Atlanta Fire Department Faces Insurance Rating Amid Budget Cuts

February 23, 2009

The insurance industry is engaging in an on-site evaluation of Atlanta’s fire protection system for the first time in three decades, a process that could add millions of dollars to premiums.

It is too early to tell whether Atlanta’s rating will suffer, or how much that would cost homeowners and businesses. But the scrutiny comes at a time when the city’s fire department is already struggling with budget cuts, forcing the closing of some stations and furloughs for firefighters.

The review and analysis will take about six months and look at fire department coverage, hydrant locations, alarms, communications and several other factors to help insurers decide how risky it is to insure Atlanta properties against fire.

State Insurance Commissioner John Oxendine asked for the review in December by the Insurance Services Office, Inc., which provides data for property /casualty insurers to gauge risks.

Oxendine, a Republican who plans to run for governor in 2010, said he was approached by firefighters and residents late last year amid the community debate over closing fire stations.

Since 1974, Atlanta has had the second-best Public Protection Classification given by the ISO: a 2 on a scale of 1 to 10.

Since then, in the absence of an actual on-site evaluation, ISO has looked at historical claims to help determine probabilities of loss in Atlanta, along with water hydrant coverage and fire station locations, said Mike Waters, ISO’s vice president of Risk Decision Services.

Oxendine said he learned Atlanta — with a population of more than 500,000 and about 600 firefighters — and neighboring DeKalb County are the only jurisdictions in Georgia without recent evaluations. DeKalb is rated 3. The only city in Georgia with a top rating is Valdosta.

“We want transparency. We want the people of Atlanta to know what the capabilities of their fire department are,” Oxendine said.

Most metropolitan areas in the country are rated between 1 and 5. New York’s is 4; Los Angeles and Chicago are 2.

Atlanta Fire Chief Kelvin J. Cochran said he believed Atlanta would keep its 2 rating, and said officials would have a chance to correct any deficiencies before a new rating is set.

Some critics say too much weight is given to the ISO rating, with major cities being unrewarded for top-notch fire protection and rural areas underrated for things such as a lack of fire hydrants, even though they may perform just as well with tanker trucks.

David Colmans, executive director of Georgia Insurance Information Services, said a change in rating won’t automatically mean higher premiums.

“There very well may not be much of a difference, if it should go to a 3,” Colmans said. “Once you get to a 4 or higher, then there tends to be a rather significant difference in the cost of homeowners insurance.”

But the local firefighters’ union warned that if the rating goes up, the overall cost to taxpayers for premium increases could exceed what they would have paid under a $44 million public safety tax increase rejected by the City Council last year.

“I think it will be in the tens of millions when you consider how many businesses and residents will be affected,” said James Daws, president of the Atlanta Professional Firefighters Association.

Daws said when the 1974 rating was set, Atlanta had about 350,000 people and twice as many firefighters spread among more units.

“The companies we’ve got are staffed from skeleton crews, and they’re having to come from farther away,” Daws said.

Chief Cochran said he and City Hall welcome the evaluation.

“We need to know whether or not budget challenges have caused our class 2 rating to be impacted negatively,” Cochran said. “It puts us into a better situation to plan for the future.”

Cochran has warned city leaders about the risks of stretching the fire department so thin after Mayor Shirley Franklin ordered four-hour-a-week furloughs last month for most city workers, including police officers, firefighters, 911 operators and corrections officers.

One result: Some fire stations were temporarily closed when a high number of firefighters called in sick over two weekends this month. That prompted the chief to warn the city had reached “an extreme level of vulnerability.”

The City Council has taken some steps to look for money to end the furloughs. But the situation is still scary, said Debbie Zimmerman, a community activist in Atlanta’s West End neighborhood.

“Honestly, I don’t know why people are not more afraid than they are,” said Zimmerman, who was among those fighting to prevent closing the historic West End fire station last year. “If people knew that on any given day, if their house caught on fire, they may or may not have anybody there.”

She said if it takes an increase in fire insurance premiums for residents to insist that the mayor and city council put public safety first, she is all for it.

“We’re not talking about money. We’re not talking about ratings. We’re talking about people’s families. We’re talking about ‘Is your family going to live?”‘ Zimmerman said.

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