The Federal Crime Insurance Program

In response to a congressional request, GAO reviewed the Federal Crime Insurance Program. Under the program, insurance for burglary, robbery, theft, and similar crimes is available to residential and commercial property owners in States where crime insurance is not available through the private market or statewide programs or where it is prohibitively expensive. Legislative authorization to enter into new insurance policies ends on September 30, 1982, and the Administration has recommended that the program be terminated at that time.

As of September 30, 1981, 26 States, the District of Columbia, Puerto Rico, and the Virgin Islands participated in the program. There were nearly 73,000 policies in force, approximately two-fifths of which were commercial policies. The crime insurance program has had losses every year; however, it has never received an appropriation, but has been funded by the National Insurance Development Fund. Within the last year, several changes have been made in the program: a premium increase has been announced, and underwriting and claims adjustment practices have been revised. These changes are designed to reduce program losses and potential program abuses. There may be a significant need for the program in only a few States, such as New York, Pennsylvania, and Florida, which account for 71 percent of the policies. In addition, it is not clear whether non-Federal crime insurance coverage is available to current policyholders, or whether it is available only at prohibitively costly premiums. In some States, alternatives to Federal programs exist; however, establishment of State programs may require State legislative action.