In Ohio, the total number of reported "auto owner give-ups" -- insurance jargon for fraudulent car fires and staged car thefts -- rose 150% from 2005 to 2007, to 245 cases last year.
Insurers say they're meeting this month with California investigators to discuss potential fraud during last fall's wildfires -- including the prospect that some of the 2,000 burned homes were in fact cases of opportune arson by owners. State Insurance Commissioner Steve Poizner acknowledged that his agency was investigating a number of such cases but would not provide further details.
One recent fire of note was set in September in Gaines Township, Mich., by Sheryl Christman, who hoped to use the insurance money to get out of a troubled marriage, not to mention a house that was four days from being seized by the bank.
The 38-year-old mother ignited a mattress in the garage of her two-bedroom home, for which she had paid $150,000 in 2006, then sat outside as the house burned. She was ultimately arrested, convicted and sentenced to 1,000 hours of community service and five years of probation. In interviews afterward, Christman called her actions "rash and stupid" and said she was "very ashamed." The gutted house was eventually sold for $40,000.
Arson of all kinds has been on the decline for years. According to the FBI, total cases of arson fell 9.7% in the first six months of 2007 compared with the same period in 2006, and U.S. Fire Administration statistics show that arson declined by 60% from 1997 to 2007.
In the current economic environment, the temptation to commit arson can be too much for some. There were 2.2 million foreclosures last year, up 75% from the previous year, according to RealtyTrac. In addition, a study by Moody's Economy.com and Equifax found that 4.5% of all mortgages were delinquent in the first quarter of 2008. Auto loan delinquencies hit a 10-year high in January.
Frank Scafidi of the National Insurance Crime Bureau, a membership organization that tracks insurance fraud, says his group has not identified a rise in financially motivated arson. "Everything we've found does not support that," he said.
But some observers say state authorities and insurance companies play down the issue -- perhaps out of fear of copycat crimes.
"The sub-prime crisis began to hit in late 2006. There's been an increasing number of cases since then," said James Quiggle of the nonprofit Coalition Against Insurance Fraud, adding that he has about 20 such cases currently on file. "Will it explode as more mortgages are reset? That's the question."
