ISO rating system comes under fire
For decades, the Jersey City, N.J.-based Insurance Service Office (ISO) has been inspecting and ranking the nation’s fire departments to help insurance companies determine premiums for homeowners in the areas they serve. However, a blaze last June at a furniture warehouse in Charleston, S.C., that killed nine firefighters from a department with a perfect ISO rating reignited an ongoing debate about the effectiveness of ISO’s ratings.
The ISO collects and analyzes firefighting capability information on nearly 46,000 areas across the country and rates departments on fire suppression ability, water availability and communications. ISO’s methodology, known as the Fire Suppression Rating Schedule, assigns a class rating on a scale of one to 10, with Class 1 given to exemplary fire departments and Class 10 to departments that do not meet minimum criteria. Homeowners served by low-rated fire departments may pay higher premiums to insure their property.
Some critics say the ISO, which has no mandatory re-evaluation time limit, fails to update fire department classifications regularly and relies partially on individual fire departments to report changes that may affect their ISO rating, which can create a false sense of security. That may have been the case in Charleston, which received a Class 1 rating nine years ago and had not been reevaluated since that time.
Following the June fire, a city task force recommended about 200 changes to update the department’s training and equipment. “We have made contact with Charleston to go back in for a re-survey as soon as we can align it with the water department, communications and the fire chief,” says ISO Vice President Mike Waters.
Other critics say the ISO has fallen behind the times by not awarding credit for new technologies being used and does not take into account communities’ individual characteristics. That was the case last summer, when the Bigfork, Mont., Volunteer Fire Department trained extensively for an ISO evaluation in an effort to improve its ratings and lower residents’ insurance premiums. The rural fire department had a split rating of Class 6 in the downtown area and Class 8 for the rest of the city.
The inspection netted the fire department an improved rating in the downtown area, but did not lower premiums. When Fire Chief Chuck Harris asked the ISO what the department could do to lower residents’ premiums, he was told to purchase smooth bore nozzles for fire hoses — items his department considers obsolete — and 16 pike poles for their fire engine, which he says are not needed in a small town.
Harris’ insurance agent told him the department would have to lower their rating to a Class 2 or 3 to see a rate reduction. “The kicker is, [doing] that would require a huge outlay of money for equipment that we would never use,” Harris says. “We train fire department personnel for all types of emergencies, such as car wrecks, medical assists, and landing helicopters, but the insurance rating system gives no credit for anything except fire [suppression],” Harris says.
ISO considers alternative means and methods so that if a fire department can show that an item serves a similar purpose to an ISO requirement, the department may get credit, says Paul Brooks, chairman for the Chantilly, Va.-based Center for Public Safety Excellence’s Commission on Fire Accreditation International (CFAI), which often works with ISO. CFAI also rates fire departments’ safety and efficiency, and bases its decision on more categories of behavior than ISO. “I’m not trying to be a cheerleader for ISO, but I feel often the fire service looks at the ISO role improperly,” Brooks says. “ISO can show very well that the loss per premium dollar is significantly less in better-rated communities. Fire departments should evaluate their risks and design the best deployment model for their community, and then let their rating reflect what they’re doing.”
Brooks says ISO is considering incorporating some CFAI behaviors, such as performing risk assessments and writing deployment standards in response to hazards, into its rating schedule. Also, Waters says ISO is considering putting a time limit on how long a department can hold a Class 1 rating.
Annie Gentile is a Vernon, Conn.-based freelance writer.