IMC 2013 INSURANCE COST BENEFITS OF MUTUAL AID AGREEMENTS Agenda • History of Property Insurance • Fire Underwriters Survey (FUS) • History of FUS • The Survey • Mutual Aid Agreements • Fire Insurance Grading Systems and Index • Saskatchewan Participation • Impact on Property Insurance Rates and Premiums • Conclusion History of Property Insurance • First known fire insurance developed in London, England in 1666 • Insurance rates offered at 2.5% of value for brick buildings, 5% for wood structures • Insurance companies developed their own fire brigades 1
IMC 2013 History of Property Insurance (continued) • In North America, first fire insurance company- The Philadelphia Contributorship • Founded in 1752 by… In Canada… • 1868 Government of Canada passed the Insurance Company Act • 1883 insurance companies created the Canadian Fire Underwriters Association • First attempt to categorize municipalities by building construction and fire fighting equipment Early Toronto Fire Brigade Great Toronto Fire, 1904 Today… • FUS is administered by SCM Risk Services • FUS provides statistical information to insurers, advice to municipalities on improvements etc. • Field surveys are used to establish the Public Fire Protection Classification (PFPC) for municipalities and businesses and the Dwelling Protection Grade (DPG) for private dwellings 2
IMC 2013 The Survey… Measures the ability of a community to prevent and control major fires and considers the following: – Available fire fighting force (Paid vs. Volunteer, number of personnel etc); – Fire fighting Apparatus (Type, Age, etc); – Water Supplies; – Superior Tanker Shuttle Operations – Communications – Mutual Aid Agreements can significantly improve grade Superior Tanker Shuttle Operations (STSS)- • Support fire fighting operations where hydrant service is unavailable or flow is limited; • Demonstrate ability to deliver a minimum amount of water, within a minimum period of time, for a specific length of time; • STSS Accreditation can improve fire protection and insurance rating Mutual Aid Agreements-Considerations • Area covered must be clearly established and defined; • Agreement must be provided a response to a call for assistance; • Requires planning to ensure that it will work as required; • Agreement is the authority for an agency to provide fire fighting, fire prevention or emergency services, or the use of fire fighting or other emergency; • Response equipment or facilities on any terms that may be agreed on; • Setting and payment of charges. *Summarized from Fire Protection and Mutual Aid Area Agreement Guidelines, August, 2011-Ministry of Corrections, Public Safety, and Policing. 3
IMC 2013 Mutual Aid Agreements-Considerations • Fees to be paid by the municipality receiving fire protection; • Methodology for fees ; • Period of the agreement; • Arbitration provisions to settle disputes; • Exact service descriptions and response times; • Legal description and civic address of the area the agreement applies to; • Priorities in the event of simultaneous calls; • Liability for equipment, actions etc. *Summarized from Fire Protection and Mutual Aid Area Agreement Guidelines, August, 2011-Ministry of Corrections, Public Safety, and Policing. Saskatchewan Participation- Saskatchewan Participation- 4
IMC 2013 Saskatchewan Participation- Saskatchewan Participation- Saskatchewan Participation- 5
IMC 2013 Saskatchewan Participation- How does all this affect insurance rates? For homeowners…an example… • 2100 square foot home • 3 bedrooms/3 bathrooms • Replacement Cost $375,000 6
IMC 2013 Average premium of 4 major insurers Protected Area (1): $1350 Semi-Protected Area (2): $2208 (64% more than 1) Unprotected Area (3): $4188 (210% more than 1) *Source-Fire Underwriters Survey For Commercial Business…an example… • Masonry building built 1990, light commercial • 2000 square feet • Alarms and fire extinguishers • Replacement Cost $300,000 Average premium of 4 major insurers Protected Area (1): $748 Semi-Protected Area (2): $1235 (65% more than 1) Unprotected Area (3): $2788 (272% more than 1) *Source-Fire Underwriters Survey 7
IMC 2013 For SUMAssure Subscribers- • Level 10 to Level 9: 14% Savings • Level 9 to Level 8: 20% Savings • Level 8 to Level 7: 38% Savings • Level 7 to Level 6: 33% Savings *SUMAssure Insurance Reciprocal-Statistical Averages What is SUMAssure doing about it? • Educating subscribers • Consultation with FUS to improve fire protection, improve FUS grades. Expected result is lower cost for municipalities as well as their businesses and citizens. CONCLUSION- • Automatic Mutual Aid Agreements improve fire protection, possibly more favourable fire grading IF • Municipality has materially improved its fire protection… AND • Updates Fire Underwriter Survey information 8
IMC 2013 In the News- In the News- In the News- 9
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