Orlando Harmon
The Building Code Effectiveness Grading Schedule (BCEGS) is a classification system that evaluates the effectiveness of building codes in a community, particularly in mitigating losses from natural hazards such as earthquakes, windstorms, and hail. The BCEGS program collects data on building codes and their enforcement, analyzing it to determine the level of code enforcement. This information is valuable for insurers, helping them to understand the risk associated with properties in specific communities and set more accurate premiums. The BCEGS classification scale ranges from 1 to 10, with 1 representing exemplary enforcement and a lower insurance risk. While most communities participate in the BCEGS evaluation, some do not, and these are typically assigned a classification of 99. Insurers can utilize the BCEGS data to make better underwriting decisions and offer premium credits for buildings constructed under well-enforced codes, ultimately reducing losses for both insurers and policyholders.
| Characteristics | Values |
|---|---|
| Full Form | BCEGS: Building Code Effectiveness Grading Schedule |
| Purpose | To encourage effective enforcement of municipal building codes to mitigate losses from natural hazards |
| Data Points | 1,243 |
| Scoring Range | 0-100 |
| Classification Range | 1-10 |
| Classification Score Meaning | 1 represents exemplary commitment to building code enforcement and 10 represents no recognizable building code enforcement |
| Classification Score Availability | The earliest year BCEGS classification data is available is 1997 |
| Classification Score Unavailability | If a BCEGS classification score is unavailable, a score of 99 is given |
| Classification Use | Used for insurance rating and underwriting purposes |
| Classification Benefits | Safer buildings, less damage, lower insured losses from catastrophes, and reduced insurance costs |
| Classification Credit | Buildings in communities with classifications of 9 and lower will receive a rating credit, and a classification of 10 receives no credit |
| Classification Credit Range | Classifications of 1-3 will receive the highest credit, and classifications of 4-9 will receive intermediate credits |
| Classification Credit Report | ISO's 2019 report provides the latest information on building code effectiveness and enforcement nationwide |
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What You'll Learn
Building codes and natural disasters
Building codes are a minimum standard for construction quality, and they play a crucial role in mitigating the impact of natural disasters. The adoption and implementation of current building codes are one of the most effective ways to protect communities and their investments from natural disasters.
FEMA's research and data prove that natural hazard-resistant building codes save lives and protect investments. Their Building Resilient Infrastructure and Communities program provides grant funding to local governments to update their building codes and enforce regulations to create disaster-resilient communities. FEMA also offers free multi-hazard mitigation guidance to homeowners, emergency managers, building code officials, and policymakers to enhance community safety and reduce losses from natural disasters.
The Building Code Enforcement Playbook assists local officials in strengthening enforcement systems, improving staffing, training, inspection, and compliance processes to support the implementation of natural-hazard-resistant building codes. Additionally, FEMA tracks the current building code adoption status for state, local, tribal, and territorial governments.
Verisk's Community Hazard Mitigation Services, through its Building Code Effectiveness Grading Schedule (BCEGS), also encourages the implementation and enforcement of effective building codes. BCEGS evaluates the effectiveness of municipal building codes and their enforcement, with a focus on mitigating losses from natural hazards, particularly windstorms and seismic activity. The grading schedule provides insurance rating and underwriting purposes, reflecting the prospect of reduced damage and insurance costs for communities with well-enforced codes.
While some vulnerable states are relaxing building regulations, it is evident that adapting building codes to natural disasters saves lives, protects investments, and reduces property losses. Strong building codes are a critical defense mechanism for communities, and their proactive implementation can help build resilience against future storms and other natural disasters.
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Insurance rates and credits
Insurance rates are determined by the Building Code Effectiveness Grading Schedule (BCEGS) classification of a community. The BCEGS classification indicates how effective and up-to-date a community's building codes are and how well they are enforced. The classification process emphasises building code requirements that help prevent or mitigate property losses related to natural hazards such as earthquakes, windstorms, or hail.
Scores range from 1 to 10, with 1 representing exemplary commitment to building code enforcement and 10 representing no recognisable building code enforcement. A community with a score of 1 is expected to have lower insurance rates as the well-enforced, up-to-date codes should demonstrate better loss experience. On the other hand, a community with a score of 10 is expected to have higher insurance rates as there is no recognisable building code enforcement, leading to higher risks and more significant losses.
The BCEGS program offers insurance credits to buildings constructed under strictly enforced codes. Buildings in communities with classifications of 9 and lower will receive a rating credit, and a classification of 10 receives no credit. Classifications of 1–3 will receive the highest credit, and classifications of 4–9 will receive intermediate credits. These credits are applied to loss costs for personal and commercial property coverages in each community.
To access BCEGS data, insurance companies can either log in to the website and perform a manual search using the building's address or community and the year the building's certificate of occupancy was issued or the final inspection was completed, or they can set up an API to have the data fed directly into their underwriting system.
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Underwriting and risk
The classification process involves evaluating a community's protection class (PC) and building codes. The stringency and enforcement of building codes are critical factors in determining the risk of property losses during natural disasters. The BCEGS program collects data on building codes and their enforcement, analyzing it to determine the level of building-code enforcement in a community.
Insurers use the BCEGS classifications to make informed underwriting decisions and determine property insurance values. The classifications range from 1 to 10, with 1 representing exemplary commitment to building code enforcement and the lowest risk, while 10 indicates no recognizable building code enforcement and the highest risk. Properties in communities with better enforcement of stringent building codes are considered safer and less likely to suffer significant damage during natural disasters.
The BCEGS program provides incentives for communities to enforce rigorous building codes. The prospect of reduced catastrophe-related damage and lower insurance costs encourages municipalities to adopt and enforce effective building codes. This, in turn, benefits insurers and policyholders by reducing losses and claims resulting from natural disasters.
To access BCEGS data for underwriting purposes, insurers can utilize the website or integrate the data directly into their underwriting system via an application programming interface (API). This allows underwriters to consider the building code enforcement in a specific community when assessing the risk associated with a property and setting appropriate insurance rates.
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Community participation
The BCEGS program assesses a community's building code enforcement in three areas: residential construction, commercial construction, and industrial construction. The evaluation process involves collecting data on the building codes in effect in a community and how effectively those codes are enforced. This data is then used to determine a Building Code Effectiveness Classification for each community, with scores ranging from 1 to 10. A lower score indicates better enforcement of building codes.
Most communities participate in the BCEGS evaluation process, recognizing the benefits of reduced damage and lower insurance costs. For communities that do not participate, a classification of 99 is given instead of a score between 1 and 10. The BCEGS program provides an incentive for communities to improve their building code enforcement by offering the prospect of lower insurance rates.
To further encourage community participation, BCEGS works closely with insurance providers. Insurers may use the assigned classifications to determine property insurance values and offer premium credits for buildings constructed under strictly enforced codes. This creates an additional incentive for communities to enforce strict building codes, as it can result in lower insurance costs for their residents.
Overall, community participation in the BCEGS program is essential to its success. By working together with local governments and insurance providers, BCEGS helps to create safer, more resilient communities that are better prepared to withstand natural disasters. Through the evaluation process, communities can identify areas for improvement in their building code enforcement and take steps to mitigate potential losses.
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Classification and scoring
The Building Code Effectiveness Grading Schedule (BCEGS) is a classification system that evaluates the effectiveness and enforcement of building codes in a community. The classification process focuses on building code requirements that help to prevent or mitigate property losses related to natural hazards, such as earthquakes, windstorms, and hail. The BCEGS program collects data on the building codes in effect in a community and how well those codes are enforced. This data is then used to determine the level of building code enforcement and assign a score.
The BCEGS classification scale ranges from 1 to 10, with 1 representing the highest level of building code enforcement and 10 indicating no recognizable enforcement. Scores of 1-3 receive the highest credit, while scores of 4-9 receive intermediate credits. A score of 10 receives no credit. The BCEGS program also assigns a separate score for dwellings (identified by a DW code) and commercial properties (CL Code).
To obtain a BCEGS classification, users must provide the building's address or the community in which it is located, as well as the year the building's certificate of occupancy was issued or the final inspection was completed. The earliest year for which BCEGS classification data is available is 1997, but not all communities were evaluated in that year, so data for some communities may start from 1998 or later. If a BCEGS classification is not available for a property or community, a score of 99 will be displayed instead of a score between 1 and 10.
The BCEGS program is designed to encourage communities to implement and enforce effective building codes, leading to safer buildings, reduced damage from natural disasters, and lower insurance costs. The program provides an incentive for communities to enforce stringent building codes, particularly in relation to mitigating losses from windstorms and seismic activity. By participating in the BCEGS program, communities can demonstrate their commitment to building code enforcement and potentially lower their insurance rates.
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Frequently asked questions
BCEGS stands for Building Code Effectiveness Grading Schedule. It is a program that assesses a community’s building code enforcement and encourages the implementation and enforcement of effective building codes to mitigate losses from natural hazards.
The ISO collects information on the building codes in effect in a community and how well the community enforces its building codes. It then uses the BCEGS to determine the level of building-code enforcement and assigns a Building Code Effectiveness Classification from 1 (exemplary enforcement) to 10.
The BCEGS classification helps insurers better understand the risk they are taking on and more accurately determine premiums. Insurers may use the assigned grading to determine property insurance values or grant premium credits for buildings constructed under strictly enforced codes.
