The Public Fire Protection Classification is expressed on a 1 to 10 scale. Commercial Lines property underwriters and risk managers will more easily recognize these classifications as "town grades". Class 1 represents the "ideal" or highest level of public fire protection while Class 10 reflects the absence of any effective public fire protection. Many insurers will subsequently group these "town grades" into Protected, Semi Protected and
Unprotected categories, to be used when calculating underwriting capacity. The gradings indicate how well communities are equipped to combat major fires that may be expected to occur in commercial, industrial, institutional and multi-family residential properties and are developed from a comprehensive review of all facets of the fire defense system as it relates to the level of risk present within the community.
Fire Underwriters Survey collects information on public fire protection efforts in communities all across Canada. In each of those communities, FUS analyzes the relevant data using our Classification Standard for Public Fire Protection. We then assign a Public Fire Protection Classification from 1 to 10.
By classifying communities' ability to suppress fires, Fire Underwriters Survey helps the communities evaluate their public fire protection services. The program provides an objective, national standard that helps fire departments in planning and budgeting for facilities, equipment, and training. By securing lower fire insurance premiums for communities with better public fire protection, the PFPC program provides incentives and rewards for communities that choose to improve their fire protection levels and thereby the community PFPC classification.
How the PFPC Grading System Works
The PFPC program provides important, up-to-date information about public fire protection services throughout the country. Fire Underwriters Survey’s Certified Fire Protection Specialists collect information about the quality of public fire protection in all incorporated and unincorporated communities with public fire protection across Canada. In each of those communities, FUS analyzes the relevant data and assigns a Public Fire Protection Classification - a number from 1 to 10. Class 1 represents exemplary fire protection, and Class 10 indicates that the area's fire-suppression program does not meet the minimum criteria of the Classification Standard for Public Fire Protection.
Canadian insurers of “commercial” property use Fire Underwriters Survey’s Public Fire Protection Classifications (aka. town grades) in calculating premiums for risks other than “detached dwellings”. In general, the price of insurance in a community with a good PFPC is substantially lower than in a community with a poor PFPC, assuming all other factors are equal.
A community's PFPC is calculated utilizing calculations of relative classification and benchmarks in the following major areas:
Fire Risk, including analysis of required fire flows for individual buildings, building groups and zones of similar risk (Fire Flow Demand Zones) of the community
Fire Department, including apparatus, equipment, staffing, training, operations and geographic distribution of fire companies
Water Supply system, including source to distribution analysis, redundancy factors, condition and maintenance of various components, and storage volume
Fire Prevention and Fire Safety Control programs including public education, codes/bylaws implementation and use of codes/bylaws in managing the level of fire risk throughout communities
Emergency Communication systems, including telephone systems, telephone lines, staffing, and dispatching systems
Benefits of the Grading System
The PFPC program recognizes the efforts of communities to provide fire protection services for citizens and property owners. A community's investment in fire mitigation is a proven and reliable predictor of future fire losses. Commercial Lines insurers use PFPC information to help establish fair premiums for fire insurance — generally offering lower premiums in communities with better protection. By offering economic benefits for communities that invest in standardized and recognized fire protection and risk reduction programs, the PFPC program provides an important incentive for developing, improving and maintaining public fire protection.
The program also provides measurable benchmarks for fire departments and other public officials to consider as they plan for, budget, and justify improvements.
The most significant benefit of the PFPC program is its effect on fire related property losses. Statistical data on Commercial Lines property losses bears out the relationship between provision of recognized levels of fire protection — as measured by the PFPC program — and reduced fire losses. By assisting communities in planning and organizing fire protection efforts, Fire Underwriters Survey programs save lives and reduce property damage resulting from fires.
How the PFPC affects individual insurance policies
Fire Underwriters Survey’s PFPC information plays an important role in the decisions insurers make affecting the availability and price of property insurance. Approximately 85% of all Canadian insurance companies — including the largest ones — use PFPC information in one or more of the following ways:
to identify opportunities for writing new business
to achieve a financially manageable concentration of property risks
to review loss experience in various rating territories
to price policies, offer coverages, and establish deductibles for individual properties
Each insurance company establishes its own rates/premiums that are charged to policy holders. The methodology each company uses to calculate premiums for property insurance may differ and depends on the individual company's fire-loss experience, underwriting guidelines, and marketing strategy.
Fire Underwriters Survey does not determine how each insurance company incorporates PFPC information into its pricing structure, so it is difficult to generalize how an improvement or deterioration in PFPC will affect individual policies.
General guidelines to the benefits of improved PFPC ratings for property owners of Commercial Lines insured properties:
PFPC may affect availability, capacity and pricing for a variety of Commercial Lines insurance coverages
Assuming all other factors are equal, the price of Commercial Lines property insurance in a community with a good PFPC is lower than in a community with a poor PFPC
It is important to stress that insurance rates/premiums are determined by each insurance company’s underwriting plans. Note that insurers also take into consideration a number of factors including but not limited, to the following (in no particular order):
Location of the risk with respect to distance from recognized water supplies (hydrants, etc.), and distance from the responding fire station
Claims history – ex. fire, wind, hail, crime and water damage claims (as relates to policyholder and/or geographic area)
Independent Broker’s insurance markets and their loss experience for that business demographic
Types of coverage such as basic fire; comprehensive “all risks”; etc.
Age of risk building and code compliance with respect to building, fire and electrical codes
Alarm systems
Specialized content coverage ex. fine arts, scheduled articles, jewellery, etc.
Loss Control inspection findings
Exposures to natural hazards such as earthquake, wind, snow and flood
Prevailing property insurance market conditions
Scope of the Fire Underwriters Survey evaluation
The purpose of a Fire Underwriters Survey public fire protection survey is to gather information to establish a Public Fire Protection ClassificationTM, which insurers use for underwriting purposes and to assist in calculating rates/premiums for fire insurance.
In many communities, fire suppression may be only one portion of the fire department's overall responsibility. FUS recognizes the dynamic and comprehensive duties of a community's fire service.
Communities make numerous complex decisions in planning and delivering emergency services. However, Fire Underwriters Survey only evaluates features related to property losses from fire (risk and protection).
The scope of a standard Fire Underwriters Survey Assessment typically includes:
Community Risk Assessment
Water Supplies for Public Fire Protection Assessment
Fire Department Assessment
Fire Prevention and Fire Safety Control Assessment
Emergency Communications Assessment
Evaluation process
To determine a community's Public Fire Protection Classification (PFPC), the Fire Underwriters Survey may conduct a field survey of the community. Fire Underwriters Survey's Certified Fire Protection Specialists observe and evaluate features of the built environment (fire risk) and fire protection systems throughout communities. Using the Classification Standard for Public Fire Protection (CSPFP), the Certified Fire Protection Specialist objectively evaluates fire risk and fire defense including the following major areas:
Fire Risk
Determination of required fire flows for buildings, groups of buildings and zones of response for fire protection throughout the community. Consideration is given to single building and multi-building fire events (conflagrations). Focus in the risk assessment is on the built environment and the quantification of needed resources for fires that may occur in the community as it has been constructed, in addition to ongoing construction and development risk. The risk assessment is used as a benchmark against which fire protection facilities are measured against.
Fire Department
A review of the fire department accounts for 40% of the total classification. Fire Underwriters Survey focuses on the fire department's initial attack, first-alarm response as well as the total concentration of assets needed during a fire event. FUS reviews such items as engine companies, ladder companies, distribution of resources (fire stations and fire companies), equipment carried on apparatus, pumping capacity, reserve apparatus, apparatus reliability, department personnel, pre-incident plan programs and operational training.
Water Supply
A review of the water supply system accounts for 30% of the total classification. FUS reviews the water supply a community uses to determine the adequacy for fire-suppression purposes. The major areas of consideration include water source reliability; volume of stored water; capacity to deliver required fire flows simultaneously with Maximum Daily Consumption; redundancy of all major components of system; looping and distribution system design; single point failure analysis; hydrant distribution, maintenance and condition.
Fire Prevention and Fire Safety Control
A review of the Fire Prevention and Fire Safety Control Program accounts for 20% of the total classification. FUS considers a community's risk reduction programs that are used to reduce the frequency and severity of fire loss occurrences. Here, FUS reviews such items as code and bylaw implementation and enforcement, fire prevention programs, building inspection programs, plan check programs and public education programs.
Emergency Communications systems
A review of the fire alarm system accounts for 10% of the total classification. The review focuses on the community's facilities and support for handling and dispatching fire alarms.
After the Survey
After completing the field survey, the Fire Underwriters Survey analyzes the data and calculates a PFPC and the correlating DPG. The community receives a notification letter identifying the updated PFPC and DPG.
For a consulting fee, FUS can also provide numerous details and reports such as response distance analysis; hydrant-flow summaries and analysis; classification details; and improvement recommendations and strategies.
Implications of the PFPC grades
If the Fire Underwriters Survey (FUS) calculates a Public Fire Protection Classification (PFPC) that is a down grade, FUS will notify the community. However, at that stage, FUS will not publish the information to the insurance industry to use for premium calculations. FUS will identify for the community the features that affect the classification. If the community then wishes to maintain its current classification, it will be given a reasonable time frame (up to a maximum of twelve months) to implement and report on an agreeable action plan. During that time, the previous classification will remain as published, however the notation “provisional” may be added to the Fire Insurance Grading Index for the community record with comments explaining the reason for provisional status grade.
FUS also recognizes that communities may not wish to make changes. If the community decides not to improve the classification, or does not notify FUS of any desire to improve, FUS will publish the updated PFPC.
Split Classifications
When the Fire Underwriters Sruvey (FUS) develops a single Public Fire Protection Classification (PFPC) for a community, all of the properties within the legal boundaries of the community receive that classification.
In many communities, FUS develops a split classification (for example, 5/9). Generally, the first class, (Class 5 in the example) applies to properties insured under Commercial Lines within five road kilometres of a fire station and within 150 metres of a fire hydrant. The second class (Class 9 in the example) applies to properties insured under Commercial Lines within five road kilometres of a fire station but beyond 150 metres of a hydrant. FUS assigns Class 10 to properties insured under Commercial Lines that are located beyond five road kilometres from the responding fire station.
