ISO is not what it used to be for many of us.

I am constantly confused with some of the discussion about ISO. Some people seem to think it is some sort of Government  regulatory agency that holds power over the fire service. “We are rated at 5, plus we were mandated to upgrade our tanker from 2000 to 3000 gals.” How does the ISO “MANDATE” anything?

An article on this site constantly makes statements such as, By lowering the communities ISO rating there will be a decrease in the insurance rates. This rate decrease should offset the costs of the improvements.” With no caveat that this does not apply to everyone.

I would question broad comments such as above and, “The ISO rating is then used to determine the insurance rates for the community that the fire department is responsible for.” And “ISO is the principle provider of insurance underwriting, rating and statistical information that is sold to the insurance industry.”

Perhaps this is true in your state, but not in mine.

I would like to point out that some insurance companies, in some states, use ISO’s data to determine premium rates and some insurance companies still buy their information.

For example, since 2001, the largest home insurance company in the U.S. does not use ISO unless state law requires them to do so. State Farm does not employ the ISO, Public Protection Classification (PPC) rating to set rates. They use a system called the “Subzone Rating Factor System” which is roughly based upon the actual fire loss in a zip code. (See: ISO ratings no
longer a factor for State Farm


I have been told, by State Farm Agents, that some other (smaller) insurance companies just use State Farm’s ratings and premiums as their guidelines, but I have not found a way to verify this.

Some very populated states, such as Texas and Illinois do not require insurance companies to use ISO. Should we really we be putting all our eggs in that basket anymore? Should ALL of us rely so heavily on ISO to justify our budgets?

I have seen fire chiefs (in Texas) stand up before city councils and state unequivocally that a better ISO /PPC rating will mean that residents will pay lower insurance rates. I once saw this in an affluent community where possibly as many 50% of the residents have State Farm.

I have to wonder if the continued importance of ISO might be merely based on the historical dependence upon it to get funding. Fire Chiefs want to able to point to an agency (in this case a pseudo-agency) and say, “We are required to have this and that resource.”

Some day, a smart city council member, who doesn’t support the fire department, will embarrass a fire chief who says “Better ISO/PPC rating = lower rates.” This councilman will say something like, “I have State Farm, will it lower my rates?” He will than go on to say, “What other insurance companies don’t use ISO/PPC?” And perhaps, “What percentage of the population of this city will actually see ANY reduction in premiums from these changes? It will be an embarrassing day for that chief.

Should we prepare ourselves for justifying our needs by other than ISO/PPC scores? Or should we just keep pretending that ISO matters like it once did and hope city councils and anti-government activists don’t find out?




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Replies to This Discussion

I agree ISO is not what many think it is. ISO works for the insurance industry not you or me. The only thing I can add to that is ISO is a needed evil, until something better comes along. My I also add to that NFPA is not what it used to be. But there has to be some kind of standard and some kind rating system out there and right now that is NFPA and ISO. You do know NFPA is not a government agency.

I know of many FD’s that have not had a structure fire is years, can this be used to say they are better prepared? or Better equipped? or Provide better fire prevention? NO!

Right now NFPA gives the guidelines on what should be on first out engines, tankers, service and ladder trucks. Does your local agent understand or know what a smooth bore nozzle is or a fog nozzle? Do they understand what a fire load is? Do they know the difference between a pressurized hydrant or dry hydrant? There has to be a rating system and I would like to see one that deals more with what we deal with in our areas daily and more realistically but they are using NFPA, AWWA and OSHA as their guide lines and for the most part they are fair with the ratings when you understand what is needed.

You commented they said you needed a 3000 gal tanker. How many tankers? They base this on your highest fire load and your delivery method. What size pumps do you have on your engines? Where is your closest water source? Do you use pressurized, dry hydrants or Turbo Draft?

Most and I say this not demeaning, but we have been dealing with ISO for over 16 years and have completed over 100 inspections a year. Most do not really understand rates can be reduced for rural area (not just cities) and we are talking to 3’s and 4’s with volunteers when you understand what is required.

We just completed an 8,000’ 5” LDH hose lay in North Montgomery, TX. Flowing 750GPM at the tip in 9 min. 55 sec. and this is just one department in Texas. Check with Lake Conroe, Teague, Cut-N-Shoot and New Waverly just to name a few of the Texas FD’s we have worked with.

As I stated in my blog comment we were contracted by State Farm to help them develop what they are using now and they still use ISO and PPC classification when figuring their rates. If they didn’t they would not know how equipped a FD or the community really is to handle what could be.
Perhaps I didn’t make my point well.

On the front page of this group there is a topic from someone that begins with, “We are rated at 5, plus we were mandated to upgrade our tanker from 2000 to 3000 gals.” My point here was that people apparently somehow believe that ISO can mandate, that is to say, FORCE you to do something. It is not a government regulatory agency. It can’t mandate a change.

My other point or question concerns the validity of the claim that “Better ISO rating = lower insurance rates.” Something I see all the time even in states where State Farm and other companies are not required to use ISO to set premiums.

I have to agree that many Texas fire departments either believe that the ISO rating influences all insurance premiums or at least they want their city councils or citizens to think so. They even proclaim it on their websites. I believe that there are many Texas fire departments who, because of this belieif, would hire someone to help with their ISO/PPC rating.

Last year there was a big news story about McKinney TX. Their press release stated that someone could see a savings of $100 per $100,000 value in insurance. They didn’t mention anything about a large percentage of their citizens would see no savings at all. (They did finally admit that perhaps 40% would see no savings.)

Here is what another large Texas city says on their website. Out of respect I will not say what city this is.
“A PPC rating has a direct bearing on the cost of property insurance for every home and building in a community.”
Do you think that is an accurate statement and if so, tell me why and can you show me the evidence to support that claim?

Since a number of insurance companies no longer use ISO, why is it “a needed evil”?

You said, “We just completed an 8,000’ 5” LDH hose lay in North Montgomery, TX. Flowing 750GPM at the tip in 9 min. 55 sec. and this is just one department in Texas. Check with Lake Conroe, Teague, Cut-N-Shoot and New Waverly just to name a few of the Texas FD’s we have worked with.”

I see it from this comment and your blog response you provide some sort of service and therefore have a vested interest in fire departments continuing to value their ISO rating. When you work with these Texas fire departments do you ever discuss the true impact ISO ratings have on insurance premiums? (I am not saying you don’t. I am just wondering.)

And let me say that if you are helping some of these rural departments improve their services to go from a 9 to a 6 or better, I applaud you. Many of these departments need help to improve their service to the community.

You said, “Right now NFPA gives the guidelines on what should be on first out engines, tankers, service and ladder trucks. Does your local agent understand or know what a smooth bore nozzle is or a fog nozzle? Do they understand what a fire load is? Do they know the difference between a pressurized hydrant or dry hydrant?” They don’t need to know. Whether they use ISO/PPC or the Subzone system, they just enter your address into a computer and your rate pops up. If we have NFPA standards, why do we need ISO to tell us what is needed too? (And yes, I know that NFPA is not a regulating agency, but that is an entirely different discussion on why the standards carry the weight they do.)

You also said, “As I stated in my blog comment we were contracted by State Farm to help them develop what they are using now and they still use ISO and PPC classification when figuring their rates. If they didn’t they would not know how equipped a FD or the community really is to handle what could be.”

They don’t know, nor do they care.

Let me say that I work for a large fire department and we really don’t worry about our ISO rating. We did until 2001, when State Farm abandoned it. Don’t get me wrong. If it is convenient, we do things that will possibly help our rating. But usually it is because it is simply a good idea to do certain kinds of training. We would do those drills even if ISO didn’t exist. We also don’t want to just ignore the people who might have to pay an increased premium. But to be honest, we are a “2” now and I don’t think we really care if we are ever a “1”. And with the abundant water supplies we have (a hydrant with a large main every 300 feet) we probably really don’t have a need to worry about it. (Let’s don’t start on what all we need etc. That was just one example of how well we happen to be equipped.)

Also keep in mind that the Texas Board of insurance only started allowing ISO/PPC data for setting rates in around 1996.

The bottom line here is that I still disagree with your claim that State Farm still uses ISO/PPC rating for homeowners in Texas and some other states. I also have to wonder, based upon the articles below, if State Farm cares how much supply line is on an engine in a given community. I provided links to articles to demonstrate how State Farm has abandoned ISO/PPC in favor of a system that just looks at actual loss in a zip code. Here they are again, with excerpts. If you are claiming otherwise, please provide documentation. I really want to know.

I also disagree with the common practice of using ISO to get more stuff by fire departments. We need to learn how to justify our needs without relying on this antiquated system.

But to give you the benefit of a doubt, I will call my State Farm agent and see if anything has changed in the past three years since I last spoke to him about it. If I am wrong I WILL report so here. After all, I have no interest in anything but accuracy.

Fire Chief Magazine
“ISO ratings no longer a factor for State Farm”
Apr 1, 2001 12:00 PM
“Although a recent survey revealed the importance of the Insurance Services Office's Public Protection Classification program to fire chiefs, State Farm Property/Casualty Insurance Group has announced that it will no longer use the popular rating system.”
Dec. 7, 2009
“Smoke but no fire where State Farm abandons standard fire ratings”
“State Farm is phasing out its use of an industry standard fire-protection ratings system.
"At issue is the Public Protection Classification (PPC), provided by the Insurance Services Office (ISO). The PPC rates a community's fire-fighting ability by examining factors including the local fire department's staffing, training programs, resources, and even the time it takes for a fire engine to get to your house.
These fire ratings have been used by every insurance company to set rates for home insurance policies."

State Farm has decided to use its own fire rating system, where allowed by law. The new system uses State Farm’s home insurance claims data to rate a community’s fire-fighting ability. According to Kip Diggs, a spokesman for State Farm, relying on its own claims data gives State Farm a more accurate rating.“

The Texas Department of insurance simple states on their ISO Q&A page.

Do PPC ratings vary from company to company?
“Yes, it can, because some insurance companies do not use ISO.”

Insurance Times:
State Farm drops ISO homeowners rating to use own data Insurer says it can save money and gain flexibility by using its own claims database instead of ISO’s Public Protection Classification Program
August 21, 2001, Vol. XX No. 17

"State Farm is using its own sub-zoning rating system to set homeowners insurance premiums in much of the country -- replacing the Insurance Services Office (ISO) program favored by the majority of the industry. The company has already launched the new system in 35 states including Connecticut, Massachusetts, New York, New Hampshire, Vermont and Rhode Island.

Homeowners insurers traditionally rely on the ISO’s fire protect system, known formally as the Public Protection Classification Program, to help calculate rates. The system uses information including regional fire claims and local fire department training and equipment data.

Money Savings
Kip Diggs, a State Farm spokesman, said his company’s saves money and can expand service by using its own data gathering system.
“Instead of going to a separate vendor to get this information and get this rating, we can simply go to our own tables and go to our own information,” he said.
“And that savings is something we can factor into pricing our customers are paying for homeowners insurance.”
Update Feb. 25, 2011-

1. I called my State Farm agent who said that, in Texas, they did not use ISO, but rather their own internal system that divides up a county. But just to be sure, and get more details, they would contact their underwriters and ask the same questions. I was called back and it was explained that they DO NOT use ISO for homeowners insurance rate calculations. They use their own system which rates an area from 1-7. For example, regardless of the city of Dallas' ISO rating, it may have several different scores, depending upon the many regions the county is divided into. The small suburb I live in (in another county) has an ISO rating of 2, but a State Farm score of 1. They were a little guarded about how they determine their ratings, but they were firm about not using ISO.

Of course in Georgia this would not be true.

2. BTW – Regarding your blog page; If I were to post a picture of me in uniform with a blog or article promoting or endorsing a private business that was my off duty job, it would be considered inappropriate and I am confident I would be lucky if I wasn't fired. A chief officer would probably be quickly demoted at the very least. Be grateful you don't have that to worry about.
I did a little more checking.

I am told that State Farm divides a county into subzones beyond the 1-7 score and perhaps even smaller divisions than that, to determine your premium rate. They also (reluctantly) admitted that your credit score might be a huge factor in what you pay for insurance.

Work on that credit score. It is used for everything today. The first thing many employers do is check your credit score. Insurance rates are just one example of how your credit ratings affect your life.
Bob, yes, the company I work with provides a service and the picture is one of only a few I have of myself. (I don’t stand still long enough to get pictures or I’m the one taking them.) This was from a ceremony last year for the new chief of a department we helped to build up from total volunteer to a combination department. I severed as Asst. Chief and helped train and provided procurement services; I’m a gun for hire. I volunteer for my community FD and serve in many positions. Let me also add we help departments find the best deals on equipment and make no financial gain other than or contract and believe me they get their money’s worth and then some, just ask them or my wife.

I understand what you are saying about State Farm (SF) if you remember I stated we were contracted by SF to help them put this together. Just understand they do whether they say it or not still use ISO as a guideline because they compete against local agents who do use this information. There is no rule in any state that the agents cannot quote lower then what ISO rates a community. All agents take into account conditions and materials of a structure and distance from the FD and water sources. That is why you may pay less or more than your neighbor for the same square foot. SF has done nothing really that different, they just quit paying someone for the information.

Usually Farm Bureau set the rates for many of the smaller areas and they follow ISO. Major cities have had a strong FD for years and this is where SF sells most of their insurance. You cannot get homeowners insurance with SF for many small communities or you couldn’t afford it.

All in all ISO has helped drive many communities to improved services. No, ISO cannot mandate anything, they provide improvement statements. I believe that statement to be a misquote or a misunderstanding. Also understand ISO does not know it all and we have made improvements that ISO said couldn’t be done, but once we showed them the way they concede. We were the first to take a rural area with no pressurized water and volunteer staff using dry hydrants to a class 5 over 16 years ago. By the way we now use Turbo Drafts and have been rated by ISO at over 900 GPM at the tip. We have used this for major cities like Cape Coral, FLA where they had no pressurized water in half the city and in Colorado, Georgia, Texas and many others.

We understand what they are looking for and have helped them to change their ways. Many departments do not understand how to challenge ISO or think that booklet (FSRS) is all they use to grade. ISO uses over 10 manuals with thousands of pages to figure a grade. Some even believe that the rep is there to help them and provide advice to their betterment. Most of these guys are data gathers and have never been a firefighter. Most do not understand the system themselves; the home office sets the grade.

You said you are a class two, that is great and yes there is little need to look at a class 1 except for bragging right as they may be. If you started reducing staff and equipment they will take notice, just ask Atlanta. Now what if you shut that department down? You stated the insurance company didn’t care about how prepared a department is to handle fires. If you remember insurance companies where the diving force to pay departments for protecting their clients home, I understand what you say but for real look at what insurance rates would be if you were not there.

The fire service is a misunderstood and underappreciated group there are a little over a million of us protecting over 300 million citizens and Trillions of dollars in property. Over seventy percent of our fire departments and brothers are volunteers. If we went away the insurance company would care and the better prepared we are the better they like us.

Ask any agent what the difference in a class 9 to a 6 or 4 to 3 can do for your rates. Most will tell you not that much. Why? Because it is money coming out of their pockets!

But once they realize they can sell riders for those items we just couldn’t afford to insure before, now they can make some of that money back. Now we are better prepared and the risk of their investment is reduced, meaning the odds of having a major loss and having to pay out just went to their favor.

Albany, GA just last year went from a class 4 to a 2 and Miller Brewing Company gave the FD a check for $100,000 and that was a ¼ of what they will save a year and that is just one company. We hold the ability to stimulate our own economy at a local level, even in Texas.

We would all be better if all the states did like Texas, the Insurance Commissioner and State Fire Marshall has to agree with their statements before a rate goes into effect. But, understand ISO is still in Texas and there will still have to be some kind of rating system in place to be fair. ISO is just a handicapper setting the odds for the insurance company.

In close I would love to have a chance to set down with you one day and talk. I just hate writing this out because something can be misunderstood or temperament read into it that wasn’t meant. It all depends on frame of mind. ISO could go away tomorrow and my services would still be needed. We use this so as to help communities hopefully save money that would be going out of their hands and help make it safer instead. Many departments operate on a yearly budget that is way less than your pay. All we try to do is help them get the most bang for their buck. Yours in brotherhood, Brian Cohen
That was a well written response and mostly good points.

I too fear that communication such as this and email can be taken the wrong way. I hope you didn’t feel any animosity from my posts.

My overwhelming fear is that if fire departments won’t find a way to justify their needs without ISO, or if they will lean to heavily upon it, they will be caught with their pants down at budget time.

Rural departments need all the help they can get when it comes to improving their service. Your efforts to help there are not unnoticed by me.

I will still disagree with you on one thing, but this is probably just a error on your part with a term and I am probably just splitting straws. You often say things to imply that insurance agents care about how a fire department is staffed or what some rating is. I would contend that agents don’t know and don’t care. All they do is type in your address and a dollar amount comes up. They don’t even care what the fire loss is for your area. And even though I was told that one’s credit rating is a big factor, they might not know or care what that is either. They just plug in numbers and an amount is spit out. The people who might care, or are at least closer to caring about all these things are the underwriters. They work in some dark office downtown to set rates with magical ciphers, tea leaves, and a Ouija Board. I am sure that the Illuminati are involved somehow. ISO might be in there too.
Bob, I can tell you are very passionate and somewhat frustrated as I am with the issues and problems going on in the fire service today. I could never feel animosity to a person that feels such compassion and is welling to hear and debate the issue. You challenge and that is the sign of a good Chief.

You are correct the agents don’t really care except for the fact they are legalized gamblers. You pay just in case and they collect hoping not to have to pay. The underwriter set the odds, and we as firefighters only care to help people in need with a hope someone will help us to provide the services needed. Sometimes it take something major to happen before people notice, I say we need to make people notice and help us before it is too late. Can I get a AMEN!


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