Leveling Construction Theft

Construction theft is big business. Large and small equipment, vehicles, building material and tools are disappearing from construction sites at an alarming rate. It is not uncommon for contractors to lose building material, tools and expensive equipment every day — in fact, this is unfortunately the norm rather than the exception. Why? The answer is simple, construction sites are particularly vulnerable to pilferage from both on-site workers and by criminals who recognize an easy opportunity.

While construction site theft is not the most common type of criminal activity, it may be one of the most costly. Should you be concerned about these costs? You bet. In Ontario, construction was ranked the second largest industry in the province in 2000. What does this mean?

Construction employs three times as many workers as the automotive industry;

Overall, the construction industry employs 5.5% of Ontario’s 5.8 million workers.

Equipment is expensive and vital to any construction project. Construction theft losses do not only mean increased overhead, operating, security and insurance costs, but also scheduling hurdles and lost man-hours of production that could have a rippling effect on the economy. “The replacement cost of one construction vehicle alone can have vast ramifications for a company’s cash flow or profits. It may also affect the ability to competitively bid on contracts,” cited an article published in the November 1998 issue of the Construction Equipment Guide.

Escalating costs

Then, we get to the insurance problem. Zurich Canada reports that insurance claims due to construction theft have climbed to approximately $46 million annually. The rise in insurance claims has ultimately led to increased insurance premiums. In some cases, the increase is so dramatic that the contractors in question have extreme difficulty getting insurance.

Now, the good news: “Although a builder’s anti-theft options are limited, there are some steps that can be taken to make a construction site more theft resistant,” comments Michel Allard, RIBO-accredited account director of the insurance division of Boomerang Tracking Inc. In the fight against construction theft, it remains the responsibility of the contractor to take action to protect his equipment, as well as the insurers to provide an incentive to do so.

The development of sophisticated new technologies that use cellular-based tracking systems now offer contractors an alternative for securing their equipment. These devices are hidden on the vehicle and in the event that it is stolen, can be quickly located, often within a few feet of its location, in less than one hour by tracking them through the cellular system of regional carriers. Cellular-based tracking devices are non-restrictive, enabling vehicles that end of up underground, in shipping containers or in enclosed areas such as parking garages to be located successfully.

Insurance incentives

Canadian insurance companies are beginning to offer various incentives to contractors who use anti-theft systems. And, in some cases they are offering reductions in premiums as well as possible reductions in cover deductibles. Many insurers appear to be adopting a “mandatory approach” to the installation of anti-theft/tracking devices to equipment before providing coverage in the construction field.

In the U.S., the National Equipment Register (NER) offers a service to educate insurers, brokers and underwriters about the growing cost of equipment theft and provides a unique recovery database service to improve loss ratios. In Canada, a number of construction associations have also joined forces with local chapters of “Crime Stoppers” to aid in ending construction theft. Crime Stoppers publishes information about reported thefts and offers rewards for information that lead to arrests of the culprits. In the Toronto area alone, the Crime Stoppers network has led to over 7,000 arrests, with that number on the international level reaching over 375,000.

As contractors search for new and innovative ways to secure their equipment, companies will continue to offer new and innovative solutions to the construction theft problem. However, creating awareness remains key to solving this problem, otherwise the situation will continue to see the loss of millions of dollars to not only the regional and national economies of Canada, but to the critical life-blood of the construction industry and its insurance partners.