ICC Expo ISO Educational Pavilion Long Beach, California September 2015

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2 ICC Expo ISO Educational Pavilion Long Beach, California September 2015 Dale Thomure, CBO,CFM Manager Community Mitigation Come and see us in booth 520!

3 About the presentation today Who are we? What do we do? The Building Code Effectiveness Grading Schedule (BCEGS) National data about building code enforcement efforts BCEGS data application Academic studies about building code enforcement Future development of BCEGS

4 Leading supplier of Statistical Actuarial Underwriting information Standardized coverage forms Class & rating programs Licensed rating organization Advisory services Verisk Analytics, Inc.

5 Analytic Capabilities 6,000+ Employees 500+ More than 500 employees with advanced degrees, certifications, and professional designations in statistical modeling, engineering, geology, economics, health economics, and many other disciplines Including: 200+ Actuarial 145 Property/Casualty Professionals Underwriters Strong Domain Expertise Insurance underwriting Insurance claims adjusting (including fraud) Data management Financial services Healthcare Supply chain and environmental health and safety

6 A Verisk Analytics Business Property & Casualty Risk Analysis Healthcare Financial Services

7 ISO Community Mitigation Programs Public Protection Classification (PPC ) Program Building Code Effectiveness Grading Schedule (BCEGS ) Specific Commercial Property Evaluation Schedule (SCOPES ) *FEMA/NFIP Community Rating System (CRS) * Administrator of program

8 BCEGS Program Scope/Objectives Scope Objectives To Improved measure building the resources codes and and enforcement support made available and applied to building code enforcement, Better, more as catastrophe-resistant well as the utilization buildings of the resources, Reduction as of property applicable losses to the mitigation of losses Reduction resulting of economic from natural and hazards social disruption common to the as jurisdiction a result of being a catastrophic measured. event

9 BCEGS Key Program Elements Minimum criteria for inclusion Assigns a rating of 1-10 Personal Lines Rating Commercial Lines Rating Updated on a 5-year cycle Areas of review Administration of codes (54%) Review of building plans (23%) Field inspections (23%)

10 BCEGS Schedule Format Point-based system 100 point scale Eligible for points in each section Prorated credit

11 Permits Plan reviews Inspections Responsibilities Training Certification Continuing education Budget information Public awareness Property value All in the Numbers

12 BCEGS Scores Across the Nation What do the Scores Mean? Classes 1 to 3 (approximately 21% nationwide) Adopted model code Unamended, latest edition (within 5 years) Exceptional staffing levels based on workloads Staff education and certification at very high levels Classes 4 to 6 (approximately 58% nationwide) Adopted model code Unamended, latest edition (within 5 years) Strained staffing levels for plan review and/or inspection Staff education and/or certification at minimal levels Classes 7 to 10 (approximately 21% nationwide) Adopted model code Amended to weaken and/or older editions Inadequate staffing levels for plan review and/or inspection Inadequate education and/or certification at minimal levels

13 BCEGS Scores Across the Nation Commercial Lines 40.00% 34.0% 30.00% 20.00% 18.0% 18.2% 14.0% 10.00% 0.00% 5.9% 3.1% 2.5% 2.8% 0.1% 1.3%

14 BCEGS Scores Across the Nation

15 Inspection Certifications

16 Plans Examiner Certifications

17 Training

18 Plan Review Workload

19 Inspection Workload

20 Background information Code adoption Training and certification Staffing levels Point analysis Natural hazards Unique customized report Jurisdiction Results Benchmarking Report

21 BCEGS Application

22 BCEGS and Insurers How does BCEGS aid the insurer? Identification of differing rigor in code enforcement Increased certainty in risk assessment Building Underwriting Reports Analysis of portfolio risk Prediction of extent of loss Enhanced Wind Rating Program Informed Decisions

23 BCEGS and the Community How does BCEGS help my community? Enhanced resilience for homes and businesses Identification of state and regional trends and benchmarks Detailed information about resources Greater choices in insurance offerings Potential premium discounts Potential reduced deductibles Lower frequency of fire loss

24 National BCEGS Data Application Building Underwriting Reports (BUR) Building Specific 350 K Yearly

25 National BCEGS Data Application BCEGS in BG II Loss Cost Advisory Loss Cost is a projection of an insurer s average future loss and loss adjustment expenses Delivered for both BG I (primarily fire) and BG II (primarily wind) Based on Construction, Occupancy, Protection and Exposure (COPE) information published by Verisk Developed using field-verified property information as well as historical premium and claims data BCEGS factor can be used by insurers to adjust the BG II loss Cost Utilizes ISO s 3 rating schedules Primarily SCOPES, FSRS and BCEGS

26 National BCEGS Data Application Enhanced Wind Rating Program Modification to Loss- Cost based on details specific to a building

27 National BCEGS Data Application Community Rating System (CRS) 432.h BC2 credits the community s Building Code Effectiveness Grading Schedule (BCEGS) classification.

28 FEMA National BCEGS Data Application

29 National BCEGS Data Application FEMA Hazard Mitigation Grant Program Part of Hazard Mitigation Assistance (HMA) Additional 5% Initiative 5% may be used to fund additional hazard mitigation measures May increase up to 10% for additional activities that promote disaster-resistant codes Must adopt disaster-resistant codes or improve BCEGS score.

30 National BCEGS Data Application Academic, Government and Insurance Industry Studies

31 Wharton Study Further Validation of BCEGS A midsize community of 50,000 people that experiences a moderate hail storm could expect to reduce losses by approximately $4 to $8 million by adopting and enforcing ISO s BCEGS ratings provide a joint assessment of both the stringency of adopted codes in addition to how appropriate well these building adopted codes. are enforced. Communities with a favorable BCEGS score can expect a 12 18% reduction in damage as compared to less favorable scores.

32 FEMA NMSZ Report Usage of BCEGS Data The In statistics order to understand indicates that the the status NMSZ of is the lagging local building behind the codes, nation the in adoption of building Building codes. Science As people Branch in of the FEMA area commemorate Federal Insurance the bicentennial and Mitigation great New Madrid earthquakes, Administration FEMA (FIMA) and the has National been working Earthquake with Hazard Insurance Reduction Service Program call on the Office, local communities Inc. (ISO) and to other take full-strength partners to track building building codes code for protection adoption against earthquake and enforcement risk in the conditions area. at the local level.

33 ISO Fire Frequency Study Fire Frequency by state BCEGS Score category Average Annual Fires (avg '09-'11) / 1k people ('10 census) Sources: 2010 Census NFIRS BCEGS database 2011 State BCEGS score 33

34 ISO Fire Frequency Study Fire deaths per million people (2010) Fire deaths by BCEGS score category State BCEGS score Sources: USFA BCEGS database 34

35 BCEGS Future Development Schedule Revision Project 2016 Increased emphasis on enforcement activities Certification Training Experience Frequency of code adoption Updates to match trends in industry

36 Questions?