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Catalytic converter thefts prompt legislation, loss control action

Catalytic converter

A spike in catalytic converter thefts has caught the attention of the insurance sector and legislators, who are moving to take measures against the rising incidence.

Risk management efforts can also mitigate the threat and challenge potential thieves, experts say.

According to the National Insurance Crime Bureau, claims for stolen catalytic converters soared 325% to 14,433 in 2020, the most recent year for which figures are available, up dramatically from just 3,389 in 2019 and 1,298 in 2018.

Catalytic converters, which are parts of car exhaust systems, reduce harmful emissions from internal combustion engines. They are targets for theft because they use precious metals, including platinum, palladium and rhodium, in the process. Late last month, platinum was selling for nearly $1,060 an ounce, palladium for $1,770 per ounce, and rhodium for $12,350 an ounce, according to Money Metals Exchange, offering a compelling bounty for thieves.

“The presence of those metals is what drives catalytic converter thefts, as they can easily bring anywhere from $20 to $240 in recycling value depending on the amount and type of precious metal they contain,” said Dale Porfilio, chief insurance officer for the Insurance Information Institute in New York.

The problem is growing and spreading.

“The frequency of these claims has increased over the past 18 months,” said Kevin Shumate, Ostrander, Ohio-based vice president, U.S. loss adjusting services, at Crawford & Co. “Stealing catalytic converters has been an issue in the U.S. for some time, but thefts are on the increase in Australia, Asia and the U.K.”

The popularity of larger sport utility vehicles has played into the hands of criminals.

“They often target sport utility vehicles because their ground clearance is sufficient for the thief to gain access to the converter without having to deploy a jack, and that saves time,” Mr. Porfilio said.

Dave Carlson, Cleveland-based U.S auto and manufacturing practice leader for Marsh LLC, said larger vehicles also have larger converters potentially worth more. “People find it easy to take a catalytic converter. All you need basically is a hacksaw and if you have an electric device or saw you can do it in a minute,” he said.

Hybrid vehicles are also targeted because the more limited frequency of the converter’s use — it is only used when the gas engine is engaged — leaves the metals inside less degraded and of higher value, he said.

“Industry sources suggest that hybrid vehicles and SUVs are targeted predominantly. The Toyota Prius is ranked among the top 10 most targeted cars in the country,” Mr. Shumate said.

Auto manufacturers, fleet owners and individual operators can take steps to mitigate the exposure.

“People are warned to park in secure locations, consider alarms and sensors, and to consult with their manufacturer around steps to make theft more difficult,” Mr. Shumate said.

The converter itself can be altered for identification purposes, and devices such as covers and steel plates can be used to frustrate theft.

“Parking vehicles in locked garages or fenced yards is ideal. If this is not available, then leaving vehicles in well-lighted areas is recommended. Services are now available to etch the VIN onto the catalytic converter, which can help recover the part if stolen,” Mr. Porfilio said.

Auto manufacturers, which may have hundreds or thousands of cars on a lot, are “very aware of the exposure,” Mr. Carlson said, and have security protocols in place to deter theft of all types. “Theft has been an issue at large original equipment manufacturers, so they’ve been very in tune with theft for decades,” he said.

Claims for catalytic converter thefts are often below the threshold of deductibles on the commercial coverage for large vehicle fleets, he said.

Emerging technology is also helping reduce the exposure for diesel vehicles.

Modern diesel engines in medium and heavy-duty trucks use diesel exhaust fluid to improve emissions and an aftertreatment system, which means they don’t have a catalytic converter. Aftertreatment systems are made up of a diesel particulate filter and diesel oxidation catalyst, according to Larry Harlow, director of claims for Sentry Insurance in Stevens Point, Wisconsin.

 “While the function of reducing emissions is the same, most aftertreatment systems don’t contain the metals that make the catalytic converters so valuable,” he said.

The problem has also caught the eye of legislators.

“Some states are implementing greater enforcement and tracking systems, which hopefully will inhibit this type of theft,” Mr. Porfilio said.

In October 2022, New York Governor Kathy Hochul announced several actions to increase catalytic converter theft enforcement in high-theft areas by targeting unauthorized and illegal vehicle dismantlers, or “chop shops.” She also signed legislation that imposes restrictions on the purchase, sale and possession of catalytic converters by vehicle dismantlers and scrap processers.

According to the National Conference of State Legislatures, 12 states enacted bills in 2021 addressing catalytic converter thefts, at least 20 states enacted 25 bills in 2022, and “the trend is likely to continue in 2023.”