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29 June 2023

Research shows leading role of insurance industry in shaping criminal behaviour

New research has shown how the insurance industry plays a prominent role in shaping crime and criminal behaviour, working with governments to combat offenders while also tolerating some crime in the interests of profit.


As the insurance industry has evolved over time, it has worked to both reduce crimes that governments have failed to tackle through inaction or lack of resource and in to reduce the ex post losses from crime, thereby ensuring that crimes can be profitably insured.

The analysis was made in new research - How Crime Shapes Insurance and Insurance Shapes Crime - co-authored by Professor Anja Shortland, of King’s College London, and Professor Tom Baker, from the University of Pennsylvania Law School.

The researchers analysed five case studies of insured crimes; auto theft, art theft, kidnap and hijack for ransom, ransomware, and payment card fraud. Their work examined the history of the insurance industry’s actions in working to combat crime in those areas as well as efforts by criminals to respond to changes made by insurers.

They said: “When it comes to crime, our case studies suggest that insurers have stepped in to address problems that governments have not adequately addressed, whether because of lack of jurisdiction, resources, or political salience.”

“In stepping in, the insurers’ goal is not to eliminate crime, as if that were possible, but rather to make criminal losses sustainably insurable – a goal that is not the same as maximizing social welfare.”

“If the goal is the public interest, insurance governance should be understood as only a complement to state governance. It is unreasonable to ask the insurance industry to be uniquely responsible for ensuring that insurance governance furthers the public interest.”


You can read the research, due to be published in the Journal of Legal Analysis, in full here.

In this story

Anja Shortland

Professor in Political Economy