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Arson Seen as Growing Risk as Home Values Fall.

Mortgage Servicing News

| May 01, 2008 | COPYRIGHT 2008 SourceMedia, Inc. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan.  All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)Copyright

Washington -- Arson is being touted as a growing insurance fraud risk given the decline in home values, according to the Insurance Information Institute.

The institute says that arson fraud in addition to raising the cost of insurance for homeowners causes needless property damage and loss of life in some cases.

The institute says that insurers are concerned that the subprime mortgage mess could "spur arson" by homeowners facing foreclosure. Suspected mortgage-related home arson cases have jumped 50% above the 2006 rate in California, according to that state's insurance department.

Insurers have set up a computerized database of property claims to help identify suspicious fires, and the companies have also established units to investigate suspected arson. The institute also notes that state laws now allow a free exchange of information between insurers and law enforcement agencies, diminishing the risk of litigation alleging libel or privacy violation.

Nonetheless, arson remains a property insurance problem. Intentionally set fires destroyed more than $900 million worth of property in 2006, up 17% from the year before, according to the ...

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