Residential and commercial growth is threatening many fire departments' ability to protect the communities they serve.

That's the most important finding from a survey of 500 fire chiefs, fire marshals and commissioners from communities of all sizes across the United States. The study asked participants about recent and expected future developments in their communities and the effect of those developments on the fire service.

Those conclusions are the result of a telephone survey commissioned by the Insurance Services Office and conducted independently July 7 to 16 by Opinion Research Corporation International of Princeton, N.J. ORC interviewed 500 top fire department officials from randomly sampled communities around the country. The survey examined current conditions, as well as developments likely to occur over the next three years. The margin of error for survey results is plus or minus 4%.

The answers the chiefs gave provide valuable perspectives on the issues — and lead to some troubling conclusions. Without careful attention, long-term planning and adequate funding, communities risk an alarming deterioration in fire protection, especially in fast-growing areas. The threat is real, even in communities where fire protection is adequate today.

Under siege

Where residential and commercial growth has occurred in the last three years, 73% of the fire officials reported that the growth is straining their departments' ability to protect the communities they serve. When asked about the areas where the growth had occurred, 71% of the chiefs reported that it occurred in areas where they needed or still need improvement to water mains, hydrants or hauled-water services; 50% reported it occurred in areas where they needed or still need additional fire stations.

Not surprisingly, 84% of the officials in areas that experienced heavy or moderate growth over the past three years felt that growth has strained their departments' resources. Every segment of the survey sample feels that threat. Reports of heavy or moderate growth came most often from officials in communities with superior fire protection, as measured by the ISO Public Protection Classification program.

The program evaluates a community's fire-protection capabilities and assigns a protection-class rating from 1 to 10. Class 1 represents exemplary fire protection; Class 10 means that the protection does not meet ISO's minimum standards. Insurers use these gradings to market, underwrite and price homeowners and commercial property insurance, generally offering lower premiums in communities with better protection. The program provides an economic incentive for communities to maintain and improve their protection and plays an important part in many communities' decisions on their fire-protection services.

Almost a third of the fire chiefs reported that the communities they served had recently annexed areas previously outside community boundaries. Where annexations occurred, 41% of the officials reported that fire services in the annexed area were nonexistent or inferior to services in the community that made the annexation. And 37% of the respondents from communities that made annexations believe it has challenged their departments' ability to provide adequate services.

Government data justifies the respondents' concerns about accelerating growth across the United States. For example, U.S. Department of Agriculture statistics show that between 1982 and 1997, 25 million acres of rural land — an area the size of Maine and New Hampshire combined — became subdivisions, malls, workplaces and other developments. According to the latest available U.S. Census data, between 1970 and 1990, the 100 largest cities added more than 14,500 square miles to their developed areas. And information from the 2000 Census indicates that in 19 states, more than 20% of the housing stock is new construction, built since 1990.

More recent information reveals that the trend is continuing. According to the U.S. Census Bureau, in more than one-fifth of the major metropolitan areas in the United States, the number of residential building permits issued in 2002 increased by 20% or more from 2001.

Substantial investments

Only time will tell whether individual fire departments have met the challenges of growth. But many communities — large and small — have made substantial investments to maintain the existing level of protection. ISO has had the privilege of working closely with many departments, including those in Las Vegas; Raleigh, N.C.; and Myrtle Beach, S.C. — all fast-growing cities — to develop detailed plans for dealing with growth. Those plans included acquiring additional apparatus, building new fire stations, changing response areas and making changes in the water supply to improve fireflows.

Almost one-fifth of the survey respondents reported that, over the last three years, their communities opened one or more new fire stations; by contrast, 5% consolidated or closed one or more existing fire stations. The response areas of one or more fire stations changed for 26% of respondents, and 50% entered into new automatic-aid response agreements with neighboring communities.

Perhaps the most dramatic statistics relate to water, with 69% of the respondents reporting that their communities installed hydrants in one or more areas during the last three years. Twenty-three percent of the respondents indicated that their communities added hauled-water operations.

But most public officials will acknowledge that for many new and expanding communities, as well as for rural communities, access to water still is the area requiring the largest investment. Adding accredited water sources often produces the greatest possible improvement in fire protection, as measured by the PPC program. Extending water service to new areas of a community can reduce insurance premiums for property owners in those areas, even if the community's overall PPC remains the same.

Completing the catalog of changes made during the last three years, 69% of the fire chiefs reported that their communities had upgraded their emergency communication systems. And 74% noted that they had increased training requirements for their firefighters, though it's not clear how much of the training is for traditional firefighting activities and how much relates to the many other activities that fire departments undertake today.

Challenges to come

Looking to the next three years, 81% of the fire chiefs and other officials said that growth is likely to strain the resources of their departments even further. Among fire chiefs responsible for areas that experienced heavy or moderate growth over the past three years, 90% anticipate even more strain on resources. And departments with superior fire protection services, as measured by the PPC program, are the group most concerned about the situation.

Not surprisingly, 77% of the respondents believe the growth is likely to occur most often in areas where they need improvements to water mains, hydrants or hauled-water services. Fifty-one percent believe the growth is likely to occur most often in areas where they need more fire stations.

Whether communities will make the necessary changes — or even keep pace with growth — remains an open question.

Adding to the challenge is this singularly interesting fact: 54% of the chiefs believe that the building materials and construction techniques introduced over the last 20 years have made it harder to fight fires. Among chiefs who represent communities graded PPC 1 to 6, the number is even higher — 62%. Precisely which materials and techniques have caused the most problems is another subject for debate.

If fire departments are to meet the needs of growing communities, particularly the expectations of a citizenry intent on stretching community boundaries and building expensive homes and businesses in outlying areas, the rate of fire service change must accelerate even further. Most respondents acknowledged that challenge by citing changes they expect in their communities during the next three years. Twenty-nine percent believe their communities will open one or more fire stations; 32% anticipate changing at least some response areas; and 43% foresee new automatic-aid agreements with neighboring communities.

Seventy-six percent of the respondents expect to increase training requirements for firefighters. And 65% anticipate upgrades to communication systems. Similarly, according to the respondents, 71% many communities will be installing hydrants areas and 32% will be adding hauled-water operations.

The chiefs of departments providing superior fire protection, as measured by the PPC program, indicate that their communities are not immune from problems associated with growth. Those communities will need to invest in additional service enhancements just to keep pace with demand.

Obstacle course

Considering the costs associated with needed service changes and the scarce resources available in local budgets, it's not surprising that an overwhelming majority of fire chiefs and other officials — 91% — said obtaining the necessary funding will be a significant obstacle to making improvements.

Eleven percent of the respondents said that, over the next three years, they expect their communities to consolidate fire districts to save money. And 7% expect their communities to close stations. Taken together with the 91% who see funding as a significant obstacle, those figures raise serious doubts about whether many communities will be able to keep pace with the growth. Facing multiple priorities, record budget deficits, a weak economy, and enormous pressure to contain expenses, many communities may be unable to maintain current service levels, let alone undertake significant expansions.

Funding is the largest potential obstacle to making improvements in the fire service, but not the only one. According to 79% of the respondents, recruiting and retaining fire-service personnel is another obstacle. The survey findings also reinforce the commonly held belief that the personnel issue hits hardest in smalltown volunteer departments.

Three out of four respondents noted the complexity of identifying and planning the most effective improvements for their communities. However, many fire chiefs have come to rely on the PPC program for help: 64% said that, during the last three years, they have used the program to plan for, budget, or justify improvements or changes in their fire protection. And 76% say they plan to use the program that way during the next three years.

Of the chiefs who said they had used the PPC program in the last three years, 94% plan to use it again during the next three years. And 91% of the communities that have experienced heavy growth in the past three years plan to use the program in the future.

At 69%, the vast majority of fire chiefs continue to be concerned about their ability to access adequate water supplies. In that context, one very disturbing finding emerged: 46% of the fire officials reported that getting cooperation from the local water company is a significant obstacle to making fire service improvements.

Insurers' high stakes

Every year, fires injure more than 20,000 people. Every year, more than 3,000 Americans die in building fires. Those statistics are tragic. But information about the economic cost of fires is also compelling in its own way.

Property insurance companies pay claims for losses arising out of any number of causes — from a burst washing machine hose to a major hurricane or earthquake. However, in terms of dollars paid by insurance companies, fire constitutes the single largest cause of property loss. In 2000, for example, fire and related losses came to more than 35% of all homeowners losses, compared with about 23% for water damage and freezing, 20% for wind and hail, 5% for theft, and 11% for all other homeowners property losses. In contrast, liability claims accounted for only about 6% of homeowners losses. In the decade from 1991 through 2000, fire losses for all lines of insurance, personal and commercial combined, totaled more than $122.9 billion.

Let's put the numbers in perspective. After a full century of ever-improving fire protection and building codes, tremendous advances in fire-suppression technology, the installation of millions of commercial sprinkler systems and residential smoke detectors, repeated fire-prevention campaigns, and dramatic gains nationally in the effectiveness of firefighting capabilities — after all that — fire is still the largest single cause of insured property loss. If that alone is not sobering, then consider that residential and commercial development threatens the progress we've already made — growth largely in areas where the communities need more fire stations, where water supplies may be inadequate, and where resources are scarce.

How will insurance companies react to the strain on local fire departments? Insurers have historically supported initiatives that save lives and property. Companies have promoted stricter codes, supported fire safety, and provided discounts for loss-reduction features such as sprinkler systems and central-station fire alarms. Everyone benefits from measures that save lives, reduce property damage and help businesses recover quickly. For insurers it's a matter of good public policy and good business.

On the other hand, property insurers also are likely to increase their focus on underwriting details that signal greater exposure to loss. Demographic shifts — particularly an increase in building stock and home values in marginally protected or unprotected areas — are likely to attract the greatest scrutiny.

Moreover, sophisticated insurers are more likely than ever to conduct detailed analysis of the properties they insure. Even when insuring properties in an area with superior fire protection, companies still need to know whether a particular high-valued home is within an appropriate distance of a responding fire station and within reach of a hydrant or other accredited water source.

Insurers' analysis may be limited to fire or wildfire exposure, or they may integrate other geographic-based information, such as hurricane exposure, along with information from claims histories. It's hard to imagine a prudent insurer not wanting to know whether the $500,000 home it is insuring is in an area without fire hydrants, is exposed to high winds or storms, or has a history of water-damage claims.

The stakes are even higher for insurers issuing policies covering commercial property for fire and business interruption.

Power of technology

Gone are the days when insurance underwriters ignored the details of community fire protection and focused solely on the PPC grade. Today, computer technology developed by the ISO — and already in use at many insurance companies — can deliver details about the available fire protection services for a particular street address anywhere in the United States. Having that information at their fingertips gives insurance underwriters the confidence to price business according to the risk of loss, market aggressively in areas where protection improves and recognize certain improvements with lower premiums.

In the recent survey, fire officials said that they have made many improvements in their services, but that they need to do more to keep pace with growth in their communities. They will continue to be vocal proponents of measures that protect lives and property.

In the battle against fire losses, one of the insurance industry's most important weapons is the PPC program. Property insurers support the program because they recognize the important link between better fire protection, lower losses, and reduced premiums.

Today, insurance companies representing more than 97% of the personal and commercial property market in the United States rely on the PPC program. They use it to identify opportunities to write new business; to help achieve a reasonable concentration of property risk; to review loss experience in various rating territories; and to price policies, offer coverages, and establish deductibles for individual homes and businesses.

Fire departments also rely on the PPC program because it helps them plan for, budget and justify expenditures that reduce property damage from fire.

The ISO is committed to strengthening and deepening the partnership between the property insurance industry and the fire service around the country. We believe that collaboration benefits everyone.

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Patrick McLaughlin is the senior vice president for risk decision services at the Insurance Services Office Inc.

Perceived Improvement Hurdles

Necessary funding	91%
Recruitment and retention	79%
Adequate water supply	69%
Water company cooperation	46%
Source: ISO, ORC International

Keep iso up to date

Your community can benefit by keeping ISO apprised of its changes. If the level of changes indicates that ISO should visit your community to reevaluate your PPC, ISO will make an appointment at a time convenient for you. But even if the level of changes doesn't warrant a re-evaluation, the changes you've made can lead to premium reductions for individual homeowners and businesses.

More than half the communities ISO re-evaluates in any year receive better public protection classifications. (Only about 2% receive worse classifications.) So it pays to let ISO know about any change that could affect your PPC such as a new fire station; revised response-area boundaries; a new automatic-aid agreement; or installation of water mains, hydrants or hauled-water capabilities.

Sharing information with ISO is easy. Under the Community Outreach Program, the organization works with fire departments, state agencies, national and state fire associations and insurers to collect information on changes. Through this program alone, ISO contacts more than 14,000 communities every year.

But if you don't want to wait for ISO to contact you, you can contact them. Call 800-444-4554, and select option 2, or visit www.isomitigation.com.

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