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ROBERT M. FIGLIO, Ph. D., CEO, CAP Index, Inc.

Crime Forecasting, Premises Liability & Data-Driven Concerns Presentation before the Casualty Actuarial Society, 3/13/01. ROBERT M. FIGLIO, Ph. D., CEO, CAP Index, Inc. General Data Concerns. Availability (unique?) Validity (real or nonsense?) Reliability (can you count on it?)

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ROBERT M. FIGLIO, Ph. D., CEO, CAP Index, Inc.

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  1. Crime Forecasting, Premises Liability &Data-Driven Concerns Presentation before the Casualty Actuarial Society, 3/13/01 ROBERT M. FIGLIO, Ph. D., CEO, CAP Index, Inc.

  2. General Data Concerns • Availability (unique?) • Validity (real or nonsense?) • Reliability (can you count on it?) • Completeness (missing info?) • Currency (now, tomorrow or some other time?) • Comparability (everywhere or just here & there?) • Business Utility (worth the time and money?)

  3. Data Sources • Governmental (officially collected) • Private (marketing, business-related) • Insurance (loss reports, experience) • Archives – warehousing (all types) • Models (emerging source)

  4. Data Analysis Concerns • Analytical expertise, do we have it? • Data warehousing – what’s there? Why were the data collected? • How to convert “data” to useful information? • Indexing (scaling) • Modeling • Calibration against experience • Over-time experiments

  5. Data-based Crime Risk Assessments: An Example of a Response to the Above-Outlined Points in the Area of Crime-Risk Determination • Premises Liability • Security Resource Allocation • Insurer Exposure • Underwriting Practice • Property Values

  6. Crime Risk Management Concerns • Safety and Welfare of Customers, Employees and Service Personnel • Likelihood of Litigation • Average Size of Award (Loss) • Exposure to Punitive Damages

  7. Premises Liability Litigation • Average Verdict Award has Increased from $800,000 in 1995 to $1.7 Million today • Average Settlement has decreased from $1.4 million in 1995 to $800,000 today • Improved Security Measures Lead to Greater Numbers of Defense Verdicts • You can defend your company’s assets if you take appropriate measures • Source- Liability Consultants, Inc

  8. Types of Businesses Sued1993-97 Case Decisions • Office 8 • College 17 • Bank 19 • Hospital 21 • Shopping Center 33 • Hotel / Motel 40 • Supermarket 40 • Retail Store 61 • Restaurant 61 • Apartment Complex 96 Source - Liability Consultants, Inc.

  9. Where Crimes are Occurring1993-97 Case Decisions • Office 8 • ATM / Night Depository 10 • Hospital / Nursing Home 12 • Hotel / Motel Room 18 • Restaurant 18 • Exterior Common Area 41 (excluding parking lot) • Apartment Unit 62 • Interior Common Area 67 • Retail Store 71 • Parking Lot 130 Source - Liability Consultants, Inc.

  10. Overall Case Outcomes1993-97 Decisions Rendered • Defense Verdict 52.61% • Remanded 19.23% sent back to trial court, decision pending • Plaintiff Verdict 17.73% • Settlement 10.43% • Source - Liability Consultants, Inc.

  11. Duty of Invitor to: • Invitee: Protect Against Known and Foreseeable Dangers • Employee: Protect Against Known and Foreseeable Dangers • Licensee: Protect Against Known Dangers • Trespasser: Protect Against Obvious Dangers

  12. Litigation for Breach of Duty • A suit could be brought for failure to guard against foreseeable criminal acts: • The plaintiff must show that an injury resulted from a breach of duty: • Cause in Fact: “But for this problem my client would not have been hurt.” • Proximate Cause: “The defendant should have known of the problem and fixed it.”

  13. Aspects of Proximate Cause • Foreseeability: There was a crime of the exact type before. • There were similar kinds of crimes before. • There was any type of crime before. • Actual Notice Could Be Constructed or Implied: High crime rate area. • High crime risk in the type of business. • Totality of circumstances.

  14. Crime Risk Questions • How can we determine which sites have high crime risks & which are less at risk? • Can we array sites in order of crime risk? • Can we make rational business decisions based on site crime risk? • Is there a valid & tested methodology available to support our underwriting and investment decisions? • Further: How can we reduce our exposure?

  15. Effectiveness of Procedures to Reduce Risk • What security for what risk? • How to measure risk? • Need to control for neighborhood crime level and other influencing factors. • Need to test security measures - what works? • Need research-based data to respond violent crime, litigation and regulatory pressures

  16. Essentials for a Data-Driven Assessment Program:Responding to the Threat of Premises Liability, Personal and Property Loss • Crime Foreseeability: • Internal Loss Tracking • Site Vulnerability Assessment (survey) • Neighborhood Crime Threat Assessment • Crime Management: • Data Analyses • Surveys • Benchmarking against Industry and other Standards • ROI Models

  17. Modeling Crime Risk • CAP Crime Risk Model is a multivariate structural model based on 25 different variables. • Optimized for Urban/Rural, Commercial/non-Commercial environments. • Scaled and indexed for direct multi-place comparisons. • Validated against company crime loss experience and Police data. • Updated and revised annually. • Provides Risk Scores for FBI Part One Crime for all Street Addresses in the US and Canada in Tabular and Mapped Formats.

  18. CAP Index Score 0 - 50 51 - 99 100 - 199 200 - 499 500+ CAPRisk Scoring Index Score Indicates a specific site’s risk of crime in comparison to the national average which is indexed at 100 (GUS/Insurance Product scaled from 1 to 10)

  19. CAP Index Rating 0 - 50 51 - 99 100 - 199 200 - 499 500+ CAP Index Rating 0 - 50 51 - 99 100 - 199 200 - 499 500+ CAPRisk Scoring A 100 score equals the national average A 300 score equals 3 X the national average X X

  20. Homicide Rape Robbery Assault Burglary Larceny Auto-Theft All FBI Part One Index Crimes are Modeled by CAP Index, Inc.

  21. Average Census Tract 61,258 census tracts, 4,289 population 226 FBI Part One Crimes consisting of: 29 Violent Crimes Against Persons 197 Crimes Against Property 0.4 Homicides 1.6 Rapes 9.5 Robberies 18 Aggravated Assaults 42 Burglaries 131 Larcenies 24 Motor Vehicle Thefts

  22. Conclusion: Data-Driven Risk AssessmentFor the 21st Century • The combination of : • Crime Forecast Data • Incident Tracking Data • Site Survey Data with • Industry crime and security data • Provides the basis for a valid assessment of practices and a basis for effective underwriting and crime-related business decision-making.

  23. CAP INDEX, Inc. Robert M. Figlio, Ph.D. 800-227-7474, ex.141 www.capindex.com rmf@capindex.com

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