Crime is on the Decline, Yet Retail Businesses See Higher Rates
Since the COVID-19 pandemic, we’ve been inundated with information and opinion pieces about crime risk, particularly in our largest cities. A January article in the New York Times recently cited New York City’s decline in overall crime rates from 2023 to 2024.
The commercial insurance community has long underwritten and provided products to protect businesses from crime risk for events like theft, vandalism, and liability emanating from assaults and harassment. Sometimes, with varying degrees of success in delivering sustainable results.
The Broad Brush Approach Doesn’t Work
Generally speaking, the industry has used models built for real estate and other industries to assess crime, but these models fall short from an insurance perspective. They lack location granularity, are missing nuance around business type, and have proven less relevant for predicting insurance loss. Often, insurers look back over a five to ten-year period to make decisions versus what is happening in real life.
“While the rationale to provide insurance coverage for these exposures is well intended, years of underwriting and pricing misses have led to increased rates, new restrictions, changes to coverage, and, in some cases, a decision to stop writing city-based risk entirely.” Patrick Girouard, Founder and CEO of District Cover, says. “More often than not, insurers are using these models to avoid risk rather than figuring out a way to say yes. If evaluated and managed correctly, this risk can be an opportunity for growth and a positive impact.”
District Cover is Moving into Your Neighborhood
The narrative surrounding increasing crime risk, coupled with more frequent and catastrophic weather events, has made getting insurance for city-based businesses even more challenging. District Cover wasn’t created to influence the narrative around crime risk but rather to use data and more granular analytics to underwrite and price this exposure.
“We exist to fill insurance capacity voids in the city. And while a theft or vandalized storefront is less likely than a fire, flood, or wind event to shutter a business for several months, the financial burden to recover from crime events is material and something that proper insurance can help manage,” Girouard says. “In looking at a recent example, It’s estimated that only 40% of the economic loss from the Minneapolis riot and civil commotion events of 2020 was insured. There's an opportunity to do better here.”
Case Study: The State of New York City Retail
Since its launch in New York City in 2023, District Cover has provided insurance for hundreds of retail Main Street businesses in the five boroughs, including variety and clothing stores, liquor stores, convenience stores, and grocery stores—often important community fixtures. District Cover is now expanding its reach beyond New York and into other U.S. cities.
“Any business, but particularly those in the retail space, has exposure to crime,” Girouard explains. “When looking at New York City’s 2024 Crime Data Report, while crimes are decreasing from pandemic-level highs, the retail segment is still materially worse than pre-pandemic levels, with nearly a 40% increase in property crime and nearly 23% in assaults.”
Queens and the Bronx are experiencing a higher surge at the borough level, with frequency nearly twice as high as before the pandemic.
Getting Started with Retail Risk Management
With these trends in place, it’s essential businesses leverage risk management principles to protect themselves from these exposures. Here are a few things you can do:
Talk to your insurance agent about the coverages in your current insurance policy. Make sure you understand whether theft, for example, is a covered peril and what your deductible is in the event of a claim.
Ensure you provide your agent with an accurate list of your property values and inventory levels. While underreporting your exposure and saving some premium dollars might be a short-term financial win, not adequately insuring your property to its full value could lead to fewer recoveries and financial pain in the event of a loss.
Evaluate security tools to better protect your business. Consider central station security cameras, motion-sensor lighting, and roll-down security doors or gates. If these tools are already in place, ensure they are working correctly, staff is appropriately trained, and procedures are in place to use them. If you’re considering human security, make sure you understand the coverage available to you in your existing insurance policy, as there could be limitations and exclusions around this exposure.
Ensure that valuable inventory is locked up and inaccessible to customers and staff. Consider just-in-time inventory approaches to limit the value in-store at a given time.
Develop relationships with neighboring businesses, share risk mitigation strategies, and work together to improve the safety of your communities.
It’s important to utilize all the tools available to protect your business, especially in an environment where risk is increasing for retail businesses. District Cover, with the support of your local insurance agent, is here to help your business thrive.
