Thinking like Thieves

Glen Sider is the operations manager for the National Equipment Register, Inc. ( NER ), New York, N.Y. Formed in 2001, NER 's mission is to increase the recovery rate of stolen equipment and reduce the costs associated with theft for owners and insurers. Additionally, NER partners with key industry groups to centralize information on equipment theft and ownership. Sider manages the NER databases, supervises NER analysts working with law enforcement, and develops and provides training in heavy equipment identification for law enforcement. You can reach Glen Sider at gsider@NERusa.com . The 2003 Equipment Theft Report and a Risk Management Guide can be viewed at www.NER.usa.com .

July 21, 2004 - Seeking to define the problem of heavy equipment theft, NER recently published its first annual study for equipment owners, insurance companies, and law enforcement. An analysis of that study provides fleet owners and risk managers with ammunition to protect their investment. And, while lift equipment as a category is one of the least targeted types of equipment, rental companies are particularly vulnerable to theft. By the very nature of their business, equipment is usually under the control of someone other than themselves.

Lift equipment, a staple for many rental companies, nearly always needs a trailer to be moved. For this reason, law enforcement and insurance adjusters often classify lift equipment as articles or property, rather than self-propelled vehicles…perhaps accounting for the lower recorded numbers of thefts for this category. Likewise, this segregation by definition may be one of the reasons there is a low recovery rate for this type of equipment.

A few simple tips for protecting your lift equipment include extending the boom at the end of the work day, removing keys or control boxes—even removing tires—to make the equipment harder to steal.

The cost of equipment theft

At present, there is no single place where every loss is recorded so existing figures must be used to make assumptions and to develop trends on the overall problem. Estimates of the total value of equipment stolen annually range between $300 million and $1 billion. To determine trends it is necessary to use a figure that has been recorded consistently for a number of years such as contractors equipment thefts insured under Inland Marine polices as reported to ISO. In this case, the value of losses increased by 64% between 1995 and 2001.

NER's report indicates other, more specific trends. For example, a geographic analysis of more than 4,000 thefts reported to NER in 2003 indicate that one-third of all thefts occur in five states— Texas , North Carolina , Florida , California , and Georgia . What's more, the clearest trend in these figures was that the level of theft closely mirrors the volume of equipment in use in any particular area.

When looking at the type of equipment most often stolen, theft figures tend to follow production levels but the key factors that affect the type of equipment stolen are value and ease of transportation. Of note is that the top five types of equipment accounted for 85% of the thefts reported to NER in 2003 • a clear message for risk managers and owners as to where to focus security efforts.

Equipment and Site Security

The high and increasing incidence of equipment theft is due to the ease with which stolen equipment can be sold for high cash values, the low physical security on equipment and at work sites, low risk of detection, and low penalties if prosecuted. Some tips to keep your equipment and work sites safe include the following:

• Customize equipment with unique paint colors. Add decals or company ID codes painted in large characters.
• Register your equipment with a national registry, such as NER, and apply NER warning decals. Record all numbers on the unit from actual plates/decals, including engine numbers.
• Position larger pieces of equipment in a circular, wagon-train pattern, with generators, compressors and other small items inside the ring.
• Using chain-link fencing allows thieves to be visible from outside the property/site.
• Place lights along the perimeter of the property/site and direct in at the work site.
• Maintain a list of employees authorized to handle equipment and site keys. Maintain a log of who has signed out particular keys to equipment or a work site.

 

Additionally, management should consider making the security policy a part of the company's business plan—then link it to incentives for employees. Be open to suggestions by field employees since they are on site and familiar with potential problems. Local trade associations can often recommend security measures pertinent to your specific region.

A good prevention tactic is to request that local law enforcement make drive-by checks of your site after-hours and on weekends. Don't forget to advise them of any expected off-hour activity at your site.

Recovery

An analysis of insurance claims reported to ISO since 1995 showed 14% marked as recovered. Past losses from over 300 NER member insurance companies reflect results both higher and lower than this but not by any significant margin. This low recovery rate compares poorly with auto recovery rates that are consistently over 60%.

While low recovery rates make it difficult to draw concrete conclusions from the analysis of recoveries alone, it is possible to get some idea as to how equipment is stolen, where it goes, and who steals it.

There are strong indications, for example, that due to the few checks made in the used equipment market, thieves are confident of not being caught and feel safe selling stolen equipment in neighboring states or even adjacent counties to the theft location. Because most pieces of heavy equipment are not titled or registered, the transfer of ownership from one person to another rarely requires anything more than a handwritten bill of sale. The lack of a due-diligence mechanism in the used equipment market, combined with the lack of any ‘official' ownership documentation, presents a vulnerability which is often exploited by savvy equipment thieves.

The low recovery success rate is due to factors such as delays in theft discovery and reporting, the lack of pre-purchase checks in the used equipment market, the lack of resources that law enforcement can dedicate to equipment investigations, the difficulty of equipment investigations due to the complexities in equipment numbering, and the lack of information immediately and nationally available to law enforcement on theft and ownership.

Being Proactive

Registering your equipment with company's such as NER is a cost-effective step (and a growing trend in the industry) that can be taken to prevent theft and increase the chances of recovery if a piece of equipment is stolen. Equipment registration encourages deterrence, speeds theft reporting, improve recovery even before a theft is detected, provide proof of ownership, and help control the cost of risk, whether insured or self-insured.