With over 58 million Americans reporting stolen packages in the past year, one startup claims to have a solution to the growing issue of package theft, known as porch piracy.
Following the busiest shopping day, Cyber Monday, countless packages have made their way to doorsteps across the United States. Unfortunately, many of these deliveries end up in the hands of thieves rather than their rightful owners. Recognizing this problem, one startup has created an insurance service designed to protect consumers against these so-called porch pirates.
James Moore, the CEO of the startup offering this service, highlighted to Business Insider the complex calculations involved in forming a viable insurance product for package theft. By partnering with several actuarial teams, including industry leaders such as Lockton Re and Pinnacle Actuarial Resources, PorchPals has established a risk profile necessary to insure against the unpredictable nature of theft.
Their service goes live on Monday, covering up to three stolen packages annually or a total claim amount of $2000 for a yearly fee of $120. Consumers can link their payment card to the service, ensuring that any future e-commerce purchases are protected. However, the insurance mathematics behind such a product are not straightforward.
Moore explains that the challenge lies not just in providing coverage but in doing so effectively, given the complexities of package theft. Significant factors include the value of shipments and the incidence of thefts, which PorchPals has learned through a California trial that typically happens with goods valued between $250 and $280—items not usually covered by standard insurance policies due to higher deductibles.
Furthermore, the CEO noted that traditional homeowner and renters insurance often proves inefficient for claims on stolen packages due to deductibles exceeding the package value. Similarly, credit card policies may require evidence that the package was secure before it was stolen. The nature of package theft diverges from other property crimes since it doesn’t strictly correlate with neighborhood crime rates, making the calculations behind premiums more intricate.
Interestingly, thieves often target luxury areas assumed to be safe, stealing high-value items from expensive properties where packages are left unattended. This aspect adds another layer of complexity as it challenges assumptions about where theft is most likely to occur.
With early testing indicating that PorchPals effectively covers valuable shipments that fall through the cracks of typical insurance policies, Moore advocates for consumers to consider this service as a realistic solution to an increasingly common nuisance.
By integrating innovative insurance techniques with strategic partnerships, PorchPals seeks to offer consumers a safeguard against the prevalent issue of package theft. As deliveries continue to rise in the online shopping era, such solutions could become indispensable.
Source: Businessinsider
