What is mitigation, and how does your local fire department play a role?

Station 16 of the Emergency Services District (Graford Volunteer Fire Department) moves toward ISO reduction

(This article was adapted from materials attributable to Verisk Analytics at isomitigation.com.)

Given increasing premiums and an overall “hardening†of the market for homeowners and commercial property insurance, some people may wonder about their ability to continue to obtain, and pay for, such insurance.

It turns out that local fire departments, in coordination with the Palo Pinto County Emergency Services District No. 1, may affect a reduction in those premiums.

How so?

To help establish appropriate fire insurance premiums for residential and commercial properties, insurance companies need reliable, up-to-date information about a community’s fire-protection services. The Insurance Services Office (ISO) provides that information through its public protection classification (PPC) program.

What is ISO?

In the early 1900s, major U.S. cities suffered disastrous fires that destroyed billions of dollars’ worth of property. In the aftermath, insurance companies realized they needed advance information on the fire-loss characteristics of individual communities.

The National Board of Fire Underwriters (NBFU) was established in 1866 to promote fire prevention and public fire protection. After several conflagrations – including the great Baltimore fire of 1904, which claimed 140 acres and destroyed 1,526 buildings across more than 70 city blocks – the NBFU expanded its scope, developing the municipal inspection and grading system. Under that program, engineers evaluated the fire potential of many cities. In response, those cities improved their public fire-protection services.

The municipal inspection and grading system, and its successors, have been an important part of the underwriting and rating process for insurers writing personal and commercial fire policies since 1909. ISO, now a wholly owned subsidiary of Verisk Analytics, was formed in 1971 by merging several property and casualty insurance rating bureaus at the state, regional and national levels. It evolved from a nonprofit organization to a for-profit stock corporation in 1997. In 2008, Verisk Analytics was established as the parent holding company for ISO. Verisk went public in 2009, and ISO became a wholly owned subsidiary.

ISO’s PPC service now gives insurers credible data to help them develop premiums that fairly reflect the risk of loss in a particular location.

What is the PPC program?

ISO collects information on municipal fire-protection efforts in communities throughout the United States. In each of those communities, ISO analyzes the relevant data using its fire suppression rating schedule (FSRS). ISO then assigns a PPC designation from Class 1, which generally represents superior property fire protection, through Class 10, which indicates the area’s fire-suppression program doesn’t meet minimum criteria.

By classifying a community’s ability to suppress fires, ISO helps the community evaluate its public fire-protection services. The program provides an objective, countrywide standard that helps fire departments to plan and budget for facilities, equipment and training. By securing lower fire-insurance premiums for communities with better public protection, the PPC program also provides incentives and rewards for communities that choose to improve their fire-fighting services.

ISO has extensive information on more than 40,000 fire-response jurisdictions. Most U.S. insurers of home and business properties use PPC in calculating premiums. In general, the price of insurance in a community with a good PPC is lower than in a community with a poor PPC, assuming all other factors are equal.

To determine a community’s PPC, ISO conducts a field survey in which expert staff members visit the community to observe and evaluate features of the fire-protection systems. Through the use of its FSRS, ISO objectively evaluates four major areas, which are:

1. Emergency communications systems – A review of the emergency communications systems accounts for 10 points of the total classification. The review focuses on the community’s facilities and support for handling and dispatching alarms for structure fires.
2. Fire department – A review of the fire department accounts for 50 points of the total classification. ISO focuses on a community’s fire-suppression capabilities. ISO measures suppression capabilities based on the fire department’s first-alarm response and initial attack to minimize potential loss. Here, ISO reviews such items as engine companies, ladder or service companies, deployment of fire companies, equipment carried on apparatus, pumping capacity, reserve apparatus, company personnel and training.
3. Water supply – A review of the water supply system accounts for 40 points of the total classification. ISO evaluates the community’s water supply system to determine the adequacy for fire suppression purposes. ISO also considers hydrant size, type and installation, as well as the frequency and completeness of hydrant inspection and flow-testing programs.
4. Community risk reduction – ISO reviews a community’s risk reduction efforts and credits them in the community risk reduction section, which allows for extra credit of up to 5.5 points, for a potential total score of 105.5. Considerations include fire prevention code adoption and enforcement, public fire safety education and fire investigation.

Following the completion of the field survey, ISO analyzes the data and calculates a PPC, after which the grading then undergoes a quality review. The community then receives a notification letter identifying the new PPC. ISO also provides a hydrant-flow summary sheet, along with a PPC summary report. The summary explains each subcategory and indicates the total points the community earned. The report also indicates the performance improvements needed to receive full credit for each specific section in the schedule, as well as the quantity provided.

OK, so what?

All areas of Palo Pinto County, other than the city of Mineral Wells, receive their fire-protection services from a local volunteer fire department. Those volunteer fire departments are coordinated by, and through, the Palo Pinto County Emergency Services District No. 1. Emergency services districts, or ESDs, are designed to ensure adequate funding of local fire, EMS, rescue and other emergency services. An important principle behind ESDs is to spread the funding for vital emergency services among everyone within the district who might depend on those services. ESDs are a response to fundraising efforts, such as bake sales and barbecues, that typically take time and effort away from service provision while still leaving the local fire department service providers in difficult financial straits.

ESDs are local political subdivisions of the state of Texas that may provide fire, rescue, EMS and other emergency services. ESDs are governed by a board of five commissioners, whose members generally are appointed by the county commissioners court for the county in which the ESD is located. ESDs are primarily funded by an ad valorem (property) tax. ESDs may also levy a sales and use tax for additional funding.

At the beginning of this year, the Palo Pinto County Emergency Services District No. 1 adopted in principle a one-year, a three-year and a five-year strategic plan. A portion of that strategic plan states:

ISO PPC rating improvements at the fire department service levels across the ESD. Ratings for each fire department service provider should improve to a “7†or better, starting with the city of Graford and Sportsman’s World.

Graford’s volunteer fire department covers a large portion of central and northeast Palo Pinto County. The department has an ISO rating of 9 in Graford and a 9/10 outside of the city limits. Over the last several months, Danny Watkins, fire chief of the Palo Pinto County Emergency Services District No. 1, in coordination with the Graford VFD fire chief Will Bounds and ESD commissioner Rodney Hall, have been working with Graford city officials, including those in charge of its water system operations, to maximize PPC points across the four major areas identified above. The goal is for the Graford VFD to have an ISO PPC rating of 7 within the Graford city limits and an 8 outside the city limits.

The fire department’s grading and review processes began April 29 and were expected to take a minimum of six weeks to complete before an initial rating could be provided. A critical part of the review included an in-person inspection by an ISO representative of the fire department’s apparatus specific capabilities, including apparatus water capacities, pump capacities, equipment, hose lengths and hose appliances. During the inspection, the fire department was to be time-tested on its ability to have six structurally trained fire fighters put a 2.5-inch hose line in operation with a water flow of 275 gallons per minute. As part of the test, the fire department’s primary structure fire truck needed to establish its own water supply by drafting from a drop tank filled by a water-tender apparatus.