By Tom Weber, CFO, EFO, MPA, MiFireE,
ISO has been developing grades of fire suppression capabilities for communities under our Public Protection Classification program for many years. We recognize there are often questions about the PPC process. This article is designed to help provide a better understanding of our PPC, along with information about some ways fire chiefs can get help with the related process.
ISO has undergone significant changes in the last 10 years, and is now a Verisk business. As part of our transformation, we’ve provided extensive outreach to communities under the umbrella of ISO Community Hazard Mitigation. Our related team works to foster an active relationship with fire departments, building departments, water suppliers and community officials throughout the country.
Participation in ISO’s PPC, Building Code Effectiveness Grading Schedule (BCEGS) and flood management programs can help support a common goal for safer communities. Verisk and ISO’s corporate values are to serve, add value and innovate; and they drive our mission of making timely and accurate data available.
At its core, the PPC program informs the insurance industry about the capabilities of related communities and fire services to respond to structure fires. Statistical data from the insurance industry indicates that a community’s investment in fire mitigation, as measured by PPC, is a proven and reliable component in predicting future fire losses. Most insurance companies that use our PPC information often do so to help calculate premiums for fire insurance, generally providing for lower premiums in communities with better protection.
Fire suppression rating schedule methodology
Our Fire Suppression Rating Schedule is the methodology we use to develop the PPC grading for a community or fire protection area. The current FSRS was updated and became effective in most states in July, 2013. The latest update to this schedule was not done in isolation. We have – and value – relationships with many stakeholders that provided input in connection with our planned updates to the schedule, including:
- Members of the fire service.
- Emergency management organizations.
- Federal.
- State.
- Local.
- Water suppliers.
- Emergency communication centers.
ISO solicited and received feedback from many sources, including:
- The United States Fire Administration.
- The International Association of Fire Chiefs.
- The International Association of Fire Fighters.
- The National Volunteer Fire Council.
- Numerous state fire chief associations.
- The National Academies of Emergency Dispatch.
- Insurance companies and regulators.
This valuable input from such a diverse group of stakeholders helped make our modified methodology that we included within the 2013 FSRS more robust, and it helped enhance the capabilities of predicting future fire loss for insurance purposes. Changes included in the updated FSRS include recognition of community risk reduction efforts and the implementation of a statistically viable, performance-based deployment analysis centered on NFPA 1710 as an alternative to the traditional road-mile distribution approach.
Currency of the grading also affects the predictive nature of the FSRS. In conjunction with our new schedule, we also updated the frequency of our evaluations. It is our intent to grade every fire protection district (FPD) in the United States on a 4-5 year timeframe. There are more than 46,000 FPDs, and we’ve already graded nearly 85 percent under the new FSRS.
ISO classification improvements
The new schedule and the capture of timely data can affect the outcome of our evaluations. The charts illustrate the change of PPC distributions between 2012 and 2017.
The charts show a significant shift to the left, indicating strong improvements in graded community fire protection. In 2012, 30 percent of FPDs were class 6 or below; today that number is 50 percent. One major reason is more communities enhanced their water capabilities through improved in-ground systems, hauled water tanker/tender shuttle operations and long hose lay capabilities. Other significant reasons for better evaluations include recognition of community risk reduction efforts and the implementation of performance-based measurements that enable departments to improve their score.
We’re dedicated to helping the community leaders in fire departments, communication centers and water suppliers fully understand the process. To improve the fire service’s understanding of the evaluation process, ISO schedules free classes based on requests received from government officials. In 2017, we participated in more than 190 sessions, including direct classes, conference presentations, and one-on-one department meetings.
As part of these efforts, we had contact with almost 21,000 stakeholders during the sessions, which are designed to help support that our evaluations accurately represent actual conditions. Feedback provided by our stakeholders during these sessions can drive process improvements so we can achieve a mutual goal of accurately measuring effective fire protection services.
How communities use ISO classifications
Despite its long-standing history within both the insurance industry and the fire service community, we still occasionally hear the mistaken view that many insurance companies may not use ISO’s PPC. In fact, insurers representing roughly 75 percent of the residential and commercial market (based on premiums) access ISO’s PPC to help inform their underwriting and/or pricing for various insurance coverages. In general, the price of insurance in a community with a good PPC will often be lower than in a community with a poor PPC, assuming all other factors are equal.
One question we’re routinely asked is, “If our grading changes, what will be the effect on the insurance premiums in the community?” The answer is complicated. Generally, insurance companies file their rates with each state’s Department of Insurance independently. Even though many such insurers may use PPC inside their rating, there can be variations on exactly what each such company will charge for individual classifications. This being said, the general trend is that lower classification often translates to lower rates. For the most accurate answer to this question, communities can consider working with their local insurance agents on running local property samples through different classification scenarios.
By classifying the ability to suppress fires at the community level, the information ISO produces can also help communities analyze their public fire protection services:
- Emergency communications.
- Community risk reduction.
- Fire departments.
- Water services.
The program provides objective countrywide criteria that may prove helpful in connection with fire departments and communities planning and budgeting for facilities, equipment and training. When companies have fewer or lower claims to pay, the premiums they collect can be lower. Therefore, by recognizing the potential effect of improved fire suppression on fire insurance losses, in that respect, our PPC program can often serve as an objective mechanism that can help recognize communities that choose to maintain and improve their firefighting services.
PPC can also be an important factor in overall community resilience and provides a consistent measurement tool that can help in these efforts, from the structural fire response perspective. Given the potential effect on fire insurance rates, our PPC could also be a factor considered by some businesses and developers to determine where to make investments.
While ISO’s primary focus is to measure the effectiveness of a community’s ability to respond to structure fires for insurance purposes, there are many derivative benefits. These include providing a statistically-proven method of measuring performance; a methodology that can help as part of planning, budgeting for and making improvements; a tool that can be used to further the concept of community resilience; and a metric that can help encourage investment in a community.
ISO stands ready to provide guidance, input and support to help you derive many of these benefits. We’re committed to transparency, so always feel free to reach out to us with any questions, concerns or feedback on how we can consider ways to improve the process. ISO strongly believes working closely with the fire service across the country can have a positive outcome on our communities and its residents. For more information, visit www.isomitigation.com.
About the author
Tom Weber is national director of community hazard mitigation for ISO, a Verisk business.