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.”