1. #1
    Dalmatian90
    Firehouse.com Guest

    Cool How big is your zip code? (Follow up on State Farm...)

    As another recent post has mentioned, State Farm has begun in certain states to rate properties based on loss experience by zip codes.

    Now, thinking more about it and reading some other posts, I realized once more sometimes there's differences in the country that may make the perspective look different!

    How big (square miles?) is your zip code? Are there multiple fire departments in it?

    In my area of New England there is a fairly close relationship in zip code coverage and fire department coverage (i.e. multiple FDs not under the same zip). A large loss in one isn't likely to affect another fire department under straight zip code rating (by straight I mean one zip, one loss history...if they average multiple zips that would be a different situation)

  2. #2
    S. Cook
    Firehouse.com Guest

    Post

    Our county is 429 square miles and has 5 zip codes. The two largest zip codes probably have over 60% of the land mass and 90% of the populated area.

  3. #3
    80FIRE
    Firehouse.com Guest

    Post

    We are a small rural department only covering aprox. 80 sq miles. After reading these posts I started counting zip codes and came up with 7 in our fire district. None of these are ALL in our district. At least 6 other departments also cover parts of these zip codes. Several have a poorer ISO rating than ours.

  4. #4
    One-L
    Firehouse.com Guest

    Angry

    Zip codes in this part of the country (Pacific NW) generally do not conform with city/fire district boundaries. This will be a bonanza for State Farm, and a disaster for ratepayers if it actually happens like State Farm wants it to.

    Consider this hypothetical: let's make up a zip code, 12345. 95% of zip code 12345 is covered by an ISO class 1 department with minimal annual fire loss. The remaining 5% of 12345 is covered by an ISO class 9 department that consistently loses houses right and left and generally does a terrible job.

    Under State Farm's new policy, will the people living in the area protected by the class 1 low loss department reap the benefits of such protection on their insurance bill? No. They'll pay through the nose because of the ineptitude of the class 9 department, even though it's not their own department and they have no control over what it does.

    Change the hypothetical any way you want, but the bottom line is this: the residents of a zip code that buy State Farm insurance will now be paying insurance based on the department that has the highest loss in their zip code, whether that department is their own or not.

    All this decision by State Farm does is make sure that if you're doing a good job and keeping fire losses to a minimum, it doesn't matter. They'll find the place that is doing the worst job and losing lots of property in a particular zip code or geographic region and judge everybody else on that, even the departments that are doing a good job.

    This isn't meant to bash State Farm, because they're doing exactly what they should be doing: finding a way to make as much money as possible. But that doesn't mean that the fire service has to accept their actions, and they shouldn't.

  5. #5
    S. Cook
    Firehouse.com Guest

    Post

    Thanks One-L, You took the words right out of my mouth. I've been trying to think of a way to phrase my similar thoughts since I posted.

    In our immediate 2 zips we have us, a 3/6 and other depts, one a 6/9, one a 7/9 and four 9/10.

    We have a low loss in the city, but the city zips extend way out into the county where mfg homes and no code construction abound. (The county would like to have a code, but under current TX law, we are too small to adopt or enforce one.)

  6. #6
    Halligan84
    Firehouse.com Guest

    Post

    The zip code for my town represents parts of 5 of the 6 districts in our township and also 2 other townships in another county. Parts of my district are covered by a zip from a different municipality. Im thinking confusion here!

  7. #7
    AVF&R452
    Firehouse.com Guest

    Lightbulb

    Just a few thoughts,

    1. If the ISO FSRS Rating was an accurate indicator of risk, I do not think State Farm would be in any hurry to change.

    2. The FSRS does not address loss due to theft, wind/storm damage, vandalism, hurricanes, tornadoes, floods, or any other types of loss. It only rates fire departments on their ability to meet specific, given criteria. An ISO Class 1 does NOT guarantee minimal fire loss.

    3. Apparently, State Farm realizes that the majority of their losses are NOT due to fire.

    4. Disasters over the last few years such as hurricanes, wildfires(Which were not managable by any single FD regardless of size or ISO Rating), floods and other occurences have been hard on the profit/loss statements of all of the insurance companies.

    5. Could it be that State Farm realizes that the Fire Service as a whole, In spite of all of its problems, does a fair job of managing the fire problem in this country?? I'm NOT saying that we cannot do more, WE CAN AND WE SHOULD!!

    6. State Farm will only make money if they sell insurance. In order to do this, they must remain competitive. They will not be able to raise rates across the board for all customers. There are too many other companies willing to sell insurance to former State Farm customers.

    7. I am NOT an insurance agent or an employee of State Farm. I am waiting to see what happens to the rates in my area. Might be time to go shopping for a new insurance company. We will see.

    Stay Safe

    Jim

  8. #8
    Firekatz04
    Firehouse.com Guest

    Cool

    How big is MY zip? 5 digits... HAHA!

    Sorry, I HAD to go there! I live in a suburb of Philly, Pa. Recently they changed some of the "non-city" areas that had city zips to other non city zips. Ex: I live in 19038 which is a non city (Glenside) zip. Wyndmoor, USED to be a city zip... 19118. Because of home owners and auto insurers complaints, they "dropped" the city zip and became a non city zip (19038).

    Now, the fire coverage for the zip of 19038 (Glenside) has gone from 3 stations in 2 twps
    to 4 stations in 3 twps. (now folks will be REALLY confused)!

  9. #9
    S. Cook
    Firehouse.com Guest

    Post

    "The FSRS does not address loss due to theft, wind/storm damage, vandalism, hurricanes, tornadoes, floods, or any other types of loss."

    True these aren't covered under the FSRS, but ISO does address these areas in other divisions of ISO. The first guy to come and do our first rating 2 years ago worked in ISO's flood division.

    [This message has been edited by S. Cook (edited 02-17-2001).]

  10. #10
    Dalmatian90
    Firehouse.com Guest

    Post

    Random thought/point,
    I don't think any standard homeowner's policy covers flood damage...that's the purvue of flood insurance.

    (Now try convincing the bank that just because part of my 12 acre property sits in a flood zone...that my house itself isn't! So I pay for a seperate flood insurance policy as part of the mortgage agreement)

  11. #11
    AVF&R452
    Firehouse.com Guest

    Post

    Matt,

    I stand corrected on the flood issue.

    Cook,

    I agree, The ISO has sections that address all types of loss. I was simply saying that basing rates for TOTAL loss due to all causes in a particular zip code seems to make sense for several reasons. First, the company HAS the information, They do NOT have to BUY it from ISO. Second, setting rates based on the FSRS does not consider other types of loss, and last, Those that live in areas of high loss SHOULD pay the higher rates. The reasons for the high loss and the resulting high rates should be disclosed to the customer, whether it be due to an excessive fire loss attributed to a substandard FD, excessive losses due to theft/vandalism, or the repeated loss of luxury condos built on a hurricane prone coastal beach.

    I am all for the improvement of all fire departments and I certainly recognize the need for a method of evaluating the abilities of each dept.


    Stay Safe,

    Jim

  12. #12
    ArmyTruckCompany
    Firehouse.com Guest

    Post

    Firekatz04- I thought that Glenside was in Cheltenham Twp, which has 5 companies??? Same thing with Abington Twp- 5 companies?? And aren't 600, 700 and 82 all one twp??

    ------------------
    "Loyalty above all else, except honor."

  13. #13
    S. Cook
    Firehouse.com Guest

    Post

    "First, the company HAS the information, They do NOT have to BUY it from ISO."

    ISO has a great scam going. Wouldn't you agree?

    "Second, setting rates based on the FSRS does not consider other types of loss,"

    The total premium is not based on an FDs ISO rate, it's just a portion (in Texas). Situations as you described previously are included in the remainder of the premium but seperate from a policys fire insurance portion. Pull out your HO policy and read about all that other stuff.

    "and last, Those that live in areas of high loss SHOULD pay the higher rates."

    In our zip are several subdivisions with almost 0 crime rate in regards to burglary and theft, while in other areas of the zip where people don't look out for each others stuff or well being.

    I agree with you when you say those that live in high loss areas should pay higher rates, and I agree. But why should the people that in the 0 crime rate portion of the zip pay just because another part of their zip code can't keep their kids from breaking in and cleaning out the neighbors' house?

  14. #14
    AVF&R452
    Firehouse.com Guest

    Post

    Scott,

    Thats why I stated that the reason(s) for the high rates should be fully disclosed. If the reason is an excessive fire loss, I can go to my city/town govt and my local fire dept. Is there a funding problem? Do we have adequate codes? Is the problem a result of poor equipment, lack of personnel, poor training, no hydrants or whatever other reason. If the rates are due to high crime, what about more cops, Whatever the problem is to cause the higher rate, It should be stated up front. In any case the company will need to remain competitive so I don't see a single company or group of companies being able to raise the rates excessively.

    Jim

  15. #15
    S. Cook
    Firehouse.com Guest

    Post

    "a single company or group of companies being able to raise the rates excessively."

    I'm not sure about other states, but in Texas SF (and other regulated companies) has to stay 30% above or below the states' benchmark. If they choose to go outside that, they have to go unregulated. Then they can charge whatever they want and some do. Either way, you can bet it wouldn't be less than the benchmark, they aren't now.

    Benchmark rates (averages for $80k home):

    class 4 - $527.00
    class 9 - 773.50

    State Farm Rates (averages for $80k home):

    class 4 - $583.00
    class 9 - 855.50

  16. #16
    AVF&R452
    Firehouse.com Guest

    Post

    Scott,

    Between the state regulations and the need to stay competitive I don't see SF or any other company being able to raise their rates an excessive amount. My SF policy is a reasonable deal, I'm sure I could shop around and save a little, and I'm sure that I can find the same coverage at a higher price. When it ceases to be reasonable, You can believe that I will be shopping for a new policy. My guess is that the majority of policyholders will not see a significant change in their premiums. Those that do, I would expect, will be shopping around.

    Stay Safe

    Jim

  17. #17
    Dalmatian90
    Firehouse.com Guest

    Cool

    I'm not sure about other states, but in Texas SF (and other regulated companies) has to stay 30% above or below the states' benchmark.
    Benchmark rates (averages for $80k home):
    class 4 - $527.00
    class 9 - 773.50


    Interesting numbers...
    Class 4, +/- 30%, gives a range of $369 to $685.
    Class 9, +/- 30%, gives a range of $541 to $1006.

    Hmmm, so a smart consumer may find coverage for a Class 9 house within $14 of the benchmark for a Class 4...

  18. #18
    S. Cook
    Firehouse.com Guest

    Post

    You must remember those are averages of 2 rates for each class:

    Class 4:
    Brick - 479
    Wood - 575

    Class 9
    Brick - 599
    Wood - 948

    BUT, according to the rate guide published by the Texas Dept. of Insurance for my territory (16C) the shopping around consumer (may or may not be smart) of a brick home can find class 9 insurance coverage $75 less than the benchmark for class 4.

    Hey, you know what they say - you pay your money and you take your chances...

  19. #19
    Bob Snyder
    Firehouse.com Guest

    Red face

    I wasn't really that interested in the survival or demise of ISO at first, but the zip code issue raises some real problems in our area. For example (I'll use names of departments and municipalities because it's easier, not because I think you all care about them)...

    My station sits in 19540 (Mohnton, PA), however, this zip includes the following municipalities/fire jurisdictions:

    1. Mohnton Borough, with primary fire jurisdiction held by Mohnton Fire Co. (my station)

    2. Part of central Cumru Township, with primary fire jurisdiction held by Cedar Top Fire Co.

    3. Part of southern Cumru Township, with primary fire jurisdiction held by Gouglersville Fire Co.

    4. All of Brecknock Township, with primary fire jurisdiction held by Brecknock Twp. Fire Co.

    5. A very small part of northwestern Robeson Township, with primary fire jurisdiction held by Gibraltar Fire Co.

    Of these, we would be dispatched on the initial call as either primary or mutual aid in areas 1-3, on some working structure fires (but not initially) in area 4, and probably never in a million years in area 5. We are also dispatched on all structures in Cumru Twp. that aren't in 19540, which are in 19607 and 19608, depending on which side of the township they are in.

    So, we'd be penalized for fire losses in areas to which we'd either never or only occasionally be sent and we provide services to areas for which we will never get any credit. That hardly seems right, either in terms of the statistical validity of the system or in terms of fairness to the policy holders. Many fire companies/municipalities in my area would be in a similar situation.

  20. #20
    KS.KE,EMT/FIRE/RESC
    Firehouse.com Guest

    Post

    Come one STOP the banter" Using any fomula or schedule is going to have it's faults. Thats like saying all engineers are the same or one paramedic could do it all should. You have exceptions to every rule out there.

    Our zip code covers about sixty percent of a county eight-hundred sixty-four sq miles. But we cover eighty percent of that area. How is a small township 12-15 minutes out with coverage from two quick attacks, "mini-pumpers" for you guys back east, going to compare to those on the other side of the zip line there still 15 min out but their in our zip?
    Another thing to think about is we've got gas industry scattered all over county with expensive compressors, dehydraters, transmition line engines, that cost more than any home in county. These costs from losses would be refected on homeowners, farm owners; who by the way are very aware of changes to the insurance scheme. As stated in a related thread, these farmers can and do drop their ISO ratings by working with us providing additional water sources and equipment that help not only them but thier neighbors. We had a tran. engine fire several years ago and we couldn't wharehouse the amount of foam needed to contain the fire but we also didn't walk away with just the slab left. It took a coordinated effort to contain this. To improve your insurance rates for every one you cover it's imperative to have everyones help, and input.

    You're right these are just my opinions, not law! To live or die by.


    ------------------
    M. Cory Myers
    EMT-I/FF/RESC;TO

    it's better to load N go then stay N play

  21. #21
    KS.KE,EMT/FIRE/RESC
    Firehouse.com Guest

    Post

    Come one STOP the banter" Using any fomula or schedule is going to have it's faults. Thats like saying all engineers are the same or one paramedic could do it all should. You have exceptions to every rule out there.

    Our zip code covers about sixty percent of a county eight-hundred sixty-four sq miles. But we cover eighty percent of that area. How is a small township 12-15 minutes out with coverage from two quick attacks, "mini-pumpers" for you guys back east, going to compare to those on the other side of the zip line there still 15 min out but their in our zip?
    Another thing to think about is we've got gas industry scattered all over county with expensive compressors, dehydraters, transmition line engines, that cost more than any home in county. These costs from losses would be refected on homeowners, farm owners; who by the way are very aware of changes to the insurance scheme. As stated in a related thread, these farmers can and do drop their ISO ratings by working with us providing additional water sources and equipment that help not only them but thier neighbors. We had a tran. engine fire several years ago and we couldn't wharehouse the amount of foam needed to contain the fire but we also didn't walk away with just the slab left. It took a coordinated effort to contain this. To improve your insurance rates for every one you cover it's imperative to have everyones help, and input.

    You're right these are just my opinions, not law! To live or die by.


    ------------------
    M. Cory Myers
    EMT-I/FF/RESC;TO

    it's better to load N go then stay N play

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