Imagine taking a test wherein your answers will affect thousands of people. You have not been informed of the value of each question (of which there are hundreds), but every point gained or lost could potentially cost thousands of dollars.
You can only prepare for your test with a textbook similar to the one the questions will be drawn from. It will take about three years to get your results: Oh, and the test-givers are paid by someone who will benefit if you happen to lose points on the test.
Welcome to the strange world of fire protection level ratings issued by ISO, a for-profit corporation otherwise known as the Insurance Services Office.
The City of Hood River Fire Department recently received the results of their ISO “test” and subsequent three-year-long appeal process and received some disheartening news: a downgrade from a Level 3 to a Level 4 ISO rating. That rating is now affecting insurance premiums throughout the city.
“As fire chief I don’t have the ability to control insurance rates,” said Chief Devon Wells, “but I do have control over the operations of my department. I want people to understand and rest assured that Hood River Fire and Emergency Services is a quality organization that continues to provide excellent services in fire protection, fire prevention and emergency services.
“We are better able to provide more services now than in 1993 (when the original Level 3 rating was awarded),” he said. “I will do as much as is possible to improve our rating and help residents see a decrease in their rates.”
Wells has been working to fight the ISO downgrade since receiving the first rating drop notice (to Level 5), in 2009. His appeal document was submitted in 2010 and the re-evaluation notice was finally issued by ISO in March of 2012, improving the rating back up one notch to a Level 4 — but still below the original 1993 level.
The latest evaluation occurred prior to the completion of the new facility and upgrades in equipment, and does not reflect the city’s pending upgrade to the water system capacity and flow.
Within the last few months, local insurance agents have begun receiving calls from their clients who have reported big increases in their fire insurance premiums, sometimes as much as 10 percent over previous bills.
Farmers Insurance agent Tony White investigated on his clients’ behalf and found the rate increase was tied to the downgrade in ISO rating.
“I do not know how many homes are in the district, but I am certain the combined affects are significant,” said White. “This may seem insignificant, but it causes each homeowner’s insurance premium in the fire district to go up roughly 10 percent.”
With over 2,000 homes and close to 600 businesses served by the fire district, that annual increase translates into very big insurance company revenues at the corporate level. Local insurance agents do not control or directly benefit from the increases.
Virtually every fire department in the country receives a rating from the private ISO corporation based on a series of questions and an occasional site visit. ISO services are paid for by insurance company subscriptions. Those insurers then use the ISO rating to determine what rates to charge for fire insurance in each community.
According to Wells, fire chiefs across the country dread the ISO rating because the process is shrouded in secrecy and yet affects public perception of the fire department’s effectiveness.
And, although fire departments willingly allow the for-profit ISO into their stations, they are not provided all the information necessary to understand how the ratings are calculated, and are provided limited specific details on the way to improve their own ratings.
“Their ratings are not based on the National Fire Protection Association standards, which we follow. We don’t actually know how they arrive at the scores they give us in many of the categories they evaluate,” said Wells, “which makes it very hard to make the changes needed to improve our ratings.” The site visit from ISO in 2009 did not include a visit to the dispatch center or participation in an actual drill, incident or staff training. Wells notes that a few hydrants were tested and some equipment was inspected. Primarily, the rating is based on a set of written responses to questions.
And here is the heart of the matter. The ISO is not a governmental agency rating the safety of a community based on their fire department’s capabilities. They are in fact providing data, derived from insurance actuarial tables tied to written information provided at each fire department, and they are paid by the insurance companies to evaluate the data on their behalf.
When contacted and asked to explain how the rating system worked, ISO employees referred the reporter up through several levels of staff and finally to a marketing company to respond to questions. Ultimately, ISO did not provide any specific details on how their rating system worked or how the Hood River Fire Department compared to similar size departments or communities.
Perhaps one of the ironic points in the fire department’s newly received ISO rating is the fact that a Level 4 rating is considered very good in comparison to most other cities and towns in the state of Oregon. Only 12 percent of other fire departments have a Level 3 or better.
“A Level 4 is still a very good rating,” said Wells, “but honestly, we haven’t done anything significantly different to receive the downgrade. We are actually now able to provide much better service than in 1993.”
ISO provided Wells with the final scores (but scarce detail on how the scores were derived), noting that three categories received a significantly lower score than the original 1993 Level 3 rating.
Those lower scores included the water supply system, the dispatch system and a mysterious category referred to as “divergence” (which contained a mathematical formula used to reduce overall ratings.) Lower points were assigned, even though Hood River’s water supply has remained stable and the dispatch system has received significant improvements since the 1993 site visit.
Wells and City Administrator Bob Francis have been combing through the ISO evaluation to determine if and where there are potential interventions that may be undertaken to improve the city’s rating.
“We will do a cost-benefit analysis and try to find some low-hanging fruit in order to make improvements,” said Wells, who is attempting to get specific guidance from ISO on those points. One identified possible improvement Wells hopes to address is an increase in hydrant inspections.
“With additional staff, perhaps a half-time person, we can conduct more hydrant inspection and maintenance operations,” said Wells, who notes that this could remove the slight downgrade received in that area. Personnel budget cuts over the last few years have decreased hydrant inspection and maintenance staff.
Wells also hopes that the completion of the city water main replacement project will increase water pressure and flow thereby improving the overall water supply system rating.
As for the dispatch system point-losses, Wells did some checking and found that Parkdale Fire District, who uses the exact same dispatch system, received a higher score in the same category.
“I’m following up on how that could be,” said Wells. “It is the same system and I’ve got to wonder how they could have been given more points for it than us.”
Wells, however, does not feel daunted by the covert rating process but instead, like any good fireman, is up for the fight.
“I plan to do everything in my power to ensure our department receives a fair rating and our residents continue to have fair insurance rates,” he said. “We have a dedicated staff and volunteer force. We have a tremendous facility and great community support. We are proud and confident of our knowledge, skills and abilities and I know that we provide excellent service to our community.”
Wells invites anyone concerned about the rating to view a copy of the document at the fire station or to set an appointment with him to review the rating scores while he and Francis continue their efforts to address the downgrade and submit a second request for reevaluation. ISO generally only provides re-evaluations every 12 years.