The Public Protection Classification (PPC™) is an important tool to help insurers price risk and make informed underwriting decisions. To provide more value to our customers, we’re making PPC even more predictive of future loss experience. The PPC numerical grading differentiates varying levels of fire protection, with Class 1 representing the best public protection and Class 10 indicating no recognized protection. After conducting various analyses, we’re introducing new categories within the PPC structure. Those categories recognize favorable loss experience for certain communities relative to split classifications that reflect reduced loss potential when compared with single-class communities. Our filings to revise the PPC structure contain a proposed effective date of July 1, 2014, in all applicable jurisdictions (states).
In our analysis, data showed that loss experience for areas within 5 road miles of a fire station but more than 1,000 feet from a water source (currently assigned Split Class 9) was more favorable than in those communities where we graded the entire fire protection area as a Class 9 (Pure Class 9). We noted the same favorable loss experience for Split Class 8B communities. To acknowledge those findings, for the Class 9 or 8B portions of communities currently split-rated, we will publish the classification number and X or Y, respectively. For example, in a new Class 6/6X, 6X will denote what we now classify as 9 in a split 6/9 classification.
Similarly, our data indicates that risks located more than 5 but less than 7 road miles from a responding fire station but with a creditable water source within 1,000 feet had better loss experience than those further than 5 miles from a responding fire station with no creditable water source. We’re introducing a new classification, referred to as Water 10 (or 10W), to recognize the reduced loss potential of such properties.