A recent report from the National Retail Federation (NRF) highlights an alarming trend in the retail sector: shoplifting incidents have surged by 93% since 2019, accompanied by a significant rise in violence. These developments carry profound implications for the insurance industry, especially in commercial property, liability, and employee safety coverage.
Key Findings from the NRF Report
The NRF’s survey of mid-size to large retailers across 164 brands uncovered several critical insights:
- Retailers reported an average of 177 shoplifting incidents daily, with some experiencing up to 1,000 incidents across their brands.
- Over 90% of retailers noted more aggressive and violent shoplifting behaviors compared to pre-pandemic levels.
- Organized retail crime (ORC) was cited as a growing concern by three-quarters of respondents, with multi-person thefts and smash-and-grab events on the rise.
David Johnston, NRF’s Vice President for Asset Protection, emphasized that this trend extends beyond petty theft, pointing to organized efforts to steal goods for resale. Violence during these incidents is escalating, driven by the lucrative opportunities available to those engaging in ORC.
Implications for Insurers
These developments present significant challenges for insurers, particularly in the following areas:
- Commercial property insurance: Retailers face heightened risks of property damage due to smash-and-grab events and other aggressive theft tactics.
- Liability insurance: Increased violence raises the likelihood of injuries to employees and customers, potentially resulting in higher claims under general liability and workers’ compensation policies.
- Employee training and risk mitigation: As 70% of retailers increase budgets for workplace violence training, insurers have opportunities to support clients through tailored loss prevention and risk management programs.
The Growing Threat of Organized Retail Crime
ORC is a driving force behind the surge in retail theft. Theft rings often operate across state lines, exploiting gaps in legislation and enforcement. This makes it difficult for retailers and local authorities to address these crimes effectively. The NRF is advocating for Congress to pass the “Combating Organized Retail Crime Act,” which would improve coordination among federal, state, and local law enforcement to tackle these threats.
For insurers, ORC poses unique challenges. Repeat offenders and large-scale theft events inflate loss ratios and create complexities in underwriting. Innovative risk assessment and policy solutions are needed to address these dynamics.
Opportunities for Insurers
The rise in retail theft offers insurers a chance to support clients with proactive measures:
- Offering enhanced coverage: Develop policies specifically addressing ORC-related risks, including coverage for high-value inventory or damage from large-scale theft incidents.
- Encouraging advanced security measures: Partner with retailers to adopt technologies like AI-powered surveillance, RFID tagging, and predictive analytics, incentivizing these initiatives with premium discounts.
- Advocating for legislative support: Collaborate with industry associations to promote federal legislation and provide resources to help retailers navigate the challenges of ORC.
Conclusion
The retail industry’s escalating challenges require insurers to adapt their offerings and strategies to meet evolving risks. By collaborating with retailers and leveraging innovative solutions, insurers can help clients navigate these turbulent times while strengthening their own resilience.
Contact us today to learn more about customized insurance solutions designed for the unique challenges of the retail industry.