thanks to Joe Kudla and Aaron Soline at the National Insurance Crime Bureau for sharing their data and for their helpful suggestions. Thanks also to Detectives Thomas Hildebrand and Andrew Starks of the Indianapolis Metropolitan Police Department for their invaluable assistance on this project. Funding for this study was provided by an InQuery Collaborative Grant sponsored by the University of Indianapolis Office of Grants and Sponsored Programs. The University of Indianapolis Community Research Center (CRC) serves as an educational facility in research and evaluation design for university students; supports the need of community organizations for data collection, storage, and analysis; and provides a setting to support university faculty and student research. Community Research Center | 1 INTRODUCTION Metal theft describes the theft of items for the value of their constituent metals (Whiteacre, Medler, Rhoton, & Howes, 2008). Jurisdictions across the country are reporting increased concerns over metal thefts. The Institute of Scrap Recycling Industries, Inc. (ISRI) has called the growth in metal theft an “overwhelming problem” for communities, police, and scrap metal recyclers. i Thefts of copper wires have resulted in power outages and decreased grid functioning. ii In 2007, a single insurance company in the U.K. received more than 1,300 metal thefts claims worth £4.4 million just from Anglican churches. iii A recent study of metal theft in Indianapolis counted eight metal thefts a day in the first half of 2008 (Whiteacre, Howes, Soika, & Rhine, 2009). During that six-month period, an average of one and a half catalytic converters was stolen from cars every day, and the aluminum siding was stolen off a house once every four and a half days. There does seem to have been a substantial drop in the thefts since a peak in mid-2008, due to a drop in the values of the metals. Numerous local and state legislatures in the U.S. have enacted, or are considering, metal theft legislation. iv In the U.S. Congress, The Secondary Metal Theft Prevention Act of 2009 (H.R. 1006; S. 418) was recently proposed “To require secondary metal recycling agents to keep records of their transactions in order to deter individuals and enterprises engaged in the theft and interstate sale of stolen secondary metal, and for other purposes.” The bulk of these new laws tend to increase the regulation and oversight of scrap yards, which are believed to provide the market for the majority of stolen metals. v There may be good reason to focus prevention efforts on scrap yards. In his refinement of Cohen and Felson’s (1979) Routine Activity Theory, Ronald Clarke (1999) coined the acronym CRAVED to identify products’ attributes putting them at a higher risk for theft: Concealable, Removable, Available, Valuable, Enjoyable, and Disposable. Certainly the steep increase in metal prices up to mid-2008 increased the value of items made from metal. A buyer of these stolen metal goods, however, is necessary for the disposal of the items, which, unlike other stolen items like electronics and clothes, are not usually enjoyable themselves. Also unlike electronic goods and other items, the resale of metal items, such as catalytic converters, copper plumbing and wires, and aluminum siding requires a rather specialized second-hand market. Interviews with thieves have found they are interested in high value, portable items that are easy to dispose of and difficult to identify (Kock, Kemp, & Rix, 1996). The British Crime Survey found that for novice thieves, the ability to convert stolen property into cash appears to play an important part in whether they continue to offend (Sutton, 1998). Scrap yards provide the specialized market for metal items. The nature of the product, moreover, coming to the yards in pieces, makes it difficult for scrap yards to distinguish between stolen and legitimate items. By unknowingly (or sometimes knowingly) purchasing stolen items, scrap yards may facilitate the disposal of stolen goods, thus increasing the theft of those items. The presence of scrap yards, therefore, might play a role in increasing metal thefts in the area. This study tests the hypothesis that the number of scrap yards in a city correlates with that city’s rate of metal thefts. Community Research Center | 2 METHODS The hypothesis discussed in the introduction is tested using as the outcome variable insurance claims for metal thefts identified by the National Insurance Crime Bureau. Independent variables tested for their relationship to metal theft claims include the number of scrap yards, burglary rates from Uniform Crime Reports, and manufacturing payroll computed from the U.S. Census. Analyses are run for the fifty-one U.S. cities with the most insurance claims in the NICB data set. Dependent Variable The dependent variable of interest is, of course, metal theft rates. Unfortunately, standardized data on metal thefts are not available across jurisdictions. In fact, few areas collect such specifics at all. In 2009, however, the National Insurance Crime Bureau (NICB) released a report on metal theft nationwide (Kudla, 2009). The report analyzed insurance claims for metal theft, which the researcher identified through the Insurance Services Office (ISO) ClaimSearch (Kudla, 2009). The researcher queried the ISO ClaimSearch for claims from January 2006 to November 2008 containing the words “copper,” “aluminum,” “brass” or “bronze” in the Loss Description field. To include only those claims involving metal theft, the dataset was narrowed to only those claims also containing “stole,” “theft,” “took,” “thief,” “thieves,” “steal,” or “missing” (Kudla, 2009). This method identified a total of 13,861 claims related to metal theft during that time period. The NICB report identified the 10 American cities and states with the most claims and then correlated metal theft claims with copper and aluminum prices over the three-year period (2006-2008). In April 2009, the NICB subsequently provided the University of Indianapolis Community Research Center with the claim counts for all cities reporting at least 30 claims for the time period January 2006 to November 2008. There were 53 cities with at least 30 insurance claims identified by the NICB through the ISO Claimsearch metal theft query. One extreme outlier, Decatur, GA was eliminated because of its extremely high rate (due to a very small population). Kansas City was eliminated because we could not find the UCR data for this city. This left 51 cities with at least 30 metal theft related claims identified by the NICB. These cities had a wide range of claims, from a low of 30 in Los Angeles, CA to a high of 321 in Cleveland, OH. The mean number of claims was 83 (mdn=55; sd = 66.8). The data were skewed positively due primarily to Cleveland’s high number of claims. vi The next highest city, Detroit, MI, had 271 claims. Regardless, raw numbers are not useful since they fail to account for differences in population size. The raw number of claims, therefore, was transformed into a rate per 100,000 residents. vii This produced a more normal distribution, with a mean rate of 20.2 claims per 100,000 (mdn = 18.5; sd = 15.0). When the data were transformed into rates, Cleveland, OH remained at the top with a rate of 73.0 claims per 100,000 residents, and Los Angeles remained at the lowest with 0.8 claims per 100,000 residents. Table 1 provides the raw numbers and rates for the 10 cities with the highest number of claims and the 10 cities with the highest rate of claims. Community Research Center | 3 Table 1 Cities with Highest Numbers and Rates of NICB Metal Theft Claims City Number of Claims City Claims per 100,000 residents Cleveland, OH 321 Cleveland, OH 73 Detroit, MI 271 Flint, MI 66 Chicago, IL 240 Birmingham, AL 64 Dallas, TX 207 New Orleans, LA 56 Atlanta, GA 182 St. Louis, MO 50 St. Louis, MO 174 Atlanta, GA 37 Columbus, OH 172 Macon, GA 36 Indianapolis, IN 157 Cincinnati, OH 35 Birmingham, AL 146 Dayton, OH 33 Houston, TX 139 Providences, RI 33 Validity Issues The ISO data provided by the NICB presented a problem with validity. The claims identified by NICB greatly undercounted the actual numbers of metal thefts. As mentioned above, the ISO ClaimSearch query found 13,961 cases from 1/06 to 11/08 for the entire United States. However, in just the first six months of 2008, Indianapolis alone counted 1,520 metal thefts (Whiteacre, et al., 2009). Of course, one would not expect the number of thefts to match exactly the number of insurance claims. Nevertheless, this issue raised concerns over the validity of the counts. To establish the usefulness of these data for our present analysis, we examined their validity on several points. 1. Face Validity . At the most basic level, the data do seem to correspond with what one might expect. The worst cities tend to be industrialized, manufacturing cities, undergoing difficult economic times – cities where one might expect more levels of metal thefts and thus more insurance claims for metal thefts. 2. Trends . The original 2009 NICB report, using some of these same data, found that the number of metal theft claims nationally rose steadily from 2006 until the middle of 2008, then dropped steeply after July 2008. This trend is consistent with general agreement about the rise in metal thefts during that time and the subsequent drop in the summer of 2008.