Anti-theft devices: Insurers gravitate towards vehicle marking systems

By Martin Beaudry | April 20 2010 02:14PM

Anti-theft devices are taking an increasingly important place in the automobile insurance industry. To date the Insurance Bureau of Canada (IBC) has supported only electronic immobilizers, but other products like tracking and marking systems are also gaining favour.

That may be why the secondary market for anti-theft devices is gaining support with insurers, manufacturers, and regulators alike. As it stands, no single device is getting the most attention, though vehicle marking does seem to be getting more popular than tracking systems.

According to André Beauchamp, Quebec director of customer and partner services at IBC, while tracking systems are good for finding stolen vehicles, they do little to deter theft. Organized crime groups usually have the technology to detect tracking systems within minutes, and other professional vehicle thieves have developed simple ways to see if a vehicle has a tracking system. They just steal the vehicle and then park it somewhere for a few days. If no one comes to get it, it is probably tracking-free, says Mr. Beauchamp.

Marking systems, on the other hand, tend to be more of a problem for professional vehicle thieves. Since marking systems tend to mark several areas and parts of a vehicle, they tend to be harder for thieves to find and erase.

Insurers are offering discounts on insurance premiums for either product, according to Mr. Beauchamp, but they are divided in the type of anti-theft devicethey prefer.

Mr. Beauchamp recently interviewed a professional vehicle thief serving time in prison. He says the man was very clear in how he viewed vehicle marking. According to the thief, a stolen car that he would normally sell for $2,000 would only get $500 if it were marked. Between stealing a marked car and stealing an unmarked one, the choice was clear.

About 55% of original equipment manufacturers already install three-point electronic immobilizers in their new cars. Mr. Beauchamp says those do a great job in diminishing the number of cars stolen to go on “joyrides,” but they do little to fend off professional car thieves and organized crime, who can bypass immobilizers quite easily.

While about 75% of all vehicle thefts are to go joyriding or to go commit a crime, professional thieves with the intent to sell a portion, or all, of the vehicle, steal the remaining 25%. It is that quarter stolen for resale that represents the costliest theft, because the models and makes stolen tend to be more expensive, and because recovery rates are considerably less.

There are different types of marking systems. In Quebec, a very costly market for insurers in terms of professional theft, one popular product is what is called “intensive marking,” a method used by Sherlock Antitheft Marking.

The Sherlock system uses sandblasting to engrave 52 different parts of a vehicle with an individual identification code. Lights, bumpers, mags, and 35 motor parts are each imprinted with the code. Sherlock then maintains a record of the code and the parts marked in a database that is accessible to insurers and police forces throughout the world.

Its presence is shown by a small adhesive applied to the windshield, identifiable by the symbol of a crab and the vehicle’s identification code. According to Sherlock president Pierre-Paul Jodoin, this marking process diminishes the black market value of a car by half.

Sherlock has had great success in Quebec. In that province, the common law code means individuals buying a car in good faith that turns out to be stolen still get to keep the car. In the rest of Canada, the civil law system means stolen cars get confiscated. Further, in many parts of Quebec, vehicle theft is not even investigated anymore, according to Mr. Beauchamp. Then there is the fact that the Port of Montreal is a gateway by sea to the rest of the world, where there is a high demand for black market vehicles.

Mr. Jodoin predicts Sherlock will mark 40,000 vehicles this year, an increase of 60% from 2003. Some insurers, including La Capitale, Desjardins General Insurance, Promutuel Bois-Francs, ING Canada, and AXA, actively promote the use of the product to the drivers they insure.

While ING does not offer a discount for use of anti-theft marking, Bernard Tremblay, actuarial vice-president for the insurer, says the company recognizes that the use of the product helps reduce theft. La Capitale is even more confident, offering to pay for the marking either in part or in full on selected vehicles.

Another product gaining popularity is DataDot, a recent arrival from Australia to Canada. Leader Auto Resources, the Canadian distributor for the product, is in discussions with the IBC to set up a study of its technology, as is the team from Sherlock with their product.

The DataDot product sprays up to 10,000 tiny dots less than one millimetre in diameter all over a vehicle, and each dot holds a vehicle identification number (VIN) and uses a special adhesive that can be seen only under black light.

The idea is that so many parts are marked in so many places, thieves will move on to easier targets. A study by the National Motor Vehicle Theft Reduction Council in Australia found that use of the technology diminished theft by 70% in that country. As a result, insurers are giving an average 18% discount on rates for those who use DataDot.

In the United States, both Nissan and BMW have begun using DataDot technology as well. BMW had already been using it in Australia, marking all its cars sold there with the DataDot technology.

Still, for as much as marking systems are making gains in the market, the jury is still out as to which type of product is best to install after the electronic immobilisers recommended by the IBC. Mr. Beauchamps points out that different companies tend to favour one or the other or both, so long as they help prevent theft or at least diminish its cost.

Costa Kaskavaltzis, manager of automotive engineering at IBC, says the bureau can’t yet recommend any anti-theft product other than three-point electronic immobilizers. He says there is not enough organized data out there yet to validate their use.

He says the industry needs to study a fleet of several thousand different vehicles over the course of many years before standards for the products can be established. Then, and only then, will the IBC be in a position to say which products do a good job and which do not.