Why “bUt tHey HaVE InsuRancE, bRo” is a Stupid Argument

     I’m no genius, folks. If you’re even vaguely familiar with me, well, you already know that through and through, so I take no offense when someone inevitably says in response to this piece, ‘What the hell do you know, Josh? You’re not an economist.’ Very true, my friend, but I do have enough brain cells to rub together to come up with some pretty easily arrived-at logical conclusions, so buckle up, buttercup, you’re not going to enjoy this if you’re of the more liberal or progressive bent.

    Firstly, let’s examine some of the long-term effects of retail theft, looting, blatant robbery and smash-and-grabs that have become right next to commonplace in major metropolitan areas from coast to coast since the ‘Summer of Love’ in 2020. According to the NCSD (National Criminal Statistics Database) breakdown of the year 2020, approximately 4.8 million incidents of ‘Destructive Theft’ took place during that calendar year, 7.2 million incidents of ‘Passive Theft’, and 2.4 million incidents of ‘Injurious Theft’. The NCSD defines ‘Destructive Theft’ as the stealing of retail or commercial property that includes damage to a physical location, shelving, and/or ancillary merchandise that was not taken by the suspects. ‘Passive Theft’ is the stealing of property that does not include any such physical damage to a store, shelving, or other merchandise, and is usually what shoplifting falls under. As for ‘Injurious Theft’, this is the stealing of merchandise that involves the physical injury of at least one employee or pedestrian during the commission of the primary theft, for the explicit purpose of either securing the item or absconding from the location where the theft took place.

     That seems like a lot of theft, right? Well, this isn’t all cumulative, so don’t be too alarmed by these numbers just yet. An incident of Passive Theft gets counted as both Passive and Injurious if it begins as a Passive Theft, and then escalates to Injurious if, say, an employee attempts to stop the thief and is punched or kicked or even shoved away in the process, which, if you ask me, is a poor way of tallying these things. The incident should be classified as one or the other, by my estimation.

     Sadly, though, I have to burst your bubble if you were hoping that pointing this out shines a light on these statistics and makes them not quite so bad to gaze upon. You see, the NCSD only counts incidents that are acted upon by law enforcement and insurance underwriters in the form of an accepted claim. In other words, if the local district attorney doesn’t chose to have incidents investigated, and the insurance companies reject a claim, the theft doesn’t get counted at all.

     Allow me to repeat that, because it bears repeating: If district attorneys and insurance companies take no action against these thefts, the NCSD doesn’t even count them as having happened. Moreover, once a retail location makes an insurance claim for theft or damages, whether or not the claim is accepted, the underwriter is legally allowed to jack up the cost of insurance going forward, or cancel coverage altogether if they can justify closure of the policy. The guidelines for what can be used to justify cancellation vary from state to state, and region to region. According to the Department of Commerce guidelines, insurance underwriters are allowed to adjust for coverage rates and eligibility based on a level as granular as zip code.

     Are you familiar with Michael Tracy? Or Julio Rosas? I ask because, between these two gentlemen, a veritable metric fuck-ton of unreported or uncounted thefts took place during just the summer of 2020 across the country, often covered over by the rampant destruction and violence visited upon small and mid-sized towns that took up the majority of page space in local and regional newspapers and websites. Property damage and personal injuries totaled, according to Rosas, a quote, “incalculable amount of financial and personal harm, with no less than 20,000 hospitalizations resulting in a grand total of 478 arrests, roughly 300 charges filed, and only about 100 convictions.”

     When an insurance underwriter is assessing whether or not their company should consider providing coverage for a retailer, there are several factors that go into their determination of whether or not to go ahead and issue a policy for the applicant. One of those factors is, ‘Is the retail location being proposed in a high-risk area?’ Prior to 2013, federal guidelines required insurance underwriters to calculate the answer to this question based solely on NCSD statistics. In 2013, however, new regulations put forth by the Department of Commerce allowed for insurance underwriters to include non-NCSD information to be included in the calculation of risk when assessing applications for insurance.

     In short, if your neighborhood develops a reputation as dangerous or crime-ridden, then guess what? The underwriter can easily deny you coverage, thus depriving your area of goods, services, and employment opportunities.

     ‘That sounds like a Republican or conservative talking point, Josh’, I can hear some of you saying. In point of fact, friends and neighbors, the whole regulation requiring retail companies to carry insurance for their locations is a regulation that has been championed since its inception by……liberals and progressives! Libertarians and some few republicans have been arguing against government interference and red tape for decades; you just didn’t want to hear their logic on it, because you assumed it was ‘racist’ or ‘classist’ or ‘sexist’ or ‘insert-ist-here’!

     Have you ever wondered why a carton of eggs or milk is so much more expensive in a grocery store in, say, downtown Minneapolis than it is in a surrounding suburb, maybe Cottage Grove? Well, the retailer has to calculate insurance costs into everything in their store, including those eggs and milk. They have to defray the cost of that policy in order to remain in operation. If your neighborhood is rife with crime and risk, you’ve nobody to blame but the people in the neighborhood for causing those rates to shoot up like a hockey stick on a line graph.

     It kills me when I hear community leaders and spokespersons making these loud proclamations about how companies like Wal-Mart are ‘damaging the community’, like they claim in Chicago, because they are ‘taking away opportunities for employment’. Motherfucker, did you ever stop to consider that maybe the company doesn’t want to jack prices through the roof in order to make up for the insurance costs that spike when every other person in that community is engaging in retail theft? If you want to understand why big companies pull stakes and haul ass out of your area, look no further than the local police blotter, or go talk to an insurance underwriter; they’ll explain in painstaking detail why that Wal-Mart or mom-and-pop corner store has to shut its doors for good.

     Now, I’m not going to spend all day just waggling my freaking finger at consumers in dangerous metropolitan areas for allowing these things to be a detriment to their own day-to-day lives, no. I’m also going to waggle it in the faces of regulators who demand that every retailer carry these expensive and, in many cases, useless insurance products. If you want to meet a real life fusion of rat and snake and human, look no further than a regulator or an insurance adjuster, because these people’s primary purpose in life seems, to me at least, to be slapping down useless rules for everyone to follow, and then when innocent people try to make a claim to be reimbursed for damages, find every slippery little loophole to avoid paying out.

     Thief stole 99 dollars worth of merch from your store? Oh, well, sorry, but we can only pay out, according to the policy contract you signed, when the loss totals 100 dollars or more, so sorry.

     Somebody punched your cashier in the face while making off with merchandise? Well, did the cashier try to stop them? Oh, well then, they aren’t covered for medical expenses, so sorry, but they were supposed to let the theft take place, says so right here in subsection 181 of paragraph 11 of parasection Q on page 584 of our policy contract, so sorry.

     Get the picture?

     The regulations are usually argued for by well-meaning folks who don’t want to see a retailer, especially larger ones, try to take advantage of and steamroll the average, everyday person, I understand and accept that. My acquaintance on Discord, Morgoth, would likely argue that the regulations requiring insurance for retailers are in place to make sure that smaller and mid-sized companies can try to get a fair shake when competing with larger big box stores like Wal-Mart and Target, so that if they are targeted for theft or property damage, they aren’t bankrupted trying to replace goods or make repairs. His intent is good; his understanding of reality is, in this instance, woefully optimistic and shortsighted.

     The solution here that I would argue for would be simply to get rid of the mandate attached to the regulation. Allow retailers to purchase an insurance plan, but don’t make it mandatory. Sure, the small and mid-sized retailers are going to be fighting an uphill battle, but consider the hyperbolic examples above; most of those insurance underwriters and adjusters are going to try like hell to weasel their way out of compensation anyway, and what good does that do the smaller retailer? With rates out of control for coverage, the only way to have a prayer of competing with the bigger companies is to remove some of the roadblocks in their way, and allow them to take the risk on a self-analysis basis. If they opt not to run a store in a crime-riddled area, good on them for having the wisdom and foresight to say, “Nope, not even trying it there, the insurance rates would be crippling. Let the big box folks try it there.”

     Is this proposal perfect? Not by a long shot. But it does address the issue of ‘But they have insurance, bro’ by pointing out that hey, dipshit, guess what? The insurance companies have a bottom line of their own, too, and thanks to excessive regulation, they have a massive upper hand in this scenario. Aren’t you all about providing a more even playing field?