The exceptions to this rule have been among the state-chartered FAIR plans, for one excellent reason: FAIR plan insurance is mandated for poor neighborhoods, and profit is not its goal. FAIR plans are supported by funds from all insurance companies, as a sort of high-risk pool; they nearly always lose money. As a result, they have become a prime target of arsonists for profit. Even so, the FAIR plans didn't fight back until fairly recently. The most encouraging sign of change has been in Massachusetts, where Boston-area arson ring of 33 people were indicted by the state attorney general. According to Mark Zanger, an investigative reporter who uncovered much of the information leading to those arrests, the Massachusetts FAIR plan spent between $700,000 and $2 million to finance that probe.
One problem is that most insurance companies do little investigations of properties on their won before insuring them. Lloyd's of London, which has reportedly been victimized by arson fraud in New York and elsewhere, has just begun to probe some of its fire claims but only after enormous losses.
photo: Sylvia Plachy
Burned out in the South Bronx, 1978
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And there seems to be clear evidence that at least some insurance claims adjusters are in league with the arsonists. Others may simply turn a blind eye to suspicious evidence. The Village Voice has learned, for example, that Bald's insurance adjuster has continued to settle claims on his properties long after he was indicted for arson.
Without some cooperation or willful ignorance on the part of insurers, how could landlords insure properties for hundreds of thousands of dollars more than the purchase price or assessed value? One law enforcement agent told us privately that he believes insurance agents are actually running the Bronx and Brooklyn arson rackets. But because it is so difficult to convict a torch, let alone a landlord, it's hard to "flip" a witness who will testify against insurance adjusters—or mob figures—in court.
Arson is the cremation ritual of a diseased housing system. A striking fact for anyone who tours a New York neighborhood ravaged by arson and abandonment is that there are still many people living there—in public housing. The private sector has been unable to create an attractive level of profit from low-income housing (without subsidies or tax shelters) for decades. In part, this has been caused by rising costs, including interest rates, fuel, and labor. In part it has been caused by the continuing lack of sufficient income for the poor and working poor to pay higher rents. (Contrary to neo-conservative mythology, these problems have notbeen caused by rent controls: they exist in cities without rent controls, and the situation is worst in neighborhoods where rent-control prices would be well above market levels.)
There is simply no incentive for banks, landlords, insurance companies, or anyone else with money to invest in building or rebuilding dwellings at reasonable rents. So landlords are encouraged to let their low-income housing fall apart until they've milked the last dollar of rent, and evaded every dollar of taxes. Ultimately, the easiest and most lucrative step is to burn it, or sell it to someone else who will burn it. In housing, the final stage of capitalism is arson.
