Tag Archives: burglar alarms

Modern Burglar Alarms Remain One Of The Best Defenses Against Losses

In the past few weeks, we have published two articles by Keith Jentoft, the Partnership Liaison of the nonprofit Partnership for Priority Video Alarm Response, regarding the use of video verified alarms. Recently, David Margulies of the Margulies Communications Group approached us and asked if we would be willing to publish an article which provides a different perspective. David's article appears below.

There is no question today that alarm intrusion systems are often one of the first lines of defense against insured losses from crime. According to the Electronic Security Association, which represents the majority of companies in the alarm industry, the breakdown for intrusion alarms shows them protecting virtually every type of insured business enterprise:

  • residential: 40%
  • commercial (office buildings, retail, banks, etc.): 30%
  • institutional (schools, hospitals, churches, etc.): 11%
  • industrial (factories, warehouses, utilities, etc.): 12%
  • government (local, state, federal Facilities): 7%

In a national survey of police chiefs, 90 percent acknowledged that alarms both deter burglary attempts and increase the probability of a burglar being apprehended. Of the nation's approximately 18,000 public safety agencies, only a handful require confirmation from a business owner, witnesses or security guard before police are dispatched to an alarm site.

One of the most in-depth and comprehensive studies of the effectiveness of alarm systems in preventing losses was conducted by the Rutgers University School of Criminal Justice (SCJ). The study found that in Newark, New Jersey, residential burglar alarm systems decreased crime. While other studies have concluded that most burglars avoid alarm systems, this is the first study to focus on alarm systems while scientifically ruling out other factors that could have impacted the crime rate.

Researchers concentrated on analyzing crime data provided by the Newark Police Department. “Data showed that a steady decrease in burglaries in Newark between 2001 and 2005 coincided with an increase in the number of registered home burglar alarms,” said study author Dr. Seungmug (a.k.a. Zech) Lee. “The study credits the alarms with the decrease in burglaries and the city's overall crime rate.”

In short, the study found that an installed burglar alarm makes a dwelling less attractive to the would-be and active intruders, and protects the home without displacing burglaries to nearby homes.

The study also concluded that the deterrent effect of alarms is felt in the community at large. “Neighborhoods in which burglar alarms were densely installed have fewer incidents of residential burglaries than in neighborhoods with fewer burglar alarms,” the study noted.

The alarm industry has aggressively addressed the issue of false alarms because of concerns that they were putting a strain on police resources. In 2003, industry leaders created the Security Industry Alarm Coalition (SIAC) which is comprised of four major North American security associations — Canadian Security Association (CANASA), Security Industry Association (SIA), Central Station Alarm Association (CSAA) and the Electronic Security Association (ESA) — representing one voice for the alarm industry on alarm management issues. The Security Industry Alarm Coalition's primary charter is to significantly reduce calls for service while strengthening the lines of communication with law enforcement professionals and end users.

“Eighty-five percent of the nation's alarm systems generate no calls to the police in any given year,” said Stan Martin, Executive Director of the Security Industry Alarm Coalition. “People who say that 98 percent of reported burglar alarms are false are trying to justify ending police response to alarms without human verification of a crime (verified response). These people have failed to perform their due diligence on public safety and industry best practices.”

Working in a partnership with law enforcement, the Security Industry Alarm Coalition has helped communities significantly reduce the number of alarm calls made to police by promoting industry and law enforcements best practices including:

  • The model ordinance requires registration of all alarm systems.
  • Two phone calls by alarm companies to alarm owners prior to calling police.
  • Technology designed into systems to avoid accidental triggering.
  • Fines for alarm owners who create unnecessary dispatches.
  • Suspending response to the chronic abusers.

According to a study just released by the Urban Institute, these steps allow communities to maintain police response while conserving law enforcement resources. The study notes that Montgomery County, Maryland was able to save $6 million in costs and reduce alarm calls by 60 percent. The reduction in alarm calls from 44,000 to 16,000 came despite a significant increase in the number of alarm systems.

According to Glen Mowrey, the National Enforcement Liaison of the Security Industry Alarm Coalition:

  • Marietta, Georgia reduced alarm calls 65 percent in two years with annual revenues of $223,050 in 2008 and $94,800 in 2009;
  • Johnson City, Tennessee reduced alarm calls 50.1 percent over a four-year period;
  • Union City, Tennessee showed a reduction of 55.4 percent over a four-year period; and,
  • during a 14-year period, the police department in Charlotte-Mecklenburg, North Carolina brought down its percentage of alarm calls, out of total calls for service, from 20.1 percent to 2.4 percent annually, netting 13.5 police officers and an annual revenue in 2009 of $334,470, which includes a reimbursement for 2.5 full-time employees from an outsource company contracted to administer the billing and tracking component.

As new technology emerges, the Security Industry Alarm Coalition is at the forefront of helping develop standards and policies with its partners in the law enforcement community. “Alarm systems and technology are constantly changing and improving,” said Stan Martin, SIAC Executive Director. “Our major and long established trade and professional associations that support SIAC are constantly working to make sure there are standards in place to properly apply this technology.”

“The working relationship between public safety agencies and the alarm industry has never been stronger,” said Mowrey, not only the National Enforcement Liaison of SIAC, but also the former Deputy Chief of Police in Charlotte/Mecklenburg, North Carolina. “Eleven states have created state-wide committees to work with the industry on alarm issues and they all have adopted some form of SIAC's model alarm ordinance.”

The Security Industry Alarm Coalition also serves as the industry's voice working with national law enforcement organizations such as the International Association of Chiefs of Police and the National Sheriffs Association.

Through the Security Industry Alarm Coalition, the alarm industry is always available as a resource to the insurance industry for questions, concerns, or more information on how the alarm industry can continue to protect the insured from unnecessary losses.

Video Verified Alarms And Priority Response – How Does It Work?

Traditional burglar alarms have lost much of their value as a tool for loss control, but video alarms are taking their place. Police response to burglar alarms is degrading and in many cases police departments have stopped responding to traditional alarms unless they are verified.

Millions of traditional alarm systems have created an enormous problem, wasting shrinking police resources on millions of false alarms. It is a big concern that has the attention of national law enforcement leadership.

International Association of Chiefs of Police (IACP) president, Chief Craig Steckler specifically addressed false alarms as a key issue in his inaugural address of October, 2012, “According to studies, last year there were more than 38 million false alarm calls in the United States. In many agencies alarm calls were the number one call for service, and statistically, these calls often account for nearly ten percent of all the calls for service the agency handles on an annual basis. Additionally, every study of the issue continually finds that 95 to 99 per cent of all alarms are false.” Chief Steckler bluntly states, “We must take a critical look and unbiased look at false burglar alarms, and determine whether in the new norm, this type of call (police responding to alarms) is truly a prudent use of severely limited resources.”

Chief Steckler is not exaggerating. Police consider traditional burglar alarms an enormous waste of resources. Officers no longer make arrests, and alarm companies focus on selling deterrence instead of apprehensions. From the police perspective, many simply no longer care.

The situation has degraded to the point that many major cities like Las Vegas, Salt Lake City, San Jose, and Milwaukee stopped responding to traditional burglar alarms altogether. This trend is gathering momentum. The public/private partnership of the police/alarm company/insurance industry has atrophied, and neither the police nor underwriters find effective loss control in traditional burglar alarms.

In contrast, this video underscores the value that law enforcement places on video verified alarms to combat property crime. The president of the National Sheriffs Association describes Priority Response and how effective they are at delivering arrests. There are many actual video clips of real burglaries in the video itself.

Response Differentials
Video verified alarms are an increasingly important evolution to combat property crime. They continue to deliver priority police response and lead to arrests. The reason is the video verified alarms mean that police respond faster to the alarm, making arrests and reducing claims.

The “response differential” between a traditional alarm and a video verified alarm is significant. The following chart illustrates the differences in different sample cities across the USA: large and small, east and west, north and south. The key issue is that video verified alarms deliver police response faster, around 15 minutes faster in many jurisdictions. Those 15 minutes makes a big difference in reducing claims for property crime.

Jurisdiction Video Alarm Traditional Differential
Boston, MA 7:38 21:00 13:22
Charlotte, NC 5:10 13:30 8:20
Chula Vista, CA 5:05 19:18 14:13
Watertown, MA 4:00 23:00 19:00
Fairfax County, VA 6:00 18:02 12:02
Salinas, CA 2:54 39:25 36:19
Amarillo, TX 10:06 19:24 9:18

Real Examples Of Alarm/Police Interaction
Perhaps the most effective way to illustrate the value of video verified alarms is to show 4 actual examples of real events with different outcomes based upon the alarm and jurisdiction. This is what the alarm business really looks like from the police side of things. Two of these examples lead to arrests. Insurers must realize the importance of central station dispatchers using video to become virtual eyewitnesses to a crime in progress.

All of the examples are not positive. In the final alarm, the 911 call taker says to the central station operator: “This doesn't meet our criteria for response,” meaning that the municipality won't respond to the alarm without the video verification. The central station operator sounds a bit stunned on the phone. But this is the scenario that is happening increasingly around the country. This last example is what insurers are trying to avoid by promoting video verified alarms to their policy holders.

Now What?
We need a strong public/private partnership to combat property crime. Underwriters must answer the question, “How can we encourage policyholders to use video alarms and police response to reduce losses?”

One answer would be to join the Partnership for Priority Video Alarm Response (PPVAR), a nonprofit public/private partnership based in St. Paul, Minnesota. The organization brings together alarms companies, insurers, and law enforcement to promote Priority Response and Video Alarms to reduce property crime and insurance losses. The PPVAR board of directors includes law enforcement, alarm companies and the National Insurance Crime Bureau (NICB) that is supported by 1,100 property/casualty insurance companies.

To further strengthen leadership from the insurance industry, the PPVAR recently added Verisk Crime Analytics Vice President Anthony Canale to its board of directors. There are now two strong insurance organizations to help build the partnership with law enforcement and the alarm companies. Verisk owns and operates national crime databases that provide services to the construction, retail, transportation, manufacturing and insurance industries.

“Our involvement with the PPVAR fits with the mission of Verisk Crime Analytics to use data and analytical tools to support public safety operations and to help our clients reduce the impact of crime,” said Canale.

As the successes grow, the PPVAR is expanding its membership in the insurance industry — individual insurance companies joining the partnership and embracing the message. The PPVAR welcomes additional insurance companies and associations to work with us to help use video alarms to reduce claims and losses.

Resurrecting "Modern" Loss Control from the Past

Once upon a time, alarms detected burglars, officers responded and police made arrests. Underwriters depended on “loss control with a badge.”

In fact, underwriters created the security industry in the early 1900s when they wired a problem Boston bank that then alerted the nearby telegraph office of a burglary. Police arrested the burglars and prevented a large claim.

Underwriters built upon this success and pushed policy holders to install burglar alarms because they worked — police made arrests and lowered claims. The alarm/police response concept worked so well that underwriters soon mandated that all high-value policy holders such as banks and jewelry stores install UL certified intrusion alarms before issuing a policy. They also created alarm discounts in their policy contracts to encourage their other commercial and residential policy holders to install burglar alarms.

This historic police/alarm/insurance model boosted profits through the 1970s, but the partnership lost its value, deteriorated and died. Before we resurrect this partnership and reconsider the “alarm discount,” we need to understand what happened.

Background
What caused “loss control with a badge” to fade?

From the underwriter’s perspective, the unprecedented bull market of the 1980s meant that profitability shifted away from loss control to a focus on collecting premium and driving investment-income. At the same time from the alarm perspective, the digital phone dialer appeared and opened a new mass market for inexpensive burglar alarms. The installed base of traditional alarm systems exploded into the tens of millions, creating a tsunami of false alarms for law enforcement that eroded value. With a staggering false alarm rate of over 98%, police now considered traditional alarms a waste of resources and response decayed. Officers no longer made arrests as alarm companies focused on selling “deterrence” instead of apprehensions. From the police perspective, they simply no longer cared.

The situation degraded to the point that major cities like Las Vegas, Salt Lake City, and Milwaukee stopped responding to traditional burglar alarms altogether. This trend towards declining alarm response continues to be an issue. The police/alarm/insurance partnership had atrophied and neither the police nor underwriters saw value in traditional burglar alarms.

The Problem
Before we consider the solution, let's look at how traditional alarms are viewed by police. When hit with budget cuts, Detroit Police joined the growing trend and decided to end response to traditional alarms because there simply weren't enough officers to go around anymore. Traditional alarms no longer delivered.

On August 16, 2011 in a Detroit Free Press feature article, Detroit Police Chief Ralph Godbee Jr. declared that any triggered alarm will require a verified response before dispatch sends a cruiser to the location. Godbee cited a US Department of Justice report supporting verified response as a reliable practice towards eliminating waste and improving public service. Abandoning traditional alarms, Chief Godbee sees video verified alarms as the solution to more effective policing — using video to verify that the alarm is an actual crime. Detroit Police Commander Todd Bettison stated, “Our main goal is to respond to crime, and if we can utilize modern technology, then so much the better. We feel very passionate about this. We've been looking at this for a long time and from what we've observed this is definitely the way to go.”

One program developed by the security industry to address this “false alarm problem” was to transform false alarms into a municipal revenue stream — creating city ordinances mandating false alarm fines and permits for burglar alarms.

While filling the city's coffers with false alarm fines may placate city councils, this approach does very little to increase arrests and address the need for effective loss control. In any case, in many jurisdictions this program is simply overwhelmed by draconian budget cuts that are decimating the ranks of law enforcement.

The recent Department of Justice publication, “The Impact of the Economic Downturn on American Police Agencies” stated that at least 10,000 officers had been laid off in 2011. In the last two years, the San Jose Police Department has reduced its officers by 20% — forcing them to reconsider alarm response.

In a memorandum sent to the City Council's public safety committee in December 2011, police Chief Chris Moore wrote that, “the primary purpose of police is to respond to reported crimes, preventive patrols and community policing, and the practice of responding to all audible alarms does not accomplish any of those goals.” Chief Moore further underscored just how ineffective traditional alarms were at delivering apprehensions: “In 2011 San Jose had 12,450 alarm calls and of those there were only 2 arrests.”

These statistics are not unique. According to the Las Cruces Sun-Times, Las Cruces, New Mexico is moving towards verified response after reviewing that in 2011 a total of 12,970 alarm runs resulted in only 2 burglars being arrested. In light of such statistics, San Jose, California went forward and implemented a verified response policy on January 1, 2011. City leaders say the new policy will allow police to focus on high priority calls and perhaps even reduce those response times.

This is the real benefit of verified response to underwriters — policy holders who use video verified alarms actually get faster response for more arrests. Police attention is focused on crimes-in-progress instead of on false alarms.

Most underwriters are not aware that police don't respond to traditional alarms in many areas of the country. Politicians avoid public outcry, and degraded alarm response policies are often presented in “politically friendly” code but the result is the same — no police response and higher claims.

“Broadcast and file” is one example of a “friendly” sounding non-response policy that is popular in Colorado and the West. For many large Colorado cities like Denver, a “broadcast and file” policy means that alarms are simply broadcast over the radio and an officer responds if he feels like it, and has nothing else to do. It is “voluntary response.”

The majority of the time this means no response at all. In contrast, video verified alarms still receive mandatory dispatch in “broadcast and file” jurisdictions and deliver real value and arrests. Many police departments have simply relegated traditional alarm response to such a low priority that the response time is measured in hours not minutes.

Underwriters have not been totally ignorant of this trend towards degraded response. Large companies like State Farm and Allstate have already eliminated the “alarm deduction” in Florida and underwriters are moving to remove it from their contracts nationwide because they can no longer afford what has become a “marketing device” that has no impact on reducing claims.

The Solution
The alarm industry and law enforcement have a solution — new technology and updated policies. Video verified burglar alarms have resurrected the police/alarm response model. Police are making arrests again and changing the paradigm. The June 2012 cover story of SDM Magazine, “Does All of This Stop Crime?”, cited examples of amazing arrest rates using video alarms. Universal monitoring, an alarm company in Charlotte, achieved over 60% arrest rates on their monitored video alarms in a one year period. F.E. Moran, an alarm company in Illinois, delivered 129 arrests for 136 incidents using video alarms protecting commercial property — over a 95% arrest rate!

The March 2012 issue of IACP (International Association of Police Chiefs) Police Chief Magazine documents a case study of this new approach at Detroit Public Schools in an article entitled, “Arresting Results: How One District Achieved a 70 Percent Closure Rate with Video Alarms.” Detroit Public Schools installed video intrusion alarms in 30 vacant schools that were targets of vandalism and copper theft. During the 2010/2011 school year, there were 101 burglaries in these facilities. According to the report, the police closed 70 incidents with arrests of 123 people — a 70% arrest rate.

From an underwriter's point of view the results change the game — a few thousand dollars for video alarms saved millions in damage for Detroit Public Schools. In fact, Detroit officer John Greene made over 150 arrests using video intrusion alarms and was named officer of the year in Police K-9 Magazine.

These results are not unique — video intrusion alarms are delivering arrests across the country, saving insurers millions.

In February 2012, the Los Angeles County Sheriff's Department, speaking of their new Priority Response program, announced initial arrest rates of 19% for video intrusion alarms. In contrast, the 2011 burglary arrest rates (without alarms) in Dallas and Minneapolis were 5.2% and 7.3% respectively. Even more worrisome, a study by the San Bernardino Police and Sheriff in 2007 reported an arrest rate of 0.08% for traditional alarms. For San Jose it was less than 2 arrests for every 10,000 alarm runs in 2011.

It is ironic that insurance companies continue to offer costly “alarm discounts” in cities that no longer respond to alarms that no longer deliver arrests.

An underwriter knows that putting one burglar in jail prevents an additional 30-50 burglaries they would have committed on the street (as well as eliminating the cost of the entire claims process incurred by the company). A single site in Chandler, Arizona protected with video intrusion alarms resulted in over 40 arrests in 4 months according to an article in Modern Contractor Magazine.

While response to traditional alarms is decaying, video verified alarms are transforming security and providing new value to law enforcement and underwriters. Alarm monitoring companies are even sending video clips of the intruders to police cell phones, making them even more effective. This is making a dramatic difference in combatting property crime, a paradigm shift for police and sheriffs. Video alarm technology and Priority Response has created an inflection point in an insurance market demanding the return to modern loss control.

It is also a new world for law enforcement. Both police and sheriffs embrace solutions that deliver arrests and make them more effective. Law enforcement sees video intrusion alarms as a fundamental paradigm shift and they want to encourage them, so much so that they are directing the 911 dispatch centers to create special dispatch codes that designate video alarms for high-priority response. In essence, the 911 operators treat video verified alarms as a crime-in-progress, not just an alarm.

Priority Response to video alarms means that the historical police/alarm concept has value for underwriters and works again protecting property and reducing losses. Police respond to video alarms and make arrests that reduce claims. Law enforcement is being proactive, encouraging their citizens to help them protect their property. Chief Steve Dye, of Grand Prairie, Texas recently announced a Priority Response policy on a televised newscast and sent flyers in the water bills of Grand Prairie property owners encouraging them to upgrade to video alarms. Sheriff Larry Amerson of Calhoun County wrote a letter to his constituents, “We believe that video alarms offer enhanced protection to you and help us in our efforts to keep Calhoun County citizens safe and protect their property.”

Law enforcement is making arrests again, and it matters. The National Sheriffs Association even officially endorsed the video alarm manufacturer, Videofied, the first endorsement of a burglary alarm by national law enforcement — because they deliver more arrests.

It is a new world for underwriters. Loss control matters again. It's a world that is ripe for the rebirth of the police/alarm/insurance partnership. Underwriters need loss control — the stock market crash and economic downturn have radically impacted the insurance business model and profitability. Pat Speer, editor of Insurance Networking News, spoke of alarm systems in her January 2012 column, “Is Loss Control a Lost Art?” She concludes her article with, “Given the cost dynamics of the industry's long history of successful loss control initiatives, holding clients contractually accountable for known risk management prevention efforts is just logical. Isn't it?”

Underwriters are again forced to price policies that depend upon loss control for profitability. To strengthen the point, the downturn has created new crime categories, such as copper theft, that leave insurers with expensive property claims 20 to 30 times greater than the scrap value of the stolen copper — recovery is impossible when stealing $1,800 of copper creates a loss of $85,000 for broken plumbing, wiring and HVAC. CBS News recently reported on copper theft at a dental office in Sacramento where thieves caused over $10,000 in damage for $200 of copper.All this pressure on profitability comes at a time when the premium base is actually shrinking. With the proverbial financial gun to their heads, underwriters are looking to resurrect “loss control with a badge.”

Reconsidering The Alarm Discount
Underwriters are becoming educated. Experience has taught them that video surveillance is not loss control. Most surveillance is NOT monitored in real time. It is true that high definition CCTV surveillance cameras and a video recorder can document a theft in high resolution for later review by the business owner. This may be interesting for a television audience, but for the underwriter the crime has already happened, the building is damaged and the crook is long gone with the loot.

Movie-quality video without real time monitoring and immediate police response is a solution, but for other problems. Video quality is not the key issue — once the monitoring operator can tell that there is an actual crime and sends the police — that is enough. There are hundreds of video clips of arrests on YouTube taken outdoors and in difficult low-light conditions that prove the point.

“Adequate video quality” means affordability and the good news is that video intrusion alarms themselves are now the price of a traditional system and much less expensive than a high definition surveillance system. Police don't need Hollywood quality to make arrests — what they need is instant notification of a crime-in-progress.

Underwriters know they must answer the question, “How can we encourage policy holders to use video alarms and police response to reduce losses?”

One simple approach is to review the existing alarm discounts and limit them to video intrusion alarms that deliver Priority Response. Practically speaking this means working with an alarm company as a partner that provides video verification services. Effective loss control means that video clips of the burglary are sent to a monitoring station where they are immediately reviewed and dispatched as crime-in-progress.

A longer term approach being coordinated by the PPVAR (Partnership for Priority Video Alarm Response) is to bring the insurers, law enforcement and security companies together to begin to develop guidelines and standards that could be used by underwriters for specific markets and applications. The board of the PPVAR is composed of representatives from the Police, Sheriffs, the National Insurance Crime Bureau, and the Alarm Industry. This security/insurer/law enforcement working group will analyze loss data for specific applications, such as construction, and create guidelines for minimum requirements needed to actually bring the police and stop the losses — an updated reincarnation of certificated alarm systems.

In any case, the alarm industry and the PPVAR are reaching out to insurance industry associations including the CPCU (Chartered Property Casualty Underwriters), the NICB (National Insurance Crime Bureau), ISO (insurance Services Corporation), PIAA (Professional Insurance Agents Association), and others to educate them and solicit their support as we attempt to resurrect the partnership that worked so well in the past — security companies installed alarms, police made arrests, and insurers reduced loss.

Additional Resources
For more information on the PPVAR: www.priorityresponse.info
CPCU webcast training is available at www.cpcusociety.org/page/184331/
NICB 6 minute video overview: www.ijmag.com/LossControl