Fire inspection lag may affect premiums

Most Atlantans probably have never heard of the Insurance Services Office, but the New Jersey-based risk assessment company plays an important role in how much they pay for their homeowner insurance.

Each year, the company rates the Atlanta Fire Department, and the results are used by most insurance companies to determine homeowner premiums.

On a scale of 1 to 10, with 1 being the best, Atlanta has a rating of 2.

But some say there’s a problem with that high rating: ISO officials haven’t done an on-site inspection of Atlanta since 1974, the year Hank Aaron broke baseball’s home run record and Maynard Jackson became the city’s first African-American mayor.

Instead, the company has been using “historical claims experience” based on actual fire losses in Atlanta.

That does not sit well with Georgia’s Insurance and Fire Safety Commissioner John Oxendine.

“It’s really unheard of to go this long” without a site inspection, said Oxendine.

Last week, he asked ISO to check out the quality of the Atlanta department’s staffing, communications equipment and fire hydrants.

Atlanta has enjoyed a high rating for decades, which has helped keep homeowner premiums at some of the lowest levels in the region. But some worry that could change as Atlanta’s population continues to rise and the Fire Department is making service cuts.

The city is struggling with major budget shortfalls — including an expected $50 million shortage in the fund that pays for fire service. In addition to citywide furloughs and pay cuts, the city on Christmas Day is shutting Fire Station 23, near Howell Mill Road and I-75, for at least the next six months. In July, the city closed Fire Station 7, located near The Mall West End.

Peachtree Battle resident Ryan Levenson said he’s worried that the city’s recent fire service cuts will result in higher insurance premiums. He wants the city to spend the $1.1 million it plans to save by closing Fire Station 7 on fire protection services.

“We’re going to be paying more to get less protection,” said Levenson, 33.

Some premiums may rise if there is a major drop in the city’s rating, said David Colmans, executive director of the Georgia Insurance Information Service.

“Naturally, a significant change in ISO ratings would impact premiums, but it is impossible to predict the specific impact,” said State Farm spokesman Justin Tomczak in a statement. “We applaud any and all efforts from the insurance commissioner’s office to ensure that these ratings are as up to date and as accurate as possible.”

ISO, asked to explain why it hasn’t inspected Atlanta since 1974, said in a statement that it considers it a more “practical approach” to use data of insurance claims in the city to determine their ratings as opposed to frequent on-site inspections.

“ISO has used actual historical claims experience to the fullest extent possible to determine advisory insurance loss costs. This loss experience is updated on a yearly basis. ISO employs this practice in many larger communities where the volume of claims data makes this a practical approach,” said Mike Waters, the company’s vice president of risk decision services, in a statement.

Waters added, “ISO also periodically gathers updated information on such changes as city boundaries, water hydrant coverage and fire stations’ locations. This information is used to update our database and geographic data systems and also to determine the need to complete a more comprehensive field survey.”

Waters said the ISO will begin a comprehensive review of Atlanta, but did not say when it will begin. The commissioner also is hoping ISO also will conduct a site inspection of DeKalb County. The company said it hasn’t done an inspection there since 1990.

“I’m not saying the department isn’t well-run,” the commissioner said in an interview. “The concern here is the citizens that are putting their property in [the ISO’s] hands, but they have no idea what the true capabilities of the Fire Department are.”

Other communities have had delays in ISO inspections. League City, Texas, a Houston suburb, hasn’t had an ISO review since 1988, city officials told the Houston Chronicle.

Oxendine last week met with ISO officials, who said they would conduct a site inspection of the Atlanta Fire Department.