I have worked at Urban Insurance Agency for more than 25 years. As an agency that specializes in auto insurance, I have seen a direct pattern between economic “Hard Times” and a surge in auto thefts. While the Bank closings and collapse of the “Sub-Prime” markets never brought us to the depths of the “Depression,” there is a sense that the “New-Normal” is dreary at best. Yes, we have improved greatly from the numbers at the end of the Bush administration when we were loosing 400,000 – 750,000 jobs per month- in fact we have seen jobs growth. What we have not seen is any truly bright light at the end of the tunnel.
This has lead to an increase in auto thefts as a result of more. People are bringing their cars in for repairs at “Back-alley shops”, stealing cars to pay to pay bills, and those that are committing insurance fraud for profit.Hard financial times, coupled with falling credit scores, are making it more difficult for man to buy new cars. This can often leave people with cars in need of major, and very costly repairs. The cost structure required to operate a new car dealership, results in labor rates of $80 – $120 per hour. It is amazing the number of Parts for new cars can cost more than buying a 50″ flat-screen TV. The combination results in the shops quoting repair cost that can be in the thousands of dollars. This is at times a price higher than what the person can afford to pay, and result to People bringing their cars in for repairs at “Back-alley shops”. While a new car dealership would be crazy to risk their multi-million dollar investment to save some money buying “HOT parts”; the same is not always true. Please, I do not mean to imply that only dealers, or shops with gleaming clean floors and Mies van der Rohe furniture in their waiting rooms, are honest. I am just stating a well know fact, that shops that operate outside of the normal licensing, have a higher tendency to be buying Hot Parts. (At times the people running these shops might not even be aware the parts they are buying are stolen).
Authorities say young joyriders are in large part to blame for the 22 % Car theft rise in Chicago, but the money behind auto thief involves selling parts stripped off of stolen cars. A term many are familiar with is “Shop Shops”, often connected to organized crime, these “Shops” will pay people to steal cars and deliver them to a building where the cars will be disassembled and the parts sold to shops. As more people are willing to buy, or turn a blind eye, about using these Hot parts,it drives the market for auto theft.Many of the same financial problems that have caused a record increase in home foreclosures, also effect car owners.
“There are a lot of people out there who are ‘Upside down on their cars” said Eddie, owner of a auto repair shop. People find their car needs $3,000 in engine work, they don’t have the money, they can’t sell the car, and they still have payments owed to the bank. Desperate times can result in desperate actions. I have found those that are committing insurance fraud for profit, and those that just find them-selves up against a wall, and look for an “Easy”, but illegal way out of their dilemma.
Many auto insures are also finding times tough, and need to carefully watch for any sign of Fraud. Some of these companies are turning to new high-tech methods of tracking, and uncovering both real thefts, as well as insurance fraud. Many in law endorsement as well as the auto insurance field, expect to see car thefts remain high as long as the economy remains slow.