BEST VALUE PERFORMANCE INDICATORS CONSULTATION: INSURERS VIEWS ON ITS IMPLICATIONS A RESPONSE BY THE ASSOCIATION OF BRITISH INSURERS The Association of British Insurers (ABI) is the trade association for insurance companies operating in the UK. It represents over 400 members who, between them, account for over 91% of the general insurance business of UK insurance companies. This paper is being submitted to the Office of the Deputy Prime Minister in response to the consultation process on Best Value Performance Indicators. This paper sets out the ABI view on the key implications for insurers and their customers. It suggests courses of action where we feel that careful thought and active engagement of key stakeholders need to be given in taking decisions on the implementation of the reforms. Proposal 1 The number of fires in non-domestic properties per 1,000 non-domestic properties. The 2004/05 Fire & Rescue Service National Framework identifies one of the five priorities for each Fire Authority s IRMP as being reducing the commercial, economic and social impact of fires and other emergency incidents. To this end, insurers firmly believer the statutory duty on Fire & Rescue Services to promote Community Fire Safety includes business, as around 80% of jobs and services to the community are provided by the private sector, albeit that some of this is funded via the public purse. There is a 1
danger that some SMEs in the lowest socio-economic groups will slip through the net and be left either without proper fire safety precautions, or be unaware how the legislation has changed or how they can carry out risk assessment. There are over 6 million SME businesses in the UK. Their stability is critical to the economy but their survival is often dependent on external specialist support. British business insured arson losses were around 700 million in 2002. In addition to this, many businesses are not fully insured. Arson attacks on business have a high cost to the community. Fire material damage and related business interruption costs totaled 1.1 billion in the UK in 2003, the third consecutive year of billion pound losses. Despite a long-term commitment by insurers to improving fire and arson prevention ABI research shows that only around 40% of businesses suffering large fire losses have any fixed fire protection installed in the building and that about three quarters of these measures are limited to fire alarms, that is they are life safety mechanisms rather than fire prevention measures. Around 8 in 10 large commercial fire losses occur in businesses with less than 100 million annual turnover. Touch Ross estimates that up to 90% of businesses fail within 12 months of a major crisis. This means a loss of employment, key services and capital from the local area. The proposed BVPI is designed to monitor the effectiveness of fire safety under the new Regulatory Reform Order, for which the Fire Authority will be the enforcing agency (as stated in paragraph 1.29 of the 2004/05 National Framework). Despite previous government and insurer led programmes of publicity and education, the message does not seem to have been picked up by many SMEs. These programmes should be evaluated, barriers to uptake identified and any future programmes designed to address the identified problems. ABI believes Fire Authorities should target fire safety work and enforcement in those areas where the impact of fire would be most damaging, economically, socially and environmentally speaking. 2
Proposal 2 The percentage of people in accidental dwelling fires who escape unharmed without FRS assistance at the fire. The Government has set a target of a reduction by 2010 of the number of accidental fire-related deaths in the home by 20%. To achieve this, Fire Authorities must focus on those communities who are most at risk of fire, where impact on communities and the economy of fire is highest. The primary aims of the Fire & Rescue Service is the protection of life, and Community Fire Safety work must be targeted to maximise the impact of this work. Results from the 2002/3 British Crime Survey indicate that there are certain characteristics that consistently indicate being at greater risk of fire: Financially unstable household; High physical disorder in property and surrounding area; Recent victim of crime; Smoking household; Mixed race or Black household. Additional research indicates: Government research suggests that socially deprived households are 31 times more likely to suffer fires than households in general. Around 50% of households on the lowest income decile have no household insurance, meaning they have to cover the cost of fire damage themselves. While ABI recognises the need to monitor the information in this BVPI, it must be expanded upon if used as a Performance Indicator. Fire safety education in the 3
community must be targeted at those sections of the community who are most at risk, and the BVPI should emphasise the need to be evidence-led on this issue. Proposal 3 The percentage of all fires attended in dwellings where: a) a smoke alarm had activated; b) a smoke alarm was fitted but did not activate; c) no smoke alarm was fitted. ABI welcomes the distinction between fires in which a smoke alarm had activated, and where a smoke alarm was present but did not activate. Insurers fully endorse smoke alarms as a life safety measure, but recognise that it must be supported by ensuring that smoke alarms fitted are kept fully operational. Government Fire Statistics for 2001 show that 45% of all battery powered alarms failed in dwelling fires in 2001, and 13% of mains-operated ones failed. Three quarters of all smoke alarms are battery powered 1. Ownership of smoke alarms is around 80% 2, however it is much lower in dwellings most at risk of fire: A smoke alarm was absent in 57% of dwelling fires in 2002; An alarm was present but failed to operate in 12% of the remaining fires; An alarm operated but did not raise the alarm in another 4% of cases. 1 Fires in the Home: findings from the 2002/03 British Crime Survey, ODPM (2004) 2 81% in 2002/03, of which 76% operational, British Crime Survey 4
In only 27% of dwelling fires in 2002 did an alarm operate and raise the alarm, despite ownership of smoke alarms being 80%. It should be noted that smoke alarms do not prevent fires, which should be the primary aim, but can assist in preventing fatalities in fires. Lives will continue to be put in danger, and the social and health impacts of fires will not be avoided, if the Fire Service focuses solely on smoke alarm as a preventative measure. Over half of domestic fires start in the kitchen according to the British Crime Survey so domestic preventative work should focus on cooking-related fire safety issues. Insurers regard it as essential that further work is carried out to promote ownership and maintenance of smoke alarms amongst vulnerable groups including those living inner city, low income or multi-ethnic areas, areas of high physical disorder, in poorly maintained properties, older or converted properties. Proposal 4 a) The number of people extricated alive from RTAs attended where an extrication was required; b) The number of people extricated dead from RTAs attended where an extrication was required; and c) The number of RTAs attended where an extrication was required. Any suggestions as to how an FRA s performance at RTAs might be supplemented? ABI welcomes the recognition of the role of the Fire & Rescue Service in responding to RTAs as part of their role as Category 1 emergency responders. However, the ability of 5
the Service to influence the number of, and outcome of, RTAs is limited as recognised in the consultation paper. The BVPIs must reflect all objectives of the Fire Service both fire and non-fire fighting activities, and to this end ABI recognizes the need for a measure of Fire Service performance at RTAs. However, BVPIs should focus on the prevention of incidents as well as responses to them, and as stated, Authorities can make only a limited contribution to the prevention of RTAs. Deletion of BV142(i) Total number of calls to fire (excluding false alarms) per 10,000 population. Do you agree that this BVPI should be deleted? ABI endorses the view in the 2004/05 National Framework that the role of a modern Fire & Rescue Service has changed, and the range of incidents that the Fire Service responds to has expanded to include Road Traffic Accidents, floods, and other special services. The level of activity of a Fire Brigade in responding to these non-firefighting incidents clearly needs to be monitored, as a measure of calls to fire is no longer an accurate measure of the level of activity of a Fire Brigade. To this extent ABI agrees that BV142(i) needs to be modified as it is not an accurate measure of Fire Brigade activity. However the total number of calls to fire (excluding false alarms) still needs to be captured, whether through Fire Statistics reports (as proposed in the consultation document) or through another means. The duty to promote Community Fire Safety, as laid down in the 2004/05 National Framework, should have two results. Firstly there should be a reduced number of deaths from fire, as part of Community Fire Safety work involves promotion of smoke alarms and other early warning systems that, although effective, do not prevent fires. Secondly, Community Fire Safety work combined with the duty to protect social and economic damage from fire should result in a reduction in the number of actual fires. It is 6
essential that this is captured in the information gathered regarding FRS activity, and used to assess the effectiveness of the focus on prevention of fires rather than intervention by firefighting. Amendment to BV146 a) Number of calls to malicious false alarms not attended per 1,000 population; b) Number of calls to malicious false alarms attended per 1,000 population. How might this proposed BVPI work following the advent of regional control rooms from 06/07? ABI recognises the burden that hoax calls place on the Fire & Rescue Service and notes the range of initiatives currently being developed in England & Wales to try and reduce the number of hoax calls, including further challenging of callers, underpinned by relevant training for staff at emergency call receiving centers. This measure can only be an accurate performance assessment barometer if control room staff are given full training and support to challenge callers and make a judgment as to whether a call is malicious or not. We have strong concerns over the use of this measurement as a BVPI, however. Any proposal on non-attendance at a 999 call must be evidence-led and fully qualified. Work to drive down the number of malicious false alarms must use effective measures and take account of the risk to life and economic capacity. While insurers fully agree on the need to reduce the number of malicious false alarms, a situation must not be allowed to 7
occur whereby a Fire Brigade did not respond to a genuine 999 call. Using nonattendance to malicious false alarms as a BVPI may encourage Fire Authorities to err on the side of non-attendance, a strategy that would increase risk to life and property in the local community. Even one instance of non-attendance at a genuine 999 call would result in significant negative publicity, criticism and loss of public and business confidence in the Fire and Rescue Service, notwithstanding the risk to life and property. This increased risk would inevitably be reflected in future pricing and availability of insurance coverage in the affected area, particularly in the event of non-attendance at a genuine fire. Amendment to BV149 a) False alarms caused by automatic fire detection per 1,000 non-domestic properties; b) Number of those properties with more than 1 attendance in the financial year; c) The % of calls which are to a property with more than 1 attendance in the financial year. ABI does not believe that BV149 is clearly worded or defined. It is not immediately clear what the relationship between a, b and c is, and what having all three measurements as BVPIs adds to the performance management process. Insurers believe a more important measurement should be the number of businesses from which fire cover has been withdrawn. This is a more effective measurement of the success of the policy to reduce the incidence of unwanted fire signals from automatic false alarms. In this way, 8
one could see that, if the number of businesses with coverage withdrawn were to increase, but figure b were to remain constant, then the policy was not targeting the repeat offenders effectively and should be reviewed. Insurers believe there should be a duty on Fire Authorities to record the number of businesses they have withdrawn cover from, irrespective of BVPIs. If this number were to increase then the message would be that businesses are being penalised for investing in fire protection systems, and in fact would benefit from more protection from the Fire Service were they to have not invested in it a message at odds with that outlined in the 2004/05 National Framework. Amendment to BV206 a) Number of deliberate primary fires (excluding deliberate primary fires in vehicles) per 10,000 populations; b) Number of deliberate primary fires in vehicles per 10,000 population; c) Number of deliberate secondary fires (excluding deliberate secondary fires in vehicles) per 10,000 population; d) Number of deliberate secondary fires in vehicles per 10,000 population. ABI believes that all Fire Authorities should identify a reduction of fire crime as one of their key priorities, and welcome the commitment in the ODPM Public Service Agreement to reduce the number of deliberate fires by 10%. ABI also fully supports the separate recording of secondary fires and vehicle fires. Vehicle arson is a significant part of the problem of fire crime, accounting for nearly 8 out of 10 vehicle fires in 2002 3. 3 UK Fire Statistics 2002, Office of the Deputy Prime Minister, April 2004. 9
This is a particularly significant problem as small and secondary fires, including vehicle arson, are indicators of anti-social behaviour and likely to lead to larger arson fires. The figures must be used to measure and improve the rates of detection and conviction of arson. Research by Nick Young, published by the Arson Prevention Bureau in 2004 4, shows that arson offences, per head of population, are far lower in the US than the UK. In addition to this, figures on arson offences differ between those collected by the Fire Service and those collected by the Police. The Fire Service recorded 113,700 malicious fires in England and Wales in 2001, yet Police statistics for England and Wales during roughly the same period were around 53,000. Of this 53,000, only 8% were detected. This low detection rate is unacceptable given that arson results in around 100 deaths per year in England and Wales, and represents a loss of around 2.2billion per year. This BVPI needs to be the driver to address this issue and reduce the number of deliberate fires, while increasing the detection rate. This means reducing arson in commercial and domestic properties, alongside high-volume vehicle arson. Voluntary Performance Indicators Do you agree that it would be useful in terms of measuring your local performance to have available a suite of voluntary performance indicators with standard definitions to allow for benchmarking with other FRAs? ABI does not believe that it is useful to have Performance Indicators that are voluntary. Whilst the use of standard definitions is essential to comparison of performance and benchmarking, making the Performance Indicators voluntary undermines any exercise in comparison. Many of the voluntary performance indicators listed in the consultation document, such as the number of deaths from fires in non-domestic properties, are essential measurements of the performance of a Fire Authority, and without compelling 4 Detecting and Convicting the Arsonist: Lessons from the United States, Nick Young, Arson Prevention Bureau, April 2004. 10
every Fire Authority to record these figures, the value of this information is diminished. It is vital that as much information as possible about local activity of the Fire Service is captured by the Authority so as full a picture as possible can be drawn of the cause, type, location and effect of each fire in the UK. Association of British Insurers October 2004 11