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Comment by prussian | Hacker News Reader

This seems strange to me though. How does one collect on insurance without it being reported to the police? Are businesses and individuals just eating the cost or are adjusters just writing out checks without a police report?

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The article points out that businesses are eating the cost until they can't tolerate it any more, then they're leaving. The example cited was that of Walgreens closing 17 stores in San Francisco because of shoplifting related losses.

Under normal circumstances, insurance protects against unlikely but catastrophic events (health insurance in the US is a weird exception). Even if shoplifting insurance exists, I can’t imagine how it would be cheaper than just eating the loss.

Any kind of meaningful coverage for shoplifting can't be dependent on having police reports. Under normal circumstances it is the shoplifting you don't know about that causes losses.

I suspect that stores do not have insurance for shoplifting, but perhaps someone with first hand knowledge could weigh in.

I don’t have first hand knowledge but I would bet all my Bitcoin that retailers do not have “shoplifting insurance”. There seems to be a common but deeply flawed belief that businesses can and do insure against literally every bad thing that could ever happen to them. Anyone with personal experience dealing with health or dental insurance should be well aware that insurance companies are in the business of covering (and paying out) as little as possible and there’s no reason to believe this dynamic is any different for a corporate customer.

You will never in a million years find an insurance carrier to underwrite a policy that covers shoplifting in Union Square. If you do, please let me know, I want to short the hell out of their stock.

Police don’t send out officers to take reports for minor crimes.

I know more than a few cops, and current SOP is to ignore anything that isn’t an immediate threat to life.

Retail stores expect some baseline amount of theft. For an individual, theft is a rare, unexpected, maybe even insurable event. Not so for stores. They expect theft. You don't generally insure against things you expect to happen.

Does insurance pay out for shoplifting? Do store owners even buy that insurance? Can you even get that insurance in SF? What are the deductibles? What happens to your rates when you make a claim?

I could see for big ticket retailers (jewelry, etc) insurance against theft makes sense, but CVS? When people steal $100 worth of makeup?

There is "commercial crime insurance" (separate from general business insurance) but I can't imagine an underwriter staying in the San Francisco market. And a large retailer like CVS, Walgreens, or Target would almost certainly be self-insured.

Are you using “self-insured” as a euphemism for “just eats the losses”? Because it’s not really insurance if there’s no risk pooling, and a large retailer is a single entity—who are they pooling risk from? Individual stores? That would make sense only if they are franchises.

They may not be pooling risk, but they may be hiring actuaries to look at their past losses compared to similar businesses, and setting aside a reserve to cover expected future risk.

I’m sure that’s exactly what they do, but that’s not insurance—just prudent risk management.

That’s basically what self-insured is. Large employers offer health insurance but they aren’t pooling risk with other companies, they just pay all expenses.

Insurance is meant to protect against catastrophic loss. If a loss isn’t catastrophic, it’s often cheaper to just pay for the loss yourself.

It is a well-defined term: https://www.investopedia.com/terms/s/self-insure.asp

"Does insurance pay out for shoplifting?" <- Yes and no. If you file a claim to the insurance company they will probably pay out. But they are trying to turn a profit too - if you are filing too many claims in a specific area they will just drop you.

Insurance pays out for theft even without a police report as long as it is a specific event (very common e.g. for shipping, where sometimes it isn’t even known in which country the theft happened). I have never heard of a policy covering “shrinkage”.

They don't collect because the level of shoplifting is so high that collecting on insurance would be financially a net negative due to premium increases.

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