Articles

How Fire Service Affects Property Insurance (E1)


This is information that you really need
to know and the system is changing and it’s never changed more quickly than it
has in the last five years. I have been at the tip of the spear as far
as changing the fire insurance rating index from what it was, which was an old
manual that looked like a Yellow Pages book, into what it is which is completely
digital GIS database, which allows every insurer in Canada to type in an address
or a latitude-longitude and to get very exact level of fire protection which they can
then use to determine what is the appropriate premium to charge for
property insurance. So I’ll go through the whole presentation and kind of connect all the
dots for you guys at the very end I’ll discuss the positive feedback loop but
in the back your head all the way through the presentation realize that’s
where we’re going with this: is that the entire system of Canadian fire insurance grading, it’s set up as a positive feedback loop and it works. It actually
is the reason that we have very good levels of fire protection across the
country and very low levels of fire losses across the country and why that
has really changed over the last hundred years. Going back to the history and
origins: the original fire insurance rating index was set up in 1883. And why?
It was the same story in the United States just so you know we pretty much
followed in their footsteps although in the last 30 years, we’ve kind of
diverged, and gone in different directions. But back when it started in the
1800’s fires would hit communities and they would devastate them. A fire hit a
community sometimes you would wipe out as much as 50% 70% 80%. In 1905 when the
fire when the Great Fire of San Francisco hit, it wiped out 95% of the
buildings — ONE fire. So that was devastating to the community. You can
imagine economically trying to rebuild a community after a 95% property loss. It
was literally devastating and not just to the property owners and the
municipal authorities who are trying to build a city, but it was devastating to
the insurance industry as well. When these kinds of events would occur, oftentimes insurers will actually go insolvent, they would go bankrupt. People that were insured would find out
well, they’re only going to get ten cents on the dollar for what they were insured
for. And why was this? Because the insurers weren’t charging enough premium for the
level of risk that they actually were carrying as far as insuring in these
communities. That was part of the problem. And then the other part of the problem
was the insurers really understand what level of risk what was in the
communities and the last part of the problem was the insurers capitalist
nature causing them to kinda always undercut each other so I have ever dealt
with insurers you know you can probably get them competing for your business. This has always been the case with the insurance industry and sometimes it can
actually undermine their financial stability. Because essentially you get two insurers, Aviva and Intact competing for your business and Intact wants to rate your
business for $1000 a year. So Aviva says we’ll write it for $951 syntax finds that
although they well, we’ll undercut them and we’ll do it for $925. And
at a certain point, they’re actually cutting their premiums down so low that
when a big loss happens they don’t have enough money put away to cover the
losses. And that essentially was something that was happening over and
over again and to such a severe extent that the insurers all came together and
said we’ve got to find a way to put a stop to that. And the solution
that they came up with was this. It was what the fire insurance rating index was. Which
essentially all the insurers came together in one room and these are guys that
were normally at each other’s throats. These guys were competing for business.
They were they were not friends. So they all came together in the same room and
they agreed to a set of terms. They said, “You know what? Let’s have one group of
engineers represent us all. Let’s have them create a standardized measure of
fire protection in every community in our country, publish that information and we’ll all
agree — they called it a tariff system — to set tariffs that are essentially would put
all of the insurance policies for property into these brackets of
insurance which we know now insurers refer to as protected, semi-
protected, and unprotected. Back in the day they had different terms for them. But
just be aware that essentially all the insurers came to an agreement in 1883
and formed an association. Basically they say we want to play by the same rules. Part of that was controlling line
capacities and in the insurance game, people use this term line capacity. You can think of this if you
were betting, you might want to limit your risk in terms of how many bets you want to
place of a certain type. And it’s the same for insurers. They might want to control
their risk by grouping the risks into lines. One of the things that my group
did this is starting back around 1900 was to create these fire insurance plans
so for every community or every major municipality in Canada about every ten
to thirty years we would review the community, have a team of actual land
surveyors go through and draw these maps. So you can you can actually access
these maps in any major university’s archives in Canada. They’ll be in the
section that controlled and by copyright you’re not allowed to take pictures and
what have you. We actually have a separate group that
we call the historic environmental insurance rate system, for short we call it HEIRS — these maps
are available for all communities across Canada and originally they were used
specifically to help ensure that control their line capacity. So essentially if you
were an insurer working out of Ontario let’s say out of Toronto and you
were underwriting in Regina you’d want to know what kind of the makeup of
Regina. You wanna know you don’t have 17 risks on one block, so if
there’s a big fire on that block, you get wiped out. So essentially we would
create these maps that showed the construction type and a bunch of the
details of fire protection for every community across the country. And we did
this on an ongoing basis and we continue to do it. Although the environmental
uh, the use of the maps, is now more for environmental than it is for fire
rating. Because is now we digitized all the fire rating stuff. In Canada, we have two lines of
insurance: commercial lines, personal lines. Basically personal is that property which is
owned for personal use. And in terms of the insurance community it’s typically
defined as dwellings. It also includes duplexes but typically nothing bigger than that. Just
be aware that as your building up your community we’re measuring your fire
protection in two ways one for each of these lines of insurance. That’s
something that we’re considering changing and it may actually change in the
next few years. But as it stands right now and it certainly as it
stood for the last few decades, just be aware that there are two lines of insurance
and you can be measured against both them. The commercial line of insurance we measure
on the PFPC scale — public fire protection class. You got a 1 to 10 class. Every community in
Canada has one. Hopefully you know yours. If you don’t, after today you can inquire
about it and find out what is your PFPC Class? Because we’ve already assigned it.
We’ve evaluated every community and we’ve assigned these classes. The
personalized system for dwellings we assign a separate grade, called the
Dwelling Protection Grade. And this impacts the property insurance for dwellings.
We know that a number of insurers have been using that grade
improperly for buildings that it was never intended to be used for and that’s
something that has created a bit of a stir in the industry and we may actually
completely eliminate the dwelling protection rate system at some point in the future. But be aware
for those of you involved in any kind of fire protection in your community, you should
know your dwelling protection grade. because it has an enormous impact on the insurance
rates in your community because it affects every dwelling. And typically most
communities are made up primarily of dwellings. What’s the difference in the
two systems? While the commercial line system is a very rigorous measurement, and
essentially when we’re measuring there is your ability to protect large-scale
fires and the biggest difference in this system is that we look at every
community differently. So that Community A isn’t measured against the same
requirements as Community B. Sorry, Glen, where did you say you’re from? (Audience member:) Melfort. (Currie:) So
we wouldn’t consider the level of fire protection that Glen maintains in
Melfort to be the equivalent or same level of fire protection as Regina.
Why not? Fires are fires. Buildings are buildings.
Wood is wood. Things burn. Well essentially the amount of fire risk that Glen
has in his community is very different than what we would seeing in Regina. The number
of buildings, the concentration of buildings, the separation between
buildings, the way the community has developed, the number of fires that occur
annually — all these things are very different in those two community, so we
measure them differently. And that’s one of the key differences between the two
systems. In the PFPC system we measure the risk specific to that community. Unlike the
DPG system. The DPG system we measure the risk in a
very consistent, homogeneous way everybody on the DPG system every
community in Canada is measured against their ability to protect what we call
the typical dwelling. That’s another problem with that system is that the typical
dwelling that we designed the system for in the Fifties and Sixties is no longer
the same as the typical dwelling of today. And essentially buildings have
gotten bigger, communities have started building the buildings closer together,
there’s been a lot of things that have changed how an appropriate fire
department response would occur for a dwelling than it would have been a fifty
or sixty years ago. Each fire insurance grade is made up of four key
measurements. Fire department, water supplies, fire safety control, and
emergency communications. Fire department accounts for 40%. Essentially that’s your
ability to have enough apparatus, have enough firefighters, have them positioned
in the community relative to the risk. So they can get there in the appropriate
timeframe to be effective. And what we call effective in terms of property
insurance is to actually fight fires offensively and save building. Not
defensively and let buildings burn down. In terms of the water supplies, we
measure your ability to produce what we call the required fire flows. We
publish a document called Water Supply For Public Fire Protection. Every
community has access to it. Anybody involved in civil engineering
for communities should be aware of it. Whether you have made it a part of your
local land use or zoning bylaw it’s entirely up to you. That’s one of the
most effective ways to make sure your water supply systems will be up to snuff
is that if you require all of your engineering departments to actually
design for fire flows and to make the fire flow calculation from Fire Underwriter
Survey. Because there are more than one. Just so you know there’s a hundred ways
to calculate required fire flows, and in terms of how effective the water
would be in any of those calculations, you have to consider what is the
objective of that method. I won’t get too deep into the weeds for
you guys, but just be aware that a sprinkler system is designed to activate
when a fire is at its incipient stage so when a fire just starts burning and
the room temperature hits or the ceiling temperature hits 165 degrees, this is like two minutes into a fire, one sprinkler head goes off because it’s
essentially breaks, there’s a fusible link breaks at that temperature, and when
that fusible link breaks about 10 gallons per minute comes out right there
at 10 gallons per minute at two minutes into a fire that’s enough. In fact most
fires, 99% of fires will be controlled at the point of origin with one
sprinkler head. But if there’s no sprinkler head and the building continues to
burn and more and more the fire expands and expands and expands
until it becomes a fully involved structure fire, we could then activate
one sprinkler head and it wouldn’t do anything. It wouldn’t be effective at all.
So you have to know when you’re considering which fire flow methodology
is right for your community what is the design objective? Enough
water to be there two minutes into the fire or enough water to be there at a
fully involved structure fire? Our system is specifically for fully involved
structure fires specifically. So just be aware that engineers when we implement this system
for required fire flow calculations, engineers will often push back and
it’s appropriate that they do so. Engineers will tell you well if you
want to have that big of pipe, it’s going to cost more. We’re going to need bigger pumps, we’re going to need
bigger reservoirs, we’re going to need more chlorine or whatever treatment system
that we’re using, so it’s all going to cost a bit more. But in terms of protecting
buildings from fire, that’s how much water that we’ve calculated that you
need. And we have quite a bit of experience in this. I just want to quickly mention fire
safety control, because it’s something that you know we’ll go into in a bit more
depth, just be aware that we’re measuring how well communities implement and
enforce things like building codes, fire codes, and have they gone above and
beyond? In fact I’ve been working with the Province of BC, one of the ministries
to help communities to get the authorization to have sprinkler bylaws
that exceed the building code. Some communities that have very limited fire
projection resources, maybe it’s appropriate that they have complete sprinkler protection for every
building. So these are the kind of things that we’re measuring when we’re measuring
the fire safety control. And you might think these things would be very
standardized but our experience has been that they’re not. When we measure how
well Community A Regina implements the the building code and what sort of
budget they have for enforcement it’s quite different than Community B
Saskatoon. We see huge differences across the board and why? Because it’s not
regulated. Provinces and the federal authorities have not deemed it
appropriate to tell you the communities that are running these .. making these
decisions how many plan reviewers do you need in your community, how frequently do you
need to be doing building code inspections and fire code inspections
for a permit process. You decide those things for yourselves. And just be aware
that when you’re making those decisions we’re gonna come through after the fact
and make a measurement of those and it will impact your fire insurance rates. As
I was saying the first step we do fire insurance rating is to measure fire risk
and we do in terms of required fire flows. There’s a new thing in some parts
of Canada we’ve seen six-storey combustible. I don’t I know if you guys
have started started to see in Saskatchewan yet it’s been allowed. I’m
guessing probably not, but being that it’s been around now for more than five
years in BC, it’s been picked up in Ontario too You can expect that it’ll be on your radar
sooner rather than later, so be aware six-storey combustible it’s coming down the pike. If
developers start saying in your community, we want to build 36 six-storey
combustibles down in this new subdivision, what is your policy on that?
How well is your fire department set up to fight fires in six-storey combustible? How well is your water system infrastructure set up to deliver the
required fire flows that are necessary for that and are those questions being
asked when you guys are setting up these kinds of occupancies? Be aware of this is
what we do if you ever want any kind of advice on those kinds of things feel
free to give us a call. We can help you with any of it. The calculation of the
required fire flows, the determination of what is an appropriate level of response
to your community and we we often we often do that kind of thing. You know
we will even come into communities and say you know what this particular
subdivision is something where you should be charging the developer up
front and saying you need to as a developer
provide two million dollars for a new piece of aerial equipment because we
don’t have that piece of equipment and we will need it to protect this kind of
occupancy. When we do our risk assessments essentially we go through it
at three levels: the building leve, zone level, and the community level. And at the
building level, we calculate the required fire flows for this building considering how big it is, what it is
built with, how well it’s protected with automatic sprinkler protection. We
might calculate the required fire flows for this building to be two thousand gallons
per minute. If you think in the old school way as you might think of that is
being ten hose streams because each hose stream is about 200 gallons per minute. So to fight a fully involved structure fire in this building, we need about 10 hose streams. Each
piece of fire apparatus usually can deliver about two. So we need about five
pieces of fire apparatus to deliver that, give or take. There are some pieces of fire
equipment that might be able to deliver more. But if you are designing this community
would you be asking those questions? Those the right questions to be asking
do we have that amount of equipment? Can we deliver it in the appropriate time
frame? Do we have the right infrastructure for this type of risk? We
we certainly ask those kinds of questions and when we’re calculating your fire insurance
grade, we can make that kind of information available to you. So as I
said be aware that required fire flows are the core measurement of risk when we
calculate fire protection grades. And in terms of your engineering department you should
know that term, required fire flows, it’s essentially gonna be the most governing
requirement for your water supply system. When we compare your domestic demand for
everybody to flush the toilets and showers, to fire flow, it’s probably about
a nine-to-one or a ten-to-one ratio, so when you’re designing your water supply
infrastructure and how big is your reservoir need to be? How big do your pipes
need to be? How big your pumps need to be? You need to know that term, fire flow, and
know that it comes basically into two categories: required fire flow — that’s all
we calculate your probably going to need for a fully involve structure fire — and
available fire flow — that’s what we’re going to measure at the hydrant. So when we actually
come in and measure a community, and how how effectively you’re going be able to
control fires we’re going to open up hydrants, we’re going to open up your water supply
infrastructure. We’ll do a detailed digital analysis but we will actually get hands-on and open up the
equipment, open up your hydrants and measure exactly how much water can you
produce around these buildings that you’ve allowed to be built. We map all this in as points so
each required fire flow typically we don’t do a required fire flow for every
building, but we try to do one for every block or at least every subdivision. If
the fire flow is very homogeneous in an area, let’s say all single-family residences, all
dwellings, then we might just assign one required partial to that area and that one
point would represent that area but typically like in a downtown area like this
we would calculate the required fire flows, and as you can see, on this slide, each one of
those little flame icons represents a required fire flow and that’s typically
how we would do it. It helps us in our digital analysis of how effective your
fire protection system is. Essentially once we have all of these points put
into our GIS system, we can use each one of those points– you can think of it like
a gravitational field, each one of those points the higher the required fire flow, let’s see if we had you know five of those six-storey combustible buildings
in one of these in one of these points — that required fire flow might be seven or
eight thousand gallons per minute, so essential that creates a lot of
gravitational pull for resources. To effectively fight a fire in a location
like that you might be 20 pieces of apparatus and a hundred firefighters. So
when we’re measuring how effective your fire fighting system is, that’s what
we’re measuring it against. And if you don’t have that number of firefighters
or that number of apparatus or pipes that are big enough to handle that, it’s
ok. It’s not the end of the world, we just measur it accordingly. You think of our
system of measurement a lot like the financial rating systems, you know
Standards and Poor, Equifax, all of us have credit ratings, all of your
communities I’m sure have credit ratings. Someone externally is measuring you on a
bunch of variables of how indebted you are, how many assets that you have and
they’re determining how credit-worthy they think your personal or
your government is. And once they determine that they assign a rating to
it and banks and lenders use that rating to then say we think that you can pay
back this much, therefore we’re gonna set a sign you this level of of credit, we’ll give you this percentage
of you know whatever the interest rates happen to be. So just
like the way the financial institutions do it, the insurance community does it as
well. But instead of interest being interested in how indebted you are, and
how many assets you have . We’re interested in how much higher risk have you built in
your community and how well have you set up your community to protect that
fire risk. Typically we group those points into zones to make it a little bit
simpler for especially you the communities to understand. Because it can
be difficult when you’re looking at a lot of points especially when you get
into you know larger communities where you get thousands and thousands or tens of
thousands of points, it can be hard to grasp at all. So we’ll group those
fire flows into zones we call fire flow demands zones and then we can use
that zone to measure the effectiveness of fire response across the zone in
general. And we found that most required fire flows in that zone are plus or minus 15% from
what we’ve designed as the fire flow demand. So essentially in this area you
see in the red area this community they might have required fire flow for that
zone of five thousand gallons per minute whereas in the outskirts in the yellow
zones it might be you know down to one thousand gallons per minute. Once we
measured the risk, then we can measure the response effectiveness. And
essentially the most communities they aren’t aware necessarily this is the
process that the fire protection should be set up with. Hopefully fire chiefs are
becoming aware of this, but I can tell you I’ve been in the business for 16
years, and I can tell you most communities don’t know about this
process. And largely go into their fire protection decisions based on rhetoric.
So a fire chief, or some representative of the fire department or even though
the manager of the community will just say listen you know we’re terrified that
you know buildings are getting too big we need bigger equipment, we need another
fire station. Response times are getting too long but they’re not necessarily
quantifying it. And it’s fine. I mean people did the best they could with with
what they had, but I think nowadays in the digital world, and with the system
that we created it, it’s a lot easier for people to get their head around how to
make this decision on more quantifiable sort of terms. As opposed to just saying you know generally we think that our responses
and ineffective in that area, so we’re gonna build a new fire station out there because it seems like a good idea. What we want to say is more specifically, we’ve
measured. The fire responses out there are getting to over 12 minutes and we have
under four firefighters being able to arrive, we consider that to be totally
ineffective because we’ve measured it and we know that isn’t an effective
response. To be more effective we have to you up this, or down that. And
you can always change anything. Sometimes you just have to say this is a risk that
we have to accept, and that’s fine too. It’s absolutely normal for communities
as they develop, to have more fire risk that they can adequately protect. But if
you know that, then your behavior changes. And essentially you know let’s take you on a
cottage out in the middle of nowhere and you know there’s no fire department, there’s no ambulance, there’s nobody
coming if there’s a problem. Your behavior, your personal risk
management, your personal decisions around everything that you do changes. So
it’s it’s really good to know that essentially you can measure your risk in
your community and you can use that information to determine and choose a
level of fire protection that you deem it appropriate, considering your
economics and considering the cost benefits of going to discuss in a bit. Just before
I jump ahead, when we evaluate your fire department response, we look at a lot of
different factors: apparatus one of them one of the most heavily weighted is
available fire force. And be aware that we give credit for volunteer and auxilliary
firefighters, but that credit is changing traditional model of dwelling protection
grade to get a qualifying fire department, you needed 15 trained firefighters on your
roster. What we found when we set when we set up
that system was that with 15 firefighters in your roster, we would almost
always get a response of five firefighters. In the last couple of decades that’s
changed and we’ve seen that that dropping in particular during certain
times of day. And we’re not a hundred percent sure on exactly why this is,
maybe employers are less likely to want to participate. So in the old days, everybody
participated in the fire department when the fire alarm went, guys left the
workstation and just went to fight the fire. Nowadays more employers are saying no if
you leave your place of business, we’re not paying you. So volunteer
firefighters are saying no I’m not coming out to that call. Plus more and more people have
different kinds of work schedules that might call them out of their place or
out of their community for long periods of time. People might be a working in the
patch for two months and they come home to live for two months. So during two months
where there are out in the patch, they can’t they can respond to fires. And because of
these changes in the way that we live as Canadians, we’ve seen a diminishment in
the effectiveness of volunteer firefighting and were making changes to
how we measure that to try to account for that. Because right now in our opinion volunteer fire department are probably being given too much
credit and insurance rates are lowered it in a way that’s disproportionate to
the how effective they are. We’re working to try to develop a better system of
measuring volunteer fire forces, but be aware as we do that, we’re gonna start
asking more detailed questions like how many of those volunteer firefighters
that you have are available, live in the community and are within eight kilometres
of the fire station they respond to, and work in the community and are
available to respond from their place of work, which also needs to be within eight
kilometers of the fire station? And as we start quantifying those things, more fire
departments are actually gonna be bumped down to Unrecognized, Unprotected, and
that’s fine too. It affects insurance rates negatively and yup, people’s
insurance rates go up when that happens. It sets off an alarm in the
community when people’s interest rates go up, they say what’s wrong? Something’s
gotta give here. It set off an alarm that reminds the citizens in your community
that they have a responsibility, if they want to be entitled to those lower
insurance rates, they need to take action and be part of their community fire
department and their fire protection plan and make sure that that fire protection plan
never drops below that minimum requirement. And essentially that’s one
of the reasons that were here and talking about
this specifically in Saskatchewan. For those of you
guys who have made decisions around fire protection I hope they are already aware
if you’re not, I’m gonna quickly explain the two most common standards of
reference that come up for fire departments: NFPA 1710 and NFPA 1720.
Neither one of them are mandated by law. Some communities around, in particular
the States have started to say you know we want to incorporate these and mandate
you know, we’re gonna actually make it part of our legal system. But just be
aware when fire departments talk about these and you’ll see in particular union
fire departments wanna talk about NFPA 1710, understand what that is and what loopholes or gray areas exist. Just like any document, it’s it’s a good
starting point, but it’s not the end all be all. NFPA 1710 or I’ll start off with
NFPA 1720, it’s a set of standards for volunteer fire departments. It doesn’t stipulate how
big a community needs to be to stop being a volunteer fire department and to
become a composite fire department and it doesn’t stipulate you know when a
community should go to career. It only says if your gonna follow NFPA 1720 here
are five standards of response, based on population density. NFPA for those you guys who aren’t familiar with it, it’s a set of consensus standards
mainly around fire protection and emergencies. So when I say it’s consensus
what ends up happening is basically anybody can participate in the
development of that standard and typically what happens is when they
develop a standard, to get a handful of you know, it’s just like our political
system, polarized opposites and they tend to land in the middle. And is
that the right answer?Maybe? Maybe not? I heard a great CBC article on the
fisheries in Atlantic Canada where some environmentalists were saying let’s go
ahead and do that kind of fishing some said no, you shouldn’t do any of it,
they landed in the middle. And it turned out it was wrong, and to allow any of
that kind of you know scrape the bottom fishing would completely wipe out the fisheries for
decades. And they’ll continue to allow it, even though a diminished amount of it, and it was devastating to
the fisheries. So NFPA is the same kind of thing — they tend to go from two
polarized opposites, and find somewhere in the middle. But I have to say it’s better
than nothing and for a long time in fire departments and fire protection
standards, there was nothing. The greatest thing about an NFPA is that it does
create a standard terms of reference. And if you don’t have common terms of
reference you might not even be talking about the same thing. So anytime you’re talking
with your fire department, I strongly recommend that you get ahold of one of
the two NFPA Standards: 1720 or 1710. And be aware of the terms of reference.
What is a firefighter? Does a firefighter require a certain amount of training?
For those are you guys that operate fire departments here, what is the required
amount of training that you require your firefighters before they’re allowed to
fight fires? If a firefighter dies on his way to fight a fire and has a car
accident because he’s driving fast, is he covered? That just actually just
happened fairly recently in BC and it went right to the commissioner’s office because it
created a big hubbub about, is a volunteer firefighter covered or not
covered? When do his duties start? Is it from the time is pager goes
off or when he actually picked up a hose? And it turned out when they did a big
study in BC, they found out 80% of the fire departments didn’t have certified
firefighters. And I bet if we do the same study in Saskatchewan, it would be the
same here. So what is the level of certification of your firefighters? Do
you require them to be an NFPA certified or do you require them to have some
other level of certification? And what does that certification entail? So
just be aware of these things. They’re all laid out in NFPA and 1720 stipulates
standards of response for volunteer fire departments, and their specific
population density. It can be a little difficult to get your head around at
first but just be aware. We were just talking earlier about about cardiac
arrest. There was a study that came out about cardiac arrest and how effective
response was for high-risk people that had cardiac arrest. Well, fire
departments also need to consider standards of response. So how effective
is a fire department that responds with 10 firefighters in 10 minutes? That’s a
common one that hopefully you guys are gonna become aware of in the near future
as well just become part of National Building Code and spatial
separation requirements of buildings are gonna be determined by whether or not
your response is 10 minutes with 10 firefighters. So the next question is how
do you determine do you have a responsive 10 firefighters within 10
minutes? How do you measure that? We have to go back to terms of reference and
again these are well documented and NFPA 1710, 1720 series. 1720 in
particular is great for most departments that are volunteers because it gives you
some indication of benchmarks of what you could be looking at. Should you be
aiming for nine firefighters in 15 minutes, ten firefighters in 10 minutes,
four firefighters in 15 minutes? Standards of response are important. And if you don’t have a policy within your municipality for this is
what the standard of response that we want in our community is, this is what
we’re delivering, this is what we measure ourselves as being capable of, you may
have some liability exposure there, and when you get into an incident when
you’re in court, believed me any subject matter expert is gonna be referencing
these two standards and saying NFPA 1710 says a career fire department should
have four career firefighters arriving within four minutes ninety percent of the time. So career
fire departments need to be extremely aware that if they are not adopting an
NFPA 1710, and I can tell you that I don’t know of any fire department in
Canada that can achieve that that, they need to by policy, specifically say we
are not accepting that standard response, we know that that’s not exist, but we’re
not using it. We’re using a standard of response of four
firefighters in seven minutes, 4 in 8 minutes, or 12 minutes, what it is that we can
achieve. We understand that will be less effective. Be aware also the weaknesses
of these documents that both documents like the dwelling tax-rate system are
specifically measuring fire departments effectiveness for a typical
dwelling. What is a typical dwelling? A dwelling not bigger than 2,000
square feet in total area, including all storeys excluding basements, so that’s your 1,000 square foot per storey, two storey
home with limited exposures, and by limited exposures their definition says
no other buildings within 30 metres. I don’t even know of any buildings that
exist except rural areas that meet that
definition. And it says that the AHJ the Authority Having Jurisdiction will
determine how how much better response needs to be if those criteria aren’t met. So there are these ambiguous areas, for
example if you’re dealing with a building like this, this doesn’t mean
that risk criteria, so what is the appropriate level of response? That up to
the Authority Having Jurisdiction to determine. Now and for the most part fire departments across the country have been responding with everything they have, to the best of their ability,
calling in mutual aid and auto aid from their neighboring communities and
they just do the best they can. And none of these things were really quantified.
And there wasn’t a lot of evidence used around the decision-making process but
that’s changing. And you guys need to be aware that you should be on the front
lines of using actual quantifiables. Using measurables to make your decisions
around fire protection. I won’t go into too much detail of this table because
this is essentially getting deep into the weeds, but just like I was saying NFPA
1720 has a set of standards of response, this is the set of standards of response
that the insurers use, that we use, to measure you and essentially what it is for each horizontal row that you see, it is a
required fire flow that we would have signed to a zone, just like we showed
you the Fire Flow Demands Zones, and once we decide that zone. then there is a
specific amount of fire department apparatus, firefighters, hoses, master
streams, elevated streams like we see on aerial devices, that we measure you
against having, which is not to say that you have them. It’s not a binary.
We’re not saying for example you need to have four piece of apparatus in three and a half minutes so if you don’t have that you get zero credit. That’s not how
the system works. We measure the credit in terms of 0 to 100% scale. So if for
example you’re being measured against providing four apparatus in three and a
half minutes, and you can only provide four apparatus in six and a half
minutes, we would measure you on a 0 to 100% scale and say in this case, they’re
getting seventy percent credit because they can get that amount of equipment
there but it takes them longer to get it there. And that affects your overall fire insurance rate. The other key piece that we measure is
the distribution. And this is one of the most difficult things to describe but what I
can tell you is that for every one of the points you saw on the required fire flow
assessment, we do this analysis where GIS algorithm measures how far is it
from the first responding fire station, how far from the second, how far from the
third, how far from the fourth, how far from the fifth, and what sort of
resources do we have from each one of those? Do we get one piece of apparatus or one
company?Do we get two pieces of apparatus?Do we get a pumper or ladder? The main companies
that we measure we’re not as keen in rescue apparatus. We are primarily
measuring how effectively do you fight fires, so we’re really interesting your pumper
apparatus, your aerial apparatus, or your ladder equipment, and your mobile water
supplies and your initial attacks. Those are the main four we’re going to be measuring.
Do you have them? Where are they positioned in your community? And where you put them
will directly impact the fire insurance rates. It has a huge impact. So be aware that
it’s not always wise to just put your fire station on the least valuable piece
of property even if it’s 20 kilometers out of town. You really want
to position the fire station so it gets the maximum coverage in terms of road
distance and we measure that with the GIS algorithm. Water supplies: same sort of thing that
we measure in terms of fire departments. We look at every element of your water
supply system. Do you have enough water? Pipes that are big enough? Pumps that are
big enough? All of the things that we would consider from source to the actual
point where you going to be delivering it. And the biggest issues that we see — well I shouldn’t say the biggest — some of the issues that we commonly see are
inadequate reservoir storage. So essentially actually people read our document, Water
Supply for Public Protection and at some point the document they say the absolute
minimum to be recognized is one hose stream, 200 gallons per minute for two hours. A hundred and twenty minutes. What does
that mean as to me as a designer? 200 x 120=
24, 000 gallons. That’s how big I’ll make my reservoir. That often
ends up not being recognized or not credited because essentially you haven’t
taken into account all the other things that you need to, such as domestic
demand. Some of your required fire flows are higher than 200 gallons per minute
and as such you spent millions of dollars in your water supply
infrastructure and it’s not helping you get reduced insurance costs because we
don’t recognize it, because it was under designed. It was poorly designed or it was
designed only for domestic use, and they just threw a few hydrants on, hoping that
insurers would be fooled. And I can tell you, the last 50 years, a lot of insurers
have been fooled by that. A lot of insurers were just using the system
where they would say, Property ABC is they would ask the property owner, do you have a hydrant within 300 metres? Do you have a fire hall within eight kilometres and if
you said yes and yes, boom, you get protected rates. Well as I’m gonna show
you guys more and more of the insurers are realizing that there’s a lot of
mistakes made using that system, and so they’re actually directly plugging into
the digital system which gives them a much more solid answer and what ends up
happening is that some of these hydrants if it’s not recognized, you don’t qualify
for those lower insurance rates, and then what happens is that the property
insurer changes the rates accordingly, the property owner finds out his rates
just doubled or tripled, and then he comes to you, the local government and says
what’s going on? You guys have mismanaged this water system or this fire
department and I don’t qualify for these rates anymore. It ends up back on my desk
and they often say you know we must changed your system and I usually end up
saying, no we haven’t changed anything actually,
we’ve just made it more accurate and more accessible, so as we made a more
accurate, more accessible, insurers are using it properly, they’re getting the
right answer, and it turns out that a lot of these properties in Canada should
have never gotten protected rates. They should have put the last 20 years been
paying double or triple. And if they had been, they probably would have been
knocking on your door in saying we need investment and fire protection. And you
probably could have made different decisions about the level of our
protection that you provided. When we come out your communities and measure the
water supplies for fire protection, we look at the hydrants and their
installation, maintenance, any kind of rules that you have around that. We look
at your flow testing schedule. We’ve seen a huge discrepancy in terms of how well
communities are flow testing their hydrants. Remember there’s a big
difference between flow testing and flushing. Flushing hydrants you let it run the
sediment comes out you turn off the hydrant good to go. Flow testing actually is something
totally different. You have to set up gauges on multiple hydrants, and then
open up one or two hydrants or even more to measure the capacity to flow throughout a
section of the system and it should be done at least every five years. But I
found lots of communities aren’t aware of that and they aren’t doing any flow
testing. In fact we had one in Coquitlam in British Columbia just last week where we went
into a section of the system and and the pipes were so full, just had
never been flushed I don’t think even, and especially when
we’re opening up the hydrant, you couldn’t get one house stream, you
literally could not get ten gallons per minute of it. It was a trickle coming out of
these hydrants. We’ve been in hydrants or in communities where hydrants aren’t
properly maintained and it’s like they’re welded shut. After a while though
if they’re not properly maintained and exercised and greased. They literally
they just weld themselves shut and then when the fire department arrives, they
can’t operate these hydrants. In particular with private hydrants. In your
communities I’m sure there are some properties where you have through your
bylaws required them to have some private hydrants on their property in their
design. Maybe a larger strata development, maybe a large shopping
mall, large institutions, a lot of times there isn’t a way to get the easements in, so you require them to put in some private hydrants.
Well what are your requirements around private hydrant maintenance? And
installation and flow testing, and are you actually following up on that and making
sure that these things are being done? Because when we come in and evaluate you,
what we do and in the fire insurance grading index, you’ll see when when I showed you the
results, when a property get searched if it shows private hydrants, a big disclaimer pops
up for the insurer saying Fire Underwriters Survey doesn’t evaluate private fire
hydrants because there’s no way that we could. In a city the size of Regina, there might be 1,000
or 1,500 private hydrants, all with separate private owners. So every one of those
private private hydrants, we tell the insurer, you need to set up a warranty to
make sure that that property is maintaining the hydrant. Most insurers
haven’t gone to that length. To do that. So they treat it as
unprotected. We’re going to consider that hydrant doesn’t count. Because we don’t
know if their municipalities is doing anything. And my experience has been most
municipalities our hands off with private hydrants. They don’t want the liability. We
encourage municipalities take over the maintenance of private hydrants to
require that. To essentially tell every private owner, we don’t trust you, you
you know, we like you in our community and what have you, but
when it comes to maintaining emergency equipment that’s going to determine
whether or not people live or die, whether or not we save property, we want
to be responsible and we want to actually maintain those private hydrants.
And when communities take over the maintenance of the private hydrants, even if
they don’t own them, we actually flip a switch in our system and those private
hydrants then are shown to the insurers exactly as we were told public hydrants.
So be aware. Fire safety control, I’ll just quickly
touch on, this is like we mentioned earlier. How well do you
implement your building codes? The fire codes? I did this similar
presentation for the fire protection engineers a couple weeks ago and we’re
talking to a bunch of the engineers from different municipalities and I said you
know how many of you have a certified fire plans examiner in your office that’s
making sure every one of these buildings that you’re allowing
to be built is actually properly sprinkler protected? And I didn’t get a
single yes. Not one community represented by the engineers actually had someone
that was appropriately certified checking the plans. They are 100 per cent
reliant on the engineer’s stamps. Most of you guys probably haven’t
been involved in this, but I can tell you I have. I used to check engineer’s drawings
and engineer’s hydraulic calculations and I found tons of discrepancies, tons of
mistakes, there’s lots of civil engineers, mechanical engineers out there checking
fire sprinkler drawings, there is a standard NFPA-13 it’s as big as the
building code, that you have to design sprinkler systems to, and most of these
engineers are signing off on them, they don’t have access to that document. They’re
signing off on it, you know, assuming that whoever it was that was the designer of
the technician hopefully they did due diligence and they actually had access
to the document. So be aware that when we come in and look at you guys
we’re gonna be looking at you from my due diligence perspective. If you’re
designing, if you’re responsible for designing a building to the building
code and I come in and say, you know let’s see your copy of the building code,
let’s see your checklist, and you say, I don’t have a copy of the building code well, how are you checking the building to make
sure that actually adheres to the building code, and that it’s compliant? And that’s
the kind of thing that we’re doing. Now that being said, we’re not in the
business of scolding people. We’re just measuring you on a scale of 0 – 100 percent credit and saying you know those communities that are doing
due diligence and properly documenting that, it’s very easy. We just give a hundred
percent credit. In terms of the firefighting assumptions
of the building code, I believe that you guys use the National
Building Code in Saskatchewan and you don’t modify it, so are you aware those of
you that are involved in making decisions around firefighting and around
municipal government, that the National Building Code in think it’s Appendix B
has a whole chapter or section on assumptions of the building code. Those assumptions go on to describe what the firefighting expectations are
for municipalities and I’ve sort of summarizing or pulled out a couple of the
sentences and I really want this one if you only if you ignore everything else
I’ve said today, that’s fine, you’re well within your rights to do so, but
please take one moment everybody involved municipal government in Canada
that has any decision-making authority over fire protection should be familiar
with this section of the building code from the appendix. Essentially what this clause is saying
is that the onus lies with you, those who are deciding what you allow
to be built in a municipality, the onus lies with you to control what you
allowed to be built to that which you can reasonably protect. So when I have
gone into communities, I often bring this clause forward and I’m always surprised
that most people aren’t aware of it. Essentially if you’re controlling what
you allow to be built in a community and right now in BC it’s it’s it’s
gangbusters with the six-storey combustible, communities are allowing
these to be built not taking into consideration whether or not they can
protect them and that’s a big problem. And I can tell you that it’s going to
create some liability scenarios that communities are going to get caught, and
it’s not going to be good for them. Because when you allow something to be built and
you’re the person that’s also deciding how much fire protection to provide, what
sort of equipment you need to have, are you putting the two together? If you
allow very high risk buildings to be built, are you saying to the developer at
the outset, we need this we need for a fire station in the middle of this… we
need to do this, we need to do that, we need to consider how that risk is going
to affect our whole community for the next hundred years. Because essentially when
you drop a risk like this and I go back to that gravitational field
theory, I don’t know that resonates with you guys, but you are basically dropping
if you think of that that fabric of your community on a map and we have all
those required fire flow points, when you have a big risk, you build something big
especially something that is combustible — — something that’s going to burn — it’s like dropping a six
hundred-pound bowling ball in the middle of that fabric. It’s pulling all the fire
protectiontowards that, and it will affect the fire insurance rates not only for that
property but for the entire community. Because we’re measuring your community’s
ability to handle all the risks are you allowed to be built. So when you build
big risks, the question is are you also adding an appropriate levels of fire
protection? It’s fine to build big risks. It’s no different than you think of the
brake system on a big truck’, you want to you know carry around fifty tons of
storage materials in your truck, its fine. But you need to have a braking system
that can stop 50 tons. It’s the same with your community. If you’re going to build big
risks, you need to consider how well we going be able to protect against these
big risks. I won’t get into E Comm because I don’t know many people here have much
of a focus on emergency communications but be aware that that’s one of the
other things its 10% of the grading. That we do you measure and we are
looking at how you set up your your system what sort of a paging system do you have, what sort of a call center that you have, and how effective that that whole system
works. This section goes fairly deep into the
weeds and I’ll just kind of summarize and gloss over it because, I do want to wrap
this up fairly quick. Each sub area that we measured so that, for example
for this building we said two thousand gallons per minute, we measured your
ability to produce the number of firefighters, the number of pumpers, the
number of hose streams, all of those things are measured and essentially each
one of them we assigned 0 to 100 percent score. We aggregate those into those into four
areas: fire department water supply and fire safety control and then we put
those four together into one classification to come up with your
final PFPC. For communities that have been graded in
the last six years since we develop the digital representation of the system, you
have access to your grade sheets which shows how much credit you got, in
blue, how much credit is available to you in each sub-area of the grading here in
red, and it also shows the weighting. Because some areas are more important
than others. For example available fire force is the most heavily
weighted. When we’ve grouped all of that together into one, I think that’s 19 categories of subareas of Fire
Department of the previous slide, when we group all that together into one, you can
see on the left column, that is the 19 areas sub areas of the
fire department grouped into one, and this is those four areas: Fire Department,
Water Supply, E-Comm and Fire Safety. When we say each one of the areas is 0 to
10, or 1 to 10 relative class, or the final PFPC is a 1 to 10 relative class, you
could directly think of that in terms of the percentages. So if you’ve got 0 to 10
percent credit, it’s a Class 10. Ten to twenty percent credit is Class 9, 20
to 30 percent credit is Class 8, if you’ve got 90 to 100 percent credit
credit, it’s a Class 1, and those classifications when we have aggregated all that
information together, essentially drive the insurers line capacities. So if you’re an
insurance company and you are interested in insuring in Canada, you
incorporate all this information into your business model and you set your line capacities accordingly to the protection and recently we’ve been
undertaking a bunch of actuarial studies some of them are strongly indicative
that it’s not only a good predictor of fire loss severity, it’s also a good
predictor of other types of perils and the severity of losses, and we believe
that it has to do with the PFPC is a pretty strong indicator of how well
governed a community is. This is the DPG system. I’m just gonna quickly gloss over
how we work in the DPG system. It was originally a 1 to 5 class system. Class 1
represents a career, class 2, composite levels of fire department. Three was originally
volunteer, and it’s still volunteer, but now three is split into A&B so
it’s volunteer with hydrants and volunteer with a shuttle. So that’s 3A and 3B. Class 4 is typically a fire department that has some
significant deficiencies and as such we recommend insurers treat it as
unprotected. Some insurers might give it some limited recognition. The basic
requirements for the DPG system because it’s very simplified are all covered in
on our website. You can visit the fireunderwriters.ca, click on dwelling protection grade, and it says what the specific prescriptive requirements are for each
one. I’m just going to jump to a new one because you haven’t seen this
in Saskatchewan yet but it’s fairly popular in Ontario and its recently
become popular in BC. It’s something that we have split out the 3B Grade into two
separate categories, as well and one of them is 3B-S or STSS and that stands
for superior tanker shuttle service, and it’s an accreditation process where fire
departments which you typically would use three to five tankers of mobile water supply
apparatus in conjunction with their normal system can deliver the minimum or
more than the minimum that’s required for hydrant systems in areas that don’t
have hydrant protection. That’s a mouthful! I want to hang on this one just a second – again this is probably pretty important for anybody has an area that
has some properties that don’t currently receive hydrant protection, it’s something
that you should be thinking about because hydrant protection versus not
hydrant protection has a huge impact on on the property insurance rates, at so if
you can get this 3B-S accreditation for a fire department to deliver the
superior shuttle service, it can have a pretty dramatic impact on property
insurance and it can be done fairly cost effectively. We’ve seen a number of
communities do it where you know the difference is in the, to the tune of
millions of dollars in property insurance. What do we do with all this information?
What’s this system we’ve been building we’ve talked about the digitization of the grading
index, like I say this was all published in a book that you can imagine, people
that were living 50 kilometers outside of Regina, when they wrote their mailing
address they would just use Regina as their mailing address, even
though they aren’t in Regina and they don’t get fire protection from REgina, well a lot of insurers were giving them
the appropriate fire insurance grades for Regina because the insured said my house is in Regina. So that created a lot of the problems with the current
system that we have and the digital GIS system that we’ve created really solves
that. And what we do is we layer in a bunch of information and I’ll quickly
kinda go through a few slides to show you what we essentially do what
information we aggregate to come up with the final fire insurance grade but you can think
of it like layers and that’s what we show this slide for. Essentially one
layer is the municipal boundaries or the fire protection service boundaries, one layer
is fire halls, one layer is hydrants and this is the fire halls layer so this is
the fire halls that we mapped right across Canada. This is the municipal boundaries layer and
essentially one of the things that we’ve created recently to allow communities
like yourselves to a) better understand what our insurance rates apply in your
community and b) to help you to self-report on your fire protection,
we’ve created a new tool called the Municipal Portal. Which initially we’ve
created, you can let your fire chief know to contact us, we’ve created an
account for every fire chief in Canada be able to log in and see their
information. The information we have about them and we really are in this
first iteration trying to ensure that fire chiefs are clearing up what sort of
contracts mutual aid and and auto aid agreements to they have. So in this area
we want to make sure that we get that information right and we want to know
where that applies. So for this community are they protecting the area outside of
their community or do they essentially cut-off protection at the boundary? And
in the past past we know that fire departments were
pretty great about you know just responding wherever there was a fire
regardless of boundaries, we’re seeing that go by the wayside in most in most
provinces. Essentially communities are realizing and this was never more true
than in the case the City of Calgary. Calgary was protecting Rockyview that
was the surrounding municipal district for years. It was a handshake mutual aid agreement, you know if you
need something give us a call, give us a call, we’ll come out and respond to you guys. So this is
pretty much how fire protection worked from the get-go in Canada. But at a certain
point the City of Calgary brought their own fiscal economist in and said, you know
let’s do an analysis of where we can save some money and one of the first things they
identified was these responses into Rockyview. They’re costing you $2.5
to $3 million a year, so what’s Rockyview paying you back for for
those responses, and the City of Calgary said, “nothing.” So we literally I mean
overnight their policy changed and they said now on we want to have a more
formal agreement with with our neighbor where they’ll pay for those responses.
It’s fine we’ll still respond to you, but we’re going to charge an appropriate rate so
essentially our taxpayers aren’t paying for your protection. And more and more
communities across Canada are coming to that conclusion. That it’s appropriate to
have mutual and auto aid where there is an equitable sharing of resources but where
the sharing of resources is lopsided then it’s maybe more appropriate that there
be some sort of contract and there be some reimbursement to equalize the
level of service and essentially pay the people that are providing the service. So
we want to make sure that we get that information right, because every time
somebody searches and the insurers search the grading index all the
time, they want to get the right buyer protection provider, so if we were talking
about an area just outside, let’s say to the north there’s an address right there that’s the insurer is going
to underwrite, they want to know is their property protection and fire department
coming from Regina or is it going to be coming from maybe another service
provider in one of these other areas maybe up north, or maybe this this is the
fire hall probably associated with that municipal county or rural municipality so essentially is it is the fire protection going to
be coming from this firehall over here all the way in to here or is gonna be
somebody from Regina, and that’s that question could make a difference. It could
be HUGE. That question could determine whether or not a development
happens. It could be that thousands of dollars to a small property. It
could be tens of thousands of dollars. It could be hundreds of thousands of
dollars of difference, depending on who’s gonna provide fire protection. So be
aware that we want to get that information right and we’ve created
portal you can layer fire chief know he can contact me this afternoon I’ll give
him his username and password. He can log in and start, number one, making sure
that with the right information here about you and, number two, being able to
give you information to help you make educated choices about policy and how
much fire protection you wanna provide. The next layer we add in is the hydrants
so if we don’t have hydrant data for your community over the last hundred years,
we’ve probably visited you and done some hydrant flow testing an assigned a class
your water system, but we might not have the hydrant information in GIS format so
if you have it in GIS format please provide it to us. We’ll make sure that the people
the property owners deserve that thousands or tens of thousands of
dollars of discounts associated with hydrant protection — that they’re getting it. And if you don’t
have the hydrants in a GIS format then get it to us in whatever format you have and
we’ll convert it into GIS and give it back to you for free. We have no problem with
that. You have like a hard copy of the map and what we’ll literally do is we put
the map on the wall, take a picture of it, hand it over to us. Our GIS team will geo
reference, you know, whatever the points on the map and get those hydrants loaded
into our system. For hydrants we typically want to get a
bunch of information about them and eventually will include them in the
municipal portal, but for the time being hydrant data is stored separately in the grading index but we do keep a bunch of information about the hydrants
there are a few key characteristics whether or not it’s recognized or not recognize and that’s at the system level.So essentially a badly designed system or a system that
has poor maintenance, it might just be with we flip a switch — not recognized.
And if it’s a part of our not recognized water system, when insurers search, it’ll
show the hydrant but it’ll be black and essentially it’ll treat this as
not a recognized hydro system. What we want to happen in that case is the
insurer tells the broker, sorry we can’t give you a hydrant protected rate. We know you send us a
picture of the hydrant, we can’t give you hydrant protected rates. It’s not part of recognized
system. The broker tells the insured, sorry you don’t qualify
for hydrant protected rates, yes that means you gotta pay double what you used
to pay. We know you used to pay $1,000 a year. From now on it’s going to be
$2,000 a year. We won’t back charge you for all the previous years we did it
incorrectly, but that hydrant system should never been recognized. The insured
you know, furious at that point comes to you the municipal council and says, what’s going on? Why is this water system not recognized? You contact your water engineer or you contact our
office directly and say “What’s going on? How come this water systems not recognized? We
say water systems have to be designed for fire protection, they need
appropriate maintenance, these are the minimum criteria that you need to meet.
This is where you haven’t met that criteria. Provide us with your plan of
how you’re going to meet that criteria and we’ll flip the switch and you’ll be back
to recognized in no time — typically it’s a process that can take three months to
three years. We run an algorithm on on all that data in those layers and we create
what we call the fire insurance rate maps and like I say these are created
for every community in Canada when the insurers are searching for an address essentially it’s referencing one of
these maps and saying which one of the polygons does it exist in? This blue area that’s an area that would actually
qualify for I think it’s PFPC 3. the orange area it’s PFPC 9 the red area
is PFPC 10. This has a huge impact on property insurance rates and like
line capacities, so it’s actually where your property falls in here is going to
really determine what sort of property insurance rates property owner pays and
you as the person or as the group that are responsible for designing the system
just need to be aware that those decisions that you make determine
whether or not that’s going to be a PFPC 3 applied to the blue area or PFPC 8
when the insurers type in an address and our system was built initially to
support a website, so essentially we went from handing out books to insurers and they would
look up Regina and see oh it’s a PFPC 3 instead of that now they would actually
look up the address and it’s much more accurate even within Regina or Saskatoon you can see there’s more than one fire grade that applies depending on
how far you are from a hydrant, from a fire hall, so the insurers now see this
screen that gives them a detailed breakdown of the fire protection
characteristics, as well as below that on the screen, it shows this map, shows which
fire hall responds first and we’re actually gonna be expanding that this
year to show not only the first responding fire hall, but the first three
responding fire halls, including those that would be covered under mutual aid
and auto aid and contract protection, so essentially you guys getting us that
information makes sure that this information is portrayed to the insurers
accurately and that the property owners you represent are getting the
appropriate insurance rates for the level of protection. Now, I like to say,
connecting the dots — most communities in Canada are made up of mostly dwellings, so we
do the cost benefit analysis we do this sometimes for communities, we’ll do a
quick rundown of how much assessed value exists across the community and what we
typically find is that about 80 to 90% sometimes more or less, is dwellings and
personal lines insured properties. Only about 10% 15% would be commercial lines insured
properties, which is everything else. In a sample community of 30,000, you know we
actually have gone into many different size communities but I like this one, which is kind
of in the middle. The sample community of about 30,000 population we did
it had 14,000 dwellings we showed that across the community across fourteen
thousand dwellings the cost of fire protection services they were paying
was $22 million a year and they were using a quasi NFPA 1710 they had four
career firefighters on duty that would be responding across their community 24
hours a day seven days a week that involved in having a 25 or 26
firefighters, training officer, prevention officer, and a chief, so they had a fairly
expensive model, a robust model of repression. It cost them about $22 million
a year. The average house we established was about $450,000 real estate price
where the average building and contents value was $250,000, so that would be the
insurable value. The insuranced value was $250 000. We determined that with no fire protection
that average house would be receiving a premium of about $3,300 to $3,290 a year and
with the level of fire protection they were getting, the career level of service, DPG 1
full hydrant protection — that dropped the property insurance for a typical dwelling down to
$893 a year across the 14,000 dwellings that difference of $2,400 added up to
about $33.5 million dollars a year. That’s a pretty
substantial difference. And this is essentially why the insurers built this
system. The insurers used to provide their own fire protection. Back over a hundred
years ago when the municipalities first started providing public protection, the
amount of fire protection provided was absolutely inadequate, so the insurers used to
kind of beef it up and provide their own fire brigades and/or hire. There would be han fire brigades that just kind of roamed the streets. I think you guys have probably seen
the Gangs of New York. In one of the initial scenes two gangs kind of come
together in front of a burning building and start fighting to see who’s going to
fight the fire. And that’s because these you know street gangs would literally
try to put out fires and get a reward for actually successfully saving
property for an insurer. This was a kind of haphazard model of a fire protection
we used to have in Canada and in the United States and we’ve really solve
that with the fire insurance grading index because it creates this incentive. If you’re
running a municipality and you’re deciding whether or not to spend on fire
protection and you know that spending on fire protection is gonna have a significant
cost benefit to the property insurance. That’s something that you can
essentially you know hang your hat on and say to your insureds, you know
there’s a reason that we’re spending this money and that we’re charging at
this level of taxes there’s a reason for this and it has to do with how much
you’re gonna be paying for your insurance. We have approached the insurance
community to say you know could you be a little more transparent about how you
give the discounts. For example I don’t know how it works in Saskatchewan with
motor vehicle but it I’m from BC and they showed me on my insurance you know
I get 40% safe driver discount. So we wish that they would show that discount
they associate with fire protection. They have said they don’t necessarily want
to do that. Insurers have indicated you know they really would do that only if all the
insurers could come to the table and agree on how they would do it and
they may not ever happen. But you as the people making the decisions need to be
aware that you can speak your local brokers. The brokers may not have enough
knowledge to really understand. We haven’t made this system available to brokers in
the past, for over a hundred years brokers didn’t even know this existed. A
broker when would you know take the information from the insured, take that to
the underwriter and say what sort of the premium would you charge? They take that
to five different underwriters and find out what the prices would be and take that back
to insured. It was the underwriters who had access to this information. So the
brokers may not know. You may actually need to go one level beyond the
brokers but we strongly encourage you to go to the underwriters find out what
what sort of difference would you be paying without any fire protection? Get rid of your fire
department, get rid of your water supply system and find out just what sort of a
difference any given property in your community would
would be paying. And then you can do the math. I mean you have the assessed values,
you can do the math and find out what sort of the cost benefit specifically is available
in your community. On the PFPC side we also do these kinds of calculations but
because there’s so much less property in terms of the overall values of the
property, that were saying eighty-five percent of the property values are
dwellings. Only 15% is commercial. It tends to be less significant in terms of the
actual what you see the visible cost benefit and here we see the cost benefit
in this community was about for six billion dollars worth of commercial lines
insured property. The cost savings for their fire protection programs around
$3.2 million. Now that being said there are other things that a person should
take into consideration when you consider you know the value of it and
beyond in terms of the actual cost benefit. Essentially you’re also
getting to saved lives and property, the business continuity and the maintenance
of the tax base. Don’t undervalue those. I mean the business continuity factor —
for small communities that might only have one or two major businesses or
major companies or major employers? If that employer burns to the ground what sort of an economic impact would
that have on your community? If everybody in your community that was employed
at that mill or whatever it happened to be, or a manufacturer, if all of that was
wiped out in one fire and all those taxpayers stop paying tax tomorrow because now
they’re unemployed, how is that going to affect the municipality? How soon are those
people gonna start moving out? Going to other municipalities where they can
find work? And how is that going to affect your economy? So the insurance
community really stabilizes the financial aspects.. not only by getting
those businesses back on their feet fairly quickly but also by actually
encouraging the community to mitigate the risk to prevent the severe losses. I
did want to mention though that impact of the insurance model that we have here
in Canada and globally is is really profound and
sometimes people think of insurance is being with negative thing oh I have to pay,
I have to pay, but they don’t realize how much benefit they derive from it, not
just themselves but as a society. And what we show Munich RE created these
charts that show areas of the world that are really well-insured versus those
that aren’t well-insured and as you would expect modern G7 G8 countries are fairly
well-insured and these are the light blue on the map. Those communities
actually experienced the greatest capped losses. When we look at this we can see
that 37% of the natural catastrophes between 1980 in 2009 occurred in those
countries. They experienced large financial losses as a result but we look
at the chart on the right we can see that actually they received the fewest number
of fatalities and you can think of this is representing personal injury as well. Why
is that? It’s because they’re the best protected. The communities that are
well-insured the areas of the world that are well-insured actually invest in
mitigation and do the right thing and make sure that they’re doing doing try to
limit their loss exposure and those of you involved in the SUMAssure program
that are part of a reciprocal you have a vested interest especially if you’re in
a reciprocal to try to reduce your losses because essentially, as part of
a reciprocal if your losses are higher you’ll be paying more insurance next year.
So I think I’ll leave it here and open up the floor to a couple of questions. We
only have time for a couple minutes here because the next presentations is going to
start. I went a little long I apologize for that but if anybody does have any
questions and we don’t have time to get to them today, feel free to email me
check the website FireUnderwriters dot ca admin @ fire underwriters dot ca. It’ll end up
on my desk at some point. If you have other questions about how fire insurance
grades work and how it affects your community what sort of information you
need to know. If you want to get access to the portal for your fire chief, drop us a
note. We really look forward to hearing from you. Any questions? if so please come
up to the microphone. Okay thanks very much guys.

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