Answering the Call.

As the risks to emergency vehicles change, insurers are defining the exposures and practicing loss prevention.

This spring, a fire truck on its way to an emergency, with its lights flashing and sirens roaring, collided with an ambulance in a busy intersection in West Hollywood, Calif. An ambulance responding to a call in Charlotte, N.C., hit another vehicle, allegedly killing its driver. And in Cleveland, a motorist died after running a red light and colliding with a fire truck responding to an emergency call.

These incidents highlight the main exposure in emergency-vehicle insurance--accidents involving police cars, fire trucks and ambulances on their way to and from emergency calls. Fire trucks, because of their size, also face the risk of hitting another vehicle or object while backing up. And although police cars are continuously on the road and exposed to risk, ambulances present unique risks, because they often are driven at high speeds during emergency calls.

These high-speed crashes are costly for insurers. Ace USA, which writes a program in tandem with program agent Target Capital for volunteer fire companies, reports that fire department vehicles can cost from $35,000 to several hundreds of thousands of dollars to repair or replace.

Emergency-vehicle insurance, including vehicle, workers' compensation and liability coverage, is a niche property/casualty market estimated to be worth $900 million in premium. About three-fourths of the market is self-insured, and about $150 million of premium is purchased from insurers, said Sally Hawk, president and chief executive officer of Coregis. Coregis, which is part of GE ERC's commercial insurance operations, is one of the top writers in this market.

Risks on the Rise

As more people move to the suburbs, municipal governments are purchasing more police cars, fire trucks and ambulances to provide sufficient emergency services. And as the suburbs become more urban with the addition of high-rise office buildings, industrial facilities and hotels, new risks are emerging for municipal emergency-services providers.

"Volunteer fire companies are staffing up to deal with new business and manufacturing exposures. That means our underwriters have to know what firefighters are exposed to and make sure they are credentialed and equipped to do the job," said Susan Woodward, senior vice president of Ace USA's special programs.

Larry Labelle, a Coregis loss products leader, said his company sees more suburban fire units adding ladder and snorkel trucks to their fleets, so they can respond to high-rise fires. "We look at the demographics of the municipality for underwriting purposes and to see if they retrained their department to use the equipment," Labelle said.

Capacity Shrinks

The high risks that are common to urban areas combined with the risk-intensive service of transporting injured or elderly persons is illustrated in the drying up of ambulette coverage in New York City. Coverage for non-emergency medical transportation was once the domain of Reliance National Insurance Co. Now that the insurer is in runoff, hundreds of ambulette services are finding it difficult to buy coverage in the primary market and are turning to assigned risk pools, where they are charged $12,000 per unit in premium, compared with the $4,000 to $5,000 charged by Reliance, said David Littell, an account executive with Arthur J. Gallagher & Co.

Littell said insurers are backing away from insuring ambulette service in New York City, and they want all of the risks reinsured. "Underwriters don't want the risks. The exposures are too great, so they want reinsurers to do it all," Littell said.

Ambulette services face risks such as dropping patients, occupants getting injured during a collision or by falling and poorly trained drivers. The New York State Supreme Court recently heard a lawsuit brought by a patient of an ambulette service because the driver allegedly failed to help her get out of the vehicle and she fell and broke her leg.

Driven to Distraction

The failure of motorists to yield to emergency vehicles remains the top concern of insurers. The sirens and lights are battling the increasingly cocoon-like environment of motor vehicles, where drivers are distracted by radios, CD players, onboard tracking systems, cell phones, passengers, air-conditioning noise and even videocassette recorders. "Today, there is more equipment usage while driving," Coregis' Hawk said.

Coregis is using risk-management programs to address the problem of motorists not yielding to emergency vehicles. Labelle said the key is to sensitize policyholders to what the public experiences. One aspect of that training is to have a firefighter or police officer drive a car with the radio and air conditioning turned on. "The police or firemen then realize they have to get their vehicles really close to the public's cars to get their attention," Labelle said.

Making a Distinction

The underwriting criteria are different for volunteer and paid fire department vehicles. The National Fire Protection Association reports that the 785,250 volunteer firefighters in the United States far outpace the number of career firemen at 279,900. Out of the 35,000 fire departments in the United States, nearly 22,000, or 60%, are run by volunteer squads.

Ace USA's predecessor, INA, had been involved with the volunteer firefighter market since 1793, but it only began writing coverage in the 1970s. Ace USA took a hiatus from the business in the '90s, after its partner turned to the alternative-risk market. But Ace USA returned 18 months ago with a new partner. Target Capital--the new partner--is an Avon, Conn.-based company that focuses on professional liability, commercial property and casualty and specialty lines programs. Target manages about $75 million in premiums annually in this $132 million market.

"We aggregate coverage and service in a program called OnTarget volunteer firefighters insurance. We underwrite and bind coverage for the carrier Ace USA, who then issues the policies. We're basically an underwriting and service conduit to Ace for agents and brokers on this program," said Drake Manning, Target's director of marketing. Target does business with 12,000 agents and brokers throughout the United States, and currently it is servicing between 200 and 300 agents and brokers with the program. Target aims to have 1,000 program participants by this time next year, Manning said.

One factor that separates paid departments from those staffed with volunteers is the distance the fire tucks are driven. Volunteer fire department trucks are usually located in less congested areas and respond to fewer calls than those of paid departments, said Harry Rambo, a program manager for Ace USA. Target also covers another exposure--volunteer firefighters who use their own cars to get to an emergency. The On Target policy offers excess liability for privately owned vehicles when they are used to answer a call. The policy also offers comprehensive liability protection; property coverage for the volunteers' property and portable and computerized equipment; directors and officers liability coverage, including errors and omissions; and employment practices liability coverage.

Vehicle Usage

Coregis is tracking the growing trend of municipalities to use fire engines and unmarked police cars to respond to medical emergencies. "We're trying to dig down and find out the actual use of the vehicles," Labelle said. Coregis monitors how the emergency departments they insure use unmarked police cars and whether fire trucks are being sent as the first responses to emergencies.

Unmarked police cars are usually used to catch speeders. But when they are responding to an emergency, they can cause problems. According to studies of road rage, motorists are more suspicious and less likely to move for unmarked vehicles, setting the stage for a possible accident, Hawk said.

Substituting other emergency vehicles for unmarked police cars to avoid this problem doesn't alleviate the risk, however. "With the buildup of the suburbs, there aren't enough ambulances to go around, so in many towns they use fire trucks for first response use," she said. "Because they are big vehicles and can cause damage when traveling at high speeds, it's a concern," Labelle said.

Clearing the Roads

Companies that insure emergency vehicles also focus on risk-management strategies to reduce the likelihood that claims will be filed. For example, cities across the United States are installing emergency-vehicle warning systems. These are computerized traffic signals that alert drivers that an emergency vehicle is nearby

In Monrovia, Calif., E-Lite Ltd. installed its E-View early-warning system at eight intersections. Display boards that read, "Warning: Police Pursuit" and "Clear Intersection," were mounted above or below the traffic lights at busy intersections. When police officers or firefighters are traveling to a call, a signal from a transponder in their vehicle is relayed to the display boards near the traffic lights, signaling drivers to pull over and make way for the emergency vehicles. These transponders were installed in 20 police cars and 10 fire department vehicles.

Another type of emergency-vehicle warning system is hooked up to a municipality's communication system and traffic-signal computers, Goregis' Libelle said. The system calculates the most direct route to the emergency scene and sends police and fire trucks there. It automatically changes the traffic lights along the way to green to clear the route for the emergency vehicles.

Insurers also are turning to municipalities for help in dealing with motorists who fail to yield to emergency vehicles. "Local towns are beginning to take aggressive action to drivers not yielding by issuing tickets," said Tim Madderom, an underwriter for Coregis.

Crashes Involving Emergency Vehicles, United States, 1998
The potential for an accident is the
main risk of emergency-vehicle coverage.
                                     Ambulance
                                     Total      Emergency Use *
Emergency vehicles in fatal crashes     25             16
Emergency vehicles in crashes with   2,306          1,756
injuries
Emergency vehicles in all crashes    4,615          2,683
Emergency vehicle drivers killed         2              1
Emergency vehicle passengers killed      7              5
Occupants of other motor vehicle        18             13
killed
Nonmotorists killed                      2              1
Total killed in crashes                 29             20
Total injured in crashes             3,274          2,382
                                     Fire Truck/Car
                                     Total           Emergency Use *
Emergency vehicles in fatal crashes     17                   9
Emergency vehicles in crashes with     781                 680
injuries
Emergency vehicles in all crashes    3,188               2,421
Emergency vehicle drivers killed         4                   1
Emergency vehicle passengers killed      3                   1
Occupants of other motor vehicle        12                   7
killed
Nonmotorists killed                      3                   2
Total killed in crashes                 22                  11
Total injured in crashes             1,035                 834
                                     Police Car
                                      Total      Emergency Use *
Emergency vehicles in fatal crashes      83             43
Emergency vehicles in crashes with    8,210          3,897
injuries
Emergency vehicles in all crashes    24,417         10,205
Emergency vehicle drivers killed         17              6
Emergency vehicle passengers killed       3              2
Occupants of other motor vehicle         66             38
killed
Nonmotorists killed                      10              2
Total killed in crashes                  96             48
Total injured in crashes             12,239          5,714
(*)Emergency lights and/or sirens in use.
Source: National Safety Council tabulations of data from National
Highway Traffic Safety Administration-1998 Fatality Analysis Reporting
System and 1998 General Estimates Systems.