Is the Insurance Service Office's Public Protection Classification system outdated or simply misinterpreted? What does the ISO rating really do for a fire department? Does a positive rating give a fire department false confidence?

ISO uses its Fire Suppression Rating Schedule in reviewing the firefighting capabilities of individual communities. The schedule measures the major elements of a community's fire-suppression system and develops a numerical grading based on water supply (40%), fire alarms (10%) and engine companies (50%). Departments are awarded gradings from Class 1, the highest, to Class 10, the lowest.

The Charleston (S.C.) Fire Department's Class 1 rating has raised many questions, and ISO Vice President Mike Waters spoke with FIRE CHIEF to answer them.

Waters began as an ISO field representative in 1979, evaluating communities' fire protection. Waters since has worked in several ISO offices and areas, including property survey, where information is gathered on commercial properties for fire and other insurance and liabilities.

As vice president, Waters' responsibilities include overall administration of technical standards and community mitigation areas, including public fire protection, building code enforcement and flood mitigation, as well as commercial property information-gathering for the purpose of baseline, loss costs and other rating and underwriting information.

What is ISO?

ISO is a licensed, statistical and rating organization in all 50 states. Our ISO operation today operates in 45 states around the country and the five remaining states are conducted by independent rating bureaus. The division I am in is directly involved in analysis, collection of data characteristics, and using existing rating methodologies in all those areas, commercial property [and] what we call community mitigation — fire, building code and flood.

Is ISO a privately owned company?

We are a private company and partially employee-owned and have been insurer-owned but [with] an independent board of directors.

How does ISO interact with the National Fire Protection Association and National Fire Incident Rating System?

We utilize NFPA standards extensively in our operation. If an insurance company wants detailed information on the construction, occupancy, and/or exposure of a commercial property in the [United States]… then ISO has a responsibility as a rating organization to establish baseline-loss costs; insurers are responsible to develop the final premium. We always like to point out that ISO is an advisory organization. We publish and make advisory information available to insurers, which they can use to make decisions on their own policy coverage and final premiums.

NFPA standards are an essential part of all of our activities in that one of the core responsibilities of ISO is in the property-fire area.

As far as NFIRS, in the course of our evaluation of communities, we record the number of incidents that are occurring within the jurisdiction of a community. We focus primarily on structural-fire alarms, but we also look at the total call volume at a communication center and once again utilize NFPA standards. We have access to NFIRS data for comparative purposes — it's not actually integrated into our analysis — but the number of calls is part of our assessment of the community's ability to protect itself from the fire peril.

Does ISO have any interaction with the Federal Emergency Management Agency or the Department of Homeland Security?

We actually perform in the three areas of community rating system mitigation as part of our business, where we conduct flood-mitigation evaluations. There is a group of property insurers, the Write Your Own, which are responsible and are the actual insurer of record for the flood peril. We work directly with FEMA on behalf of the WYO companies in evaluation of communities that apply to FEMA for participation in the National Flood Insurance Program. We conduct an analysis and produce that information for FEMA, which is then used by the insurers to write flood insurance.

We have been talking to the folks at DHS and a couple other government agencies recently because of their interest in ISO and the information we collect, the role we play around the country, and [our] hazard-related data. We don't have any current contracts with DHS. The responsibilities we have with flood program are with the WYO insurers and under the direction of FEMA's NFIP.

It has been said that ISO's rating system and evaluation process are outdated and ignore new technology.

I think it would be important to have in the back of anyone's mind the role of ISO and the use of our Public Protection Classification Program. We utilize a methodology known as the Fire Suppression Rating Schedule, a time-tested methodology that ISO has been responsible for administering since its formation in 1971.… [T]he reason that insurers have utilized this methodology and continue to use this methodology is because there is a direct statistical relationship between the PPC, which runs from 1 being the best to 10, which is unprotected. Because of that direct relationship, it says to insurers and to us that not only is the program beneficial to the communities and to the fire service, it is ultimately [beneficial] to those who may have their insurance positively affected by the ability of a community to protect themselves against fire. That the losses' trend, almost directly, is a predictive variable and the strength of that predictive variable to insurers means that they can make decisions based upon our assessment of what the communities are actually doing.

At the core of it, the ability of the community to measure through the PPC program the relative effect of improvements in a fire protection program is significant. We have a lot of interaction with the fire service around the country and a lot of educational programs. We're at conventions and conferences, and [communicate] through our field representatives deployed across the country, our management staff, and our home office staff in [New] Jersey….

The rating system focuses only on fire and not on other hazards or responses.

Fire departments have many variable charges these days that run from homeland security to EMS activities to terrorism response. The list of duties is endless … and the fire chief can point to the possibilities, but it's the insurers that have the final say [on setting premiums]. The fire chief can say to the mayor, city council or their counterparts, “I've met with ISO, done the research and if I do the following things, I may positively affect my public protection classification or I may be able to retain my classification even in a high-growth period of demand on a community or department.” That's a unique ability to project a possible financial effect of improved fire protection compared to something else.

There are a lot of important people with a lot of important responsibilities on their shoulders if you look around a city council and on departments. The fire chief can say, “if I build another station, if I'm able to equip my engines and ladders and truck companies with the following equipment or work with my counterpart in the water department or improve water protection in an area that was not served, I can show community-wide improvement or building improvement.”

To go back to your point about ISO's obsolescence, I would say that the program continues to deliver the message and the results that improved fire protection matters and can be measured in many regards as it is utilized in the PPC program.

How many fire departments are currently rated and classified?

We have evaluated almost 46,000 fire protection areas. A fire protection area is usually a community boundary; it could be a city, it could be a town or even a county, but it could also include subdivisions of communities from a fire protection or fire districts. In the Midwest and Northeast there are many fire districts that make up a town, three or four sometimes. Of those 46,000 fire protection areas visited by a field representative, an evaluation is conducted and a classification is produced.

How many field representatives does ISO currently have?

[There are] a total of 650 full-time employees of ISO. They are trained by ISO and given equipment by ISO for data collections: laptop and broadband connections. Almost all have a company car and they are exclusively our employees working from their homes and connected to us electronically, along with digital cameras that are GPS-enhanced. Of the 650, we have 90 field representatives focused directly on fire protection, building-code enforcement and flood mitigation, and the balance are devoted toward our commercial property activities.

What about ISO's lack of credit for advances in technology such as foam systems, GIS and aerials over 100 feet?

The matter of staying with technology is one for which we rely on the NFPA and the American Waterworks Association. Our methodology reflects the most current NFPA standards, so as the standards change, our evaluations change with it.

The other aspect is through the use of technology we have never had a higher demand for detailed information that insurers are now asking ISO to provide than today. Through a geographic information-based system, we have proactively mapped current fire station locations, the response area boundaries, the existence of automatic aid agreements, and the existence of public water or hauled water that meets ISO criteria. These are all mapped into a GIS-based platform and insurers — over 100 of them — are receiving information electronically as [are] the remaining 1,100 insurers that are participants in our ISO rating and underwriting information. We find that the demand for and our ability to meet insurers' needs has never been higher.

Fire chiefs can now update changes in their departments online.

On Fire Chiefs Online [a password-protected Web site at www.isomitigation.org] we have over 6,000 fire chiefs signed up. We have a proactive program to detect change where it exists around the country, and there are many changes that we refer to as our community outreach program.

Through the outreach program, we call ahead, send a questionnaire and receive responses from fire chiefs that tell us where changes are occurring. They are also given a map and can update the information online. Through Fire Chiefs Online their answers are cached for future reference, they can also see an interactive map of their protection area and can alert us of changes. They can print a small map or request a large map.

The Web site also offers fire chiefs all the commercial property information inventory. In a large community this could be thousands of buildings, or in a smaller community it could be several hundred. What we're allowing fire chiefs to see without charge is a customized summary report — rather than insurance jargon — on the construction, occupancy protection, sprinkler installed and receiving credit and whether or not there are any hazardous processes. These are all buildings that have been visited by ISO field representatives around the country and is truly the basis on which insurers are making decisions, being the same database that an insurer is seeing.

We want fire chiefs to know what we have done regarding inventory in a community and they can use it for their own planning. We give them a calculation, number of gallons per minute needed at that building to fight a fire; the water department would want to know because that is how we would compare the amount of water that would be needed at the street or hydrant level to combat a fire in that building and also for preplanning purposes. We don't warrant it as a preplan, but it's a very good start from the fire perspective on how that building was built and its likelihood of withstanding a fire with its construction and type: frame building, masonry, roof construction, occupants and the like.

How often do you re-certify a fire department's ISO rating?

We verify and validate all the information that we collect with our field representatives. The classification is established and then we maintain an updated or current-as-possible status and make a determination of a physical return to the community on the basis of the response to the Outreach program.

Whether a community would receive a visit sooner rather than later depends on how much change has occurred in that community. Community response is compared to our baseline information — if a community has built and added fire stations; added staffing or annexed an adjoining area; changed the nature or complexion of a community; added fire hydrants or hauled water operation, tankers and tanker relays. If there's a substantial enough change to trigger a revisit to the community, we notify the community ahead of time. We provide them with information as to what we're going to be talking about. We can also respond to a community on the basis of a request and as long as there's a substantial enough change or other factors that tell us it's a good idea to go back. We also go back on the basis of a request from an insurer who is interested in this area. It's a constant process of evaluation and taking updated information.

In addition to those field representatives, we also have an office-based staff in three locations: Chicago; Marlton, N.J.; and Austin, Texas — all of those folks and another close to 100 people helping assess, gather, update and otherwise support field operations in information collection.

Obviously, there is an advantage to advise ISO when items would improve a fire department's rating, but what about the opposite? How many departments notify you of changes in staffing, SOPs or water problems?

We are looking for a high response to the outreach program; when we don't receive a response, it doesn't mean we're not following up. On our own, we proactively contact communities … where we believe change is occurring or possibly update the activities that we would need to know and re-evaluate.

The process is one that we are aggressive; we reach out proactively to approximately 15,000 fire departments a year ourselves.

With 46,000 classified departments and only 90 field representatives focusing on fire, how do you “proactively” reach 15,000 departments a year?

…[T]he balance of our activity in terms of getting updated information, whether it is by speaking directly to water officials, fire officials, just in terms of the interaction we have, it's not just on the ground; it's intake of outreach responses.

We also monitor press clippings. We have an electronic clipping service where we are constantly looking for keywords and are in touch with communities in terms of changes that are occurring. It's a large effort, but would we warrant that we know where every fire hydrant change has been or fire station change or fire department change has occurred? No. Do we warrant that we are aggressively seeking that activity? Yes.

When we speak to fire chiefs, we want them to think of ISO as they add or change a station, as they add staff or add automatic aid agreements, or new water is made available that positively affects their community.

We also have a retro-aggression policy procedure with a community, where we outline to a community where there may have been changes compared to their previous classification and the possible loss of a class. We give them time, usually several weeks, to review our findings, respond back to us and give us an indication to regain their class prior to it becoming effective. We see a lot of improvements that are made where those communities may have come up short. We have approximately 150 of those communities at any time of the year and many are satisfactorily resolved.

Is that through an onsite visit?

Yes. We are in the verification and validation business and have a high degree of trust for public officials. It's not that we don't trust anyone, it's just that we are accountable to the regulators that approve our file schedules. We are accountable to the fire officials, community officials, to our customers and we also get a lot of media inquiries. Though ISO is involved in many different things with insurers, mortgage companies, health care analytics — our market is diverse — the core strength is still around the property casualty market and the highest media inquiries we get are the Fire Protection Classification Program.

Charleston was given an Class 1 department rating nine years ago, but the fire department assessment task force recently has issued 200 recommendations, including several critical operational items.

Charleston had responded to us with updated information since the time of their last physical evaluation. We have been in contact with the chief in Charleston and other city officials and we had advised the chief that although one fire is not going to change our process or our evaluation — because one fire can occur anywhere; that is tragic and that was certainly very tragic event — once the evaluation of what had occurred there is issued, we certainly will take a look at those. We would be in contact with Charleston anyway in terms of updating physically the changes that would have occurred in a growing community as in the case of Charleston.

We are considering a time limit on the rating, particularly in ISO 1.

An ISO 1 rating is frequently incorporated into logos and apparatus. Doesn't that create a false sense of confidence, as we've seen recently in Charleston?

We don't encourage that in fire departments. 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.

What can fire chiefs do right now?

Go to our Web site and register for Fire Chiefs Online.