This piece was originally published in the May 2016 issue of ei, the magazine of the electroindustry.
By Bryan P. Holland, NEMA Southern Region Field Representative
One sentence in the foreword to the 2015 edition of NFPA 70E Standard for Electrical Safety in the Workplace posits, “It can be debated that all of the requirements of the National Electrical Code, when traced through a chain of events, relate to an electrical hazard.”
This is likely true for every code and standard developed for the manufacture and installation of electrical and alarm products. Therefore, it can be deduced that electrical and alarm products manufactured and installed in compliance with an applicable code and standard significantly reduce or eliminate potential hazards from the use of electricity to persons and property.
The insurance industry’s involvement in the development and promulgation of electrical and alarm codes and standards dates back to the beginning of the electroindustry. In 1881, C.J.H. Woodbury of Factory Mutual Insurance reported at a meeting with the New York Board of Fire Underwriters that “there were 65 installations of electrical light in the mills insured by the Manufacturers’ Mutual Insurance Companies of New England, which were followed by 23 fires in six months, presenting a most hazardous and alarming condition of affairs.”
This meeting led to the publication of the first set of adopted rules for the installation of electrical systems by a local jurisdiction. That was October 19, 1881. Nearly 135 years later, the insurance industry still plays a major role in electrical safety.
Investing in Compliance
The insurance industry has representatives on committees at all levels of codes and standards development, including NFPA code-making panels, UL standard technical panels, and International Code Council development committees. Many states and local jurisdictions also have insurance industry positions on their code councils. The industry also serves as a major source of information and guidance to legislators and local policymakers in the development of laws and rules that regulate construction.
The insurance industry has a vested interest in the property it covers, thus ensuring that electrical and alarm systems comply with the most recently published editions of applicable codes. This is achieved through the industry’s endorsement of and support for the Coalition for Current Safety Codes and the three-year code adoption cycle.
Code-adoption advocacy is channeled through the Insurance Institute for Business and Home Safety, an independent, nonprofit, scientific research and communications organization supported solely by property insurers and reinsurers. It is critical to the industry that codes and standards are adopted and enforced, as written, without any amendments that reduce safety requirements.
A program developed by the Insurance Services Office, which promotes best practices in code adoption and enforcement, is the Building Code Effectiveness Grading Scale (BCEGS). This program evaluates building codes in effect in a particular community and how the community enforces those codes. The BCEGS community insurance rating can reduce insurance premiums for property owners up to 25 percent. It can also result in substantial discounts on premiums for flood insurance policies under the National Flood Insurance Program.
The Federal Emergency Management Agency (FEMA) uses BCEGS ratings to determine disaster recovery funding. Today, more than 20,800 communities participate in the BCEGS program, covering 87 percent of the U.S. population. Increased property and flood insurance premiums, along with decreased FEMA disaster recovery funding, can serve as a huge deterrent for a jurisdiction to delay adoption of construction codes or to implement code amendments that reduce the electrical and fire safety.
Another insurance industry program related to electrical safety is the “increased cost of compliance” or “law and ordinance” coverage offered to policyholders in homes and buildings more than five years old. In the event that a claim is filed to repair or rebuild a covered property, the increased cost of compliance or law and ordinance coverage will pay for electrical equipment and system upgrades necessary to meet the most recently published NEC and other electrical and alarm standards.
The insurance industry remains an essential partner of the electroindustry in its endeavor to promote electrical safety. With the availability of insurance to cover increased costs of compliance with newer construction codes, home and business owners can bring their properties to the most current electrical safety standards when repairs or rebuilding occurs.
Mr. Holland has 20 years of experience in the electrical industry and has been a NEMA field representative since 2014.
 The National Fire Protection Association (NFPA) publishes NFPA 70 National Electrical Code® (NEC), as well as other codes and standards related to fire, building, and life safety.