I am posing this question to you guys because TexAgs knows stuff.

I serve on the BOD of a small volunteer fire department. We currently have an ISO rating of 3. Due to a new, consistent funding source, we now have the resources to attain a 2 rating which will lower insurance rates for our residents.

My question is this, I read an article that suggested Insurance companies were moving away from ISO ratings to set their rates. I know this board is filled with Realtors and lenders, but I think there are some insurance guys, and girls, here too.

With improvements, and the use of a consultant, we estimate spending around $24K to attain the 2 rating. We can easily afford this now, but, if the ISO ratings are becoming less and less important, we would prefer not to spend the money.

I humbly await your brilliance.

Disclaimer: I can't conclusively answer your question, but I'll share my 2 cents for consideration. Take it (or ignore) for what it's worth.

It's my understanding that insurance companies are not legally required to consider ISO ratings in setting rates/premiums. Some do, to varying degrees, and some do not. You cannot guarantee your constituents that a higher ISO rating will reduce their insurance rates/premiums, as it may or may not. If you're considering this expenditure, you should do so because it enhances service (at least theoretically), and not because of a higher ISO rating and *possible* rate/premium decrease. Any cost savings would be a bonus, but not the decision driver.

Most, almost all, of our carriers use the ISO rating as a factor. I have also not heard anything about carriers dropping the ISO rating as a factor, but that doesn't mean there isn't talk, I just have not heard it. While each situation is different, almost always a higher ISO rating does help rates. There are several rating factors and they differ from carrier to carrier, but the ISO rating is one of those factors, so a better rating would help to lower premiums in most cases.

Hope that helps.

What will the money be used for to go from a 3 to a 2? If it is the paperwork required to document the things you already do I would suggest going for it. I would be less inclined if there was an ongoing liability associated. I think too many departments chase a better ISO rating and justify more men per truck and other ongoing costs. I don't think an ISO rating is a good justification for this type of commitment but the commitment may be appropriate based on other needs.

Thanks for the replies.

To follow up: Almost all of the improvements needed to attain a "2" rating we have wanted to do for years, but we didn't have the funding. Most notably, staffing 2 men per truck 24/7.

The remaining money to be spent would be for a consultant to aid in our record keeping and be present during the inspection. We hired this consultant a few years ago when we went from a "5" to a "3". We, the BOD, agree the consultant is a worth the money, but not if ISO would not be a major factor for insurance rates.

Thanks Rolloinsurance for your contributions.