When is it OK to pay the police?

Giving money to the police is traditionally viewed with suspicion, but some of the UK’s top insurance companies are doing just that. Fed up with under-funded public services and spiralling crime, they have stumped up the cash for a new Metropolitan Police unit.

Organised crime rings are stealing plant from UK construction sites at a cost of around £600m per year to the insurance industry. In an effort to tackle the gangs, a group of five insurers – Allianz, RSA, HSB Haughton, Zurich and Norwich Union – have agreed to pledge a total of £250,000 to fund a specialist police unit to tackle the problem. But should the insurance industry have to fund the police to tackle crime, and does it lead to any conflicts of interest?

The Metropolitan Police admit that it is not ideal to have to resort to industry funding to fight crime. But it is not as rare as might be expected – for example, banks contribute to the cost of policing credit card fraud. And although the theft of construction plant is a relatively common and hugely expensive crime, the police claim they would not have the resources to set up a specialist unit to fight it without the insurers’ contribution.

Martin Ball, underwriting and operations manager at Allianz, says the Metropolitan Police approached the insurance industry in February 2007 with the proposition for the, as yet, unnamed unit and received an enthusiastic response. “There is an obvious benefit”, he says. “We have a large contractors’ plant account, which is running unprofitably – they [the Met] came to see us and we signed up on the day.”

Ball adds that plant theft is on the increase. “There are more plants around and there is more construction going on,” he says. Construction projects associated with the 2012 Olympic Games exemplify the plentiful opportunities that are available for crime rings to steal plant.

In addition to the unit helping insurers by recovering stolen plant they may have paid out on, Ball argues that the construction industry has a corporate social responsibility to tackle the problem. Plant theft disrupts construction projects and the proceeds fund organised crime, he says.

Ball adds that the Met did not have the resources to set up a unit to tackle the problem. “We have a pretty good idea who the 10 biggest gangs in the South East are, but they [the Met] don’t have the manpower to bust them,” he says. However, the new unit will plug the gap in police resources. “It will be a dedicated full-time resource working with the insurance industry – they will stop kit on the road and hit the ports.”

Ball acknowledges that, ideally, the insurance industry would not have to pay for the unit, but he says that the arrangement does not create a conflict of interest. “In a perfect world, the insurance industry probably would not [fund the unit], but it will be completely independent – it’s not working on behalf of individual insurers, and what they find is what they find.”

Ball says the unit will be looking to recover all stolen plant, not just plant insured by the companies footing the bill for the unit. However, he estimates that the five insurers funding the unit are the backbone of the engineering insurance market with a

90% share.

“ We have a large contractors plant account, which is running unprofitably – they [the Met] came to see us and we signed up on the day.

Martin Ball, Allianz

If the unit is successful, will it lead to insurers funding other types of police units. Ball says: “Why not? This was too good an initiative to pass up.”

Detective Constable Ian Elliott, who will run the unit, which has funding for a minimum of two years, says the aim in the first year will be to recover stolen plant with a total value in excess of the insurers’ investment. “In the next couple of months, it will be up and running”, he says. The three-man unit will have one analyst and two officers. “The analyst will check that, if a piece of kit is stolen in Birmingham, its information is correctly recorded in the system,” Elliot says.

Ensuring that data about stolen plant is logged correctly will help to build up a more accurate picture of the extent and nature of such theft. This is difficult at present due to the inaccurate recording of information. Elliot says he has seen 19 different spellings of Liebherr – a manufacturer of plant equipment – in theft reports.

He also says a key element of the fight against plant theft is plant owners’ use of the Construction Equipment Security and Registration Scheme, or Cesar, which tags equipment with an identification number.

The two police officers in the unit will build national intelligence about plant theft, but will also kick doors in, says Elliot. “They will research suspects to see if their lifestyle exceeds their declared income and they will look at the crime network and draw links. It’s like a spider’s web. They [the gangs] don’t always work the same ground, for example, one night it might be in Bexleyheath, the next in Epping.”

Elliot adds that the unit will target suspects using surveillance and helicopters. It will be based in London, but will have a national remit for intelligence. It will make arrests in locations within reasonable travelling distance from the capital, with intelligence on suspects further afield being handed to local police forces.

Elliot denies that funding from the insurance industry will create a conflict of interest, and says that the unit will recover plant regardless of whether it is insured by one of the companies paying for the unit. “We’re only interested in criminals,” he says.

He adds that it is difficult to estimate how successful the unit will be, but he highlights the success of a police unit funded by the Finance and Leasing Association to tackle vehicle fraud. “For every £1 it invested, it got £5 back,” he says. Elliot adds that one of the main targets of the unit will be increasing the 5% recovery rate for stolen plant.

Gary Thom, senior underwriter for the engineering account at Norwich Union, believes the investment will be worthwhile. “It’s not a solution to plant theft – owners and operators of plant machinery are still responsible for security – but it’s a method of greater detection,” he says.

The rest of the industry will be watching the experiment closely.