Recent Alabama research on homes impacted by hurricanes delivers a strong message to insurers and homeowners nationwide: climate-sensitive construction techniques can safeguard your home and lead to significant savings.
The initial analysis reviewed thousands of insurance claims linked to Hurricane Sally, which struck the Alabama coast in 2020 with winds reaching 105 mph. Homes that were either renovated or constructed to meet enhanced standards saw a marked decrease in claims, primarily due to a voluntary construction code established by the Nonprofit Insurance Institute for Wind Power and Rain Mitigation Institute (IBHS).
If all homes in Mobile and Baldwin counties had adhered to fortified standards, insurance companies could have reduced payouts by up to 75%, saving nearly $112 million, while policyholders might have enjoyed up to 65% less in deductibles, amounting to savings of around $35 million.
“We have learned a lot from our experiences,” stated Dr. Lars Powell, director of the Center for Risk and Insurance Research at the University of Alabama’s Culver House Business School.
The insurance market across the US is under strain due to more frequent and costly climate events, while federal support for resilience projects that could mitigate such losses is decreasing. Officials and researchers involved in the study believe it underscores Alabama’s proactive strategies, including significant insurance discounts for those adhering to enhanced standards and a supportive grant program.
Drawing from decades of research, IBHS developed an enhanced fortification to bolster buildings against storm damage. Equipped with facilities like rain, hail, and a large wind tunnel, the model simulates winds up to 130 mph.
“This year has been record-breaking, not just for disasters but also for insured losses. We’re seeking impactful ways to decrease the frequency and severity of these losses,” explained Fred Malik, managing director of the Enhancement Program.
The program features three designation levels—fortified roof, silver, and gold—that utilize improved roof connectors, impact-rated doors and windows, and secure wall-to-foundation connections for added safety. Third-party verification of work is a requirement for this program.
Currently, about 80,000 homes across 32 states have been fortified, including over 53,000 in Alabama.
The state began exploring methods to enhance storm outcomes after Hurricane Ivan severely impacted its insurance market in 2004. “Ivan was utterly devastating,” remarked Alabama Insurance Secretary Mark Fowler. “Our market was chaotic, and many insurance companies exited.”
Now, Alabama is the only state enforcing mandatory minimum insurance discounts for homeowners’ premiums, reducing them by half. The state has also launched the Strengthen Your Alabama Home incentive program, which offers homeowners grants up to $10,000 for renovations that meet enhanced standards.
Since 2015, the state has invested $86 million in 8,700 fortified retrofits. Fowler commends the initiative for stimulating demand for new fortified constructions and encouraging contractors and inspectors to familiarize themselves with the standards.
“It has proven to be exceptionally effective,” he remarked. “We’ve witnessed a significant stabilization in the market.”
Hurricane Sally offered researchers their first opportunity to evaluate the program in real storm scenarios. “It was a typical storm that anyone living on the hurricane coast would experience annually,” Malik noted.
They gathered insurance data from over 40,000 properties in the affected regions, with total insurance amounts reaching $17 billion.
Enhanced construction techniques reduced claim frequency by 55% to 74% and minimized loss severity by 14% to 40%, depending on the specified level. Even though strengthened homes constituted nearly a quarter of the policies reviewed, they accounted for only 9% of claims.
These homes outperformed those built to similar codes, likely due to the program’s rigorous verification processes, though not officially designated.
“The real value starts to sink in for everyone involved,” Malik stated. “Insurers see the benefits, and homeowners gain value too.”
The fortified homes experienced no hurricane-related losses. Nearly half of the claims in this study stemmed from fallen trees, which necessitate separate mitigation strategies.
However, enhanced standards introduce additional costs: 0.5% to 3% for new constructions and 6% to 16% for retrofitting. Nonetheless, disaster recovery organizations like Habitat for Humanity, Team Rubicon, and SBP have frequently utilized enhanced standards, supported by philanthropic contributions from companies like Allstate.
“This will assist homeowners affected by disasters to rebuild smarter with storm-resistant construction in line with IBHS fortified standards,” remarked Thomas Corey, chief operating officer of New Orleans-based nonprofit SBP.
Potential insurance savings can also facilitate recovery for families by lowering monthly expenses and boosting confidence in their ability to safeguard their homes. “For low-income families, this might mean greater upward mobility following a disaster or long-standing economic hardships,” Corey added.
This year, Alabama is expanding its grant program into three new counties. Fowler hopes the results will encourage more insurers to offer wind protection for coastal residences, and that the model will extend into regions less prone to severe weather.
This initiative has garnered interest from other states searching for resilience solutions. Fowler recently addressed California’s legislative committee regarding the proposed California Safe Home Law, which aims to fund fire-safe roofing and defensible space grants to mitigate wildfire risks.
“Natural disasters such as storms, earthquakes, and wildfires are inevitable,” he informed the committee. “This underscores the necessity of building more resilient structures before such events occur, thereby minimizing damage afterward. It’s a straightforward concept.”
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Source: apnews.com