Residential insurance could take a 50 to 60 percent rate hike

By Chaun Scott
Yellowstone Newspapers

  Montana residents may see a "huge" hike in their insurance premiums over the next year if the the Montana Department of Labor and Industry's Building Codes Bureau (Department) does not adopt the 2012 International Residential Building Code, according to Dennis Hirsch, President of the Montana International Building Codes Advisory Council and Building inspector for the City of Forsyth.

Recently, the Insurance Service Office (ISO) performed an audit for the State of Montana and determined that rates were to be changed; and for the City of Forsyth, that meant going from a rating of 4 to a 9 (1 being the lowest rate and 10 the highest).  
Kileen Hagadone of Rosebud County Insurance says the change in rate is "huge."
"It's huge!  That means homeowners could possibly see their residential insurance double," said Hagadone.  "City residents could wind up paying as much as someone who lives 20 miles out of town. People who live in the country expect to pay more for their insurance, not those living in town where they have city fire protection and fire hydrants.  That's just huge!"
Hirsch says the ISO rate hike happened because the state did not adopt the 2009 International Residential Codes (IRC) and instead opted to stick with the 2006 edition that was already in place.
"The state did not adopt the 2009 IRC because it required all new single and double family dwellings to be built with a sprinkler system in place," said Hirsch.  "A series of hearings were held and did not get a good response so the state didn't adopt the 2009 code.  Since the state did not adopt the code the City [Forsyth] couldn't."
In the spring of 2009, the State held a six-city tour to receive input from certified cities, citizens and stakeholders on moving to the 2009 IRC and received numerous amount testimonies, mostly regarding the sprinkler systems. According to David Cook, Executive Director of the Department of Labor and Industries Building Code Bureau, the meetings were very emotional.
"I chaired every one of those meetings and I can say that never before or since has there been a code adoption so polarized and contentious," said Cook in a letter. 
Four scenarios of adoption were presented during the hearings to either adopt the 2009 edition as is with no modifications, to not adopt and keep the 2006 edition in place, adopt with modifications to extend the effective date of the sprinklers or to adopt the 2009 edition with modifications to the sprinkler requirements for trade-offs in certain conditions (ie: increased exiting, fire alarms, fire resistive construction etc.).   According to Cook, the option to not adopt the 2009 edition and to stay on the 2006 was the leading opinion of the people who participated.
"At the time, there was talk at the national level of overturning the sprinkler system provision in the IRC in the 2009 edition," said Cook in a letter.  "The recall never happened and the sprinkler system stood in the 2009 edition and is now included in the 2012 edition."
The decision to stay on the 2006 edition was later upheld by the Department; and was further endorsed by the 2011 Legislature when House Bill 307, Prohibiting building codes from requiring some mandatory sprinkler systems, was passed through both Houses and was placed on the Governors desk for signing.  Governor Schweitzer vetoed the bill with an amendment to allow local government to decide on sprinklers for individual jurisdictions, but the state would not have sprinklers in their jurisdiction.  The amendment and bill died from a lack of signatures and did not become law.
With the amended bill never becoming law, individual jurisdictions were unable to adopt the 2009 edition on a city-to-city basis.
"We do codes universally as a state," said Jan Morgan, Code Enforcer for the City of Colstrip and Secretary of the Montana International Building Advisory Council.  "We [all jurisdictions] are all in the same boat.  We all adopt what the state has adopted."
According to Morgan, Montana is the only state that has a "state-wide building code."
"That's why we are all in the same boat; we are all impacted."
During last week's City Council meeting, Feb. 25, Hirsch reported to Council that after receiving the negative ISO rating for the City of Forsyth, "which will increase all insurance premiums on residential homes," he talked to Michael Vargas, Community Mitigation Analyst for the ISO, and to Cook.  Hirsch was advised by Vargas that "the State of Montana needs to proceed to update the building codes to the 2012 IRC Division in order to to get a lower insurance rating for the cities of Montana."
According to Cook, the State will be holding similar listening sessions, like those held in 2009, beginning in April.  The meetings will be held to gauge citizen and stakeholder  outlook on the 2012 editions of the codes.  Once collected and documented, the state will send the question of adopting the 2012 editions to the Building Code Advisory Council for deliberation and assistance in formulating the strategy on adopting the codes.
"The process is going to start on April 2 and could take a couple of months," said Hirsch.  "We should have everything back in place by September.  The ISO has agreed to keep our rates at the same structure until then."

Published March 6, 2013

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