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ISO-Building Code Effectiveness Grading Schedule

Reference Number: MTAS-1135
Reviewed Date: 11/09/2022

The Insurance Services Office (ISO) was established in 1971 to assist with identifying and mitigating hazard risk for insurance companies that provide coverage for public and private sector customers. It addresses specific risk information for natural catastrophes, fire-protection resources, community water systems, municipal building codes, and flood zones. ISO’s Public Protection Classification (PPC) Service evaluates the capacity of the local fire department to respond to and fight structure fires. By evaluating a community’s ability to suppress fires, ISO provides crucial information for understanding risks associated with a specific property. From these assessments, ISO develops and assigns a rating to a community, often referred to as the ISO rating.

ISO provides information on:

  • buildings — size, construction, occupancies, hazards, and public and private fire protection;
  • people — fraud, criminal and public records, claims, and employment history and background; and,
  • communities — fire protection, water systems, other critical infrastructure, building codes, and natural and man-made catastrophes.

Communities rely on ISO’s information to plan for, budget and justify improvements in fire protection and communications infrastructure.

ISO recognizes that not all communities adopt and enforce building codes or have equally stringent building codes, nor do all communities enforce their codes with the same vigor. Yet the effectiveness of local building codes can help predict how well some structures in the community will fare in a hurricane, earthquake, or other natural disasters. ISO’s Building Code Effectiveness Classifications help distinguish the various levels of community building-code adoption and enforcement.

The concept is simple: municipalities with well-enforced, up-to-date codes should demonstrate better loss experience, and insurance rates can reflect that. The prospect of lessening catastrophe-related damage and ultimately lowering insurance costs provides an incentive for communities to enforce their building codes rigorously especially as they relate to windstorm damage.

The anticipated upshot: safer buildings, less damage, and lower insured losses from catastrophes.

The ISO Building Code Effectiveness Grading Schedule (BCEGS) program assigns each municipality a BCEGS grade of 1 (exemplary commitment to building-code enforcement) to 10. ISO develops advisory rating credits that apply to ranges of BCEGS classifications (1-3, 4-7, 8-9, 10). A grade of 98 is given if a community refuses to participate in BCEGS. ISO gives insurers BCEGS classifications, BCEGS advisory credits, and related underwriting information.

Follow the link for frequently asked questions about BCEGS: