Veronica PiscitelliAs states prepare for the upcoming hurricane season, the Alabama Department of Insurance (DOI) is unveiling a new study to showcase the effectiveness of fortifying coastal areas against natural disasters.
The study, conducted by the DOI and the Center for Risk and Insurance Reseach at the University of Alabama, showed promise for insurers and homeowners when it comes to proactive climate-resilient construction methods. The first-of-its-kind study reviewed thousands of insurance claims from hurricane-affected homes and found many areas where costs can be saved using Fortified standards.
Fortified is a voluntary construction code created by the nonprofit Insurance Institute for Business and Home Safety (IBHS) for wind and rain mitigation. It was created by the IBHS to strengthen buildings against storm damage. Concluding decades of research, the group provides best standards to protect buildings from damage, including using a giant wind tunnel to test houses under extreme conditions.
The Fortified standards fall under three designations: Fortified Roof, Fortified Silver and Fortified Gold. Each employ methods like improving roof fasteners, using impact-rated doors and windows and securely anchoring walls to their foundations as a way to mitigate damage. All the methods also require third-party verification once completed.
In Alabama, the Fortified standards came about as the state searched for ways to improve storm outcomes after Hurricane Ivan in 2004. In 2009, the state legislature passed a bill recognizing Fortified as the state standard for resilient construction. Alabama also became the only state to implement mandatory minimum insurance discounts for Fortified homes, which are nearly half off homeowners’ wind premiums.
In 2015, the state launched Strengthen Alabama Homes (SAH). This incentive program, made available to Mobile and Baldwin counties, offers grants for homeowners retrofitting their houses to Fortified standards. Since its conception, the program has given $86 million to 8,700 retrofits and catalyzed demand for new Fortified construction. Now over 80,000 homes across 32 states have Fortified designations, including 53,000 in Alabama alone.
This year, the grant program in Alabama is expanding to three new counties. Jefferson, Tuscaloosa and Escambia counties will have access to the grant program starting November 4. More details about the SAH grants, eligibility and applications can be found on DOI’s Strengthening Alabama Homes website.
Researchers specifically investigated the impacts of Hurricane Sally on the infrastructure along Alabama’s Gulf Coast. Hurricane Sally made landfall in Gulf Shores, Alabama in September 2020 as a Category 2 storm, with winds up to 105 knots. The storm gave researchers the first chance to assess Fortified in real storm conditions. They collected insurance data on more than 40,000 houses in the affected area with a total insured value of $17 billion. The study found that homes retrofitted or built to Fortified standards saw significantly fewer and less costly claims.
The study also finds that Fortified construction reduced claim frequency by up to 74%, depending on the designation level. The mitigation methods also decreased loss severity by up to 40%. Additionally, despite representing almost a quarter of the policies studied, Fortified homes accounted for only 9% of claims. The Fortified houses also fared better than houses built to similar codes but without the official designation. The study concludes this is likely due to the program’s more stringent verification requirements.
The study concludes that mitigation efforts do decrease damage done by hurricanes. It was determined that if every impacted home in Mobile and Baldwin counties had met the Fortified standards, insurance companies could have spent 75% less in payouts, or a savings of up to $112 million. Policyholders could have paid up to 65% less in deductibles, saving almost $35 million. Further details of the study and its findings can be found here.
Across the United States, insurance markets are feeling the pressure of more frequent and expensive climate events, while federal support for resilience projects that could reduce damage are shrinking. Officials and researchers with the study say their findings prove the proactive approach done in Alabama is successful. The model of mandatory, sizable insurance discounts for those who use Fortified and a grant program to help make the changes affordable could be replicated on a national level to increase insurability and safety.
While the enhanced standards do add cost, 0.5% to 3% for new construction and 6% to 16% for retrofits; the long-term benefits offset this upfront cost. Disaster recovery nonprofits, such as Habitat for Humanity and Team Rubicon, use Fortified standards, often with the support of large insurance companies.
Other states are seeking resilience solutions to achieve similar positive outcomes, like the ones demonstrated in Alabama. In California, the California Safe Homes Act is a proposed bill that would fund grants for fire-safe roofing and defensible space to protect from wildfires.
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