In the Insurers’ Report column, we’ll be discussing some common questions we get from insurers. If you have a question you’d like answered, e-mail us. Keep your eye on future issues for your question (and our answer).
I’ve heard a lot about ISO’s new split classifications in the Public Protection Classification (PPC®) structure. Can you explain the new classifications?
ISO examined the loss experience of communities of varying size and fire protection capabilities. Based on the results, we introduced new split classifications within the PPC structure to recognize favorable loss experience for certain communities. A split classification is one in which a community may receive multiple grades based on distance from both a responding fire station and from a recognized water source.
In our analysis, data showed that loss experience for areas within 5 miles of a fire station but greater than 1,000 feet from a water source (therefore assigned Split Class 9) was more favorable than in those communities where we graded the entire fire protection area a “Single” Class 9. The analysis noted the same favorable loss experience for Split Class 8B communities when compared with communities where we classified the entire fire protection area as a Single Class 8B. Based on that analysis, we’re introducing new PPC rules and factors to reflect the reduced loss potential.
We also reviewed loss experience for risks more than 5 road-miles from a responding fire station. We had assigned those risks a grade of 10. But data showed that risks located between 5 and 7 road-miles from a responding fire station and within 1,000 feet of a creditable water source had better loss experience than those farther than 5 miles from a responding fire station with no creditable water source. As a result, we introduced a Water 10 class (or 10W) to recognize the reduced loss potential of such areas.