New AAIS Fire Risk Model Approved by Florida Regulator

Insurance advisory organization AAIS (American Association of Insurance Services) has received approval from the Florida Office of Insurance Regulation for its new predictive model. The AAIS Fire Loss and Mitigation Evaluation Score (FLAMES) was designed to improve on existing methods of quantifying expected severity of fire losses.

Current methods of measuring fire risk reflect fire protection capabilities within the geographic boundaries of individual fire departments, but do not look at variation in capabilities and claims severity across communities. Using fire department boundaries can also make it difficult for insurers to integrate risk scores into underwriting systems and processes.

The FLAMES model incorporates a more data-driven, analytical option that is acceptable to insurance carriers, regulators, and other industry professionals. AAIS evaluated a wide range of data including National Fire Incident Reporting System (NFIRS) data, carrier claims data, weather, crime, economic activity, fire station locations, fire hydrant coverage, traffic patterns, population density, building stock characteristics, and vacancy rates, which best reflected the drivers of loss.

According to Matt Hinds-Aldrich, PhD, AAIS Senior Risk Strategy Lead, rather than a checklist of input measures to grade individual local fire department performance, FLAMES measures outcomes in terms of severity of fire losses by ZIP code.

AAIS established relationships throughout the fire protection industry and received input from industry experts and thought leaders regarding ways to begin to standardize, consolidate, and validate mitigation data. AAIS said FLAMES can encourage fire departments to prioritize collaboration and coordination in both response and mitigation efforts beyond the boundaries of their respective jurisdictions.

Topics Florida Risk Management