From the May 2011 issue of American Agent & Broker •Subscribe!

Encourage Safer Building

Bill to tighten codes would bring safety to a local level

On Oct. 17, 1989, rush hour in the San Francisco Bay area was well underway, with commuters inching their ways along the myriad highways snaking out of the city. The Giants were hosting the Oakland Athletics at Candlestick Park in game three of the World Series.

Ninety-six miles away, at 5:04 p.m., in the Santa Cruz Mountains, the ground rumbled and then shook violently.

Related: Read "Could California Crumble?"

This was the Loma Priéta earthquake, registering 7.1 on the Richter scale. The quake rocked the Bay area, causing the collapse of a 50-foot section of the Bay Bridge and a 1.25-mile span of Oakland’s elevated Nimitz Freeway. Damages exceeded $6 billion, and 68 people died.

But 8 miles north of the ball park, in the heart of San Francisco, the TransAmerica Pyramid—the city’s most recognizable and at the time tallest building—swayed a mere 12 inches side to side but stood erect and remained undamaged. And no one was seriously injured.

Engineers credit the design and construction of the structure for its ability to withstand a major earthquake. And, it brought lessons that could save both lives and dollars.

In the years since the Loma Priéta earthquake, the federal government has spent more than $96 billion for disaster assistance. But less than $4.5 million of that was spent to mitigate hazards of natural disasters such as earthquakes, hurricanes, floods, tornados and wildfires.

"It is not rocket science to see that, as our grandparents knew, ‘an ounce of prevention is worth of pound of cure,’" said Charles M. Chamness, president of the National Assn. of Mutual Insurance Cos. (NAMIC). "Allocating scarce tax dollars in a way that helps prevent the damage that Mother Nature regularly inflicts on our environment would of course be a smart thing to do, and that’s something NAMIC will once again be advocating in the halls of Congress this year."

NAMIC formed the Building Code Coalition in 2007 to promote federal legislation to provide incentive to adopt and enforce stronger building codes throughout the country. The "Safe Building Codes Incentive Act" was introduced in each of the past two Congresses, and the coalition expects it will soon be reintroduced in the 112th Congress as well.

The coalition’s Safe Building Codes Incentive Act would encourage rather than mandate the adoption of building codes that result in structures being able to better withstand the forces of nature. Because building codes typically are adopted at the municipal or state level, the coalition favors an incentive approach to achieving the goal of stronger buildings rather than a federal mandate that requires compliance at the local level. States that do not adopt stronger codes would not be penalized, but those that do would qualify for increased federal disaster funds.

Specifically, the legislation would require the secretary of Housing and Urban Development to award grants, on a competitive basis and with federal matching funds, to qualified local building code enforcement departments to increase staffing, provide staff training, increase staff competence and professional qualifications, support individual certification or departmental accreditation, or for capital expenditures specifically dedicated to department administration.

"Based on engineering principles, building codes establish a reasonable minimum standard for safety that everyone should be able to rely on," said Matt Gannon, assistant vice president of federal affairs for NAMIC. "An increase in the amount of post-disaster mitigation aid available to states following a natural disaster based on the strength and enforcement of their building codes would be a powerful incentive for those states"

FEMA helps America "prepare for, prevent, respond to and recover from disasters," and it does so through a number of programs created through the Stafford Act and the Disaster Mitigation Act of 2000. The programs were designed to help states assess the conditions and factors that could be affected by a disaster, and what steps could be taken to alleviate or prevent losses from occurring.

One of these programs, the Hazard Mitigation Grant Program (HMGP), requires states to submit a Standard Mitigation Plan for approval by FEMA as a condition for receiving disaster aid funding. According to the HMGP, one of the permissible uses of funding includes projects associated with "post-disaster building code related activities that support building code officials during the reconstruction process."

States also could increase the amount of funding they would qualify for by as much as 20 percent of the aggregate amount of grants to be awarded by preparing a more comprehensive program known as an Enhanced Mitigation Plan.

Beyond the specific grant programs, among the objectives FEMA lays out for itself in its 2008-2013 strategic plan is promoting the "development of national, consensus-based building, life safety, and fire codes and standards, and encourage their adoption by governmental entities."

The Safe Building Codes Incentive Act would build on this approach, giving states the opportunity to further increase the amount of funds available to them through the HMGP by four percent if they adopt a qualifying building codes and the means to ensure it is enforced.

"One of the simplest and most effective ways to lower the costs of natural disasters, in both human and economic terms, is to build stronger buildings," said Jimi Grande, senior vice president of federal and Political Affairs for NAMIC. "And the simplest and most effective way to make that happen through the adoption and enforcement of stronger building codes."

Reaching the qualification threshold for the additional aid would not be especially difficult for states, even those in disaster-prone areas along the nation’s coastlines. An analysis by the coalition found that as many as 13 states already qualify. They are California, Florida, Louisiana, Michigan, New Hampshire, New Jersey, New Mexico, New York, Pennsylvania, South Carolina, Utah, Virginia and Washington.

Ten more states could reach the incentive level with minor modifications to their codes, and an additional eight states already have the proper regulations in place but lack the necessary enforcement measures to qualify. That leaves just 19 states that face major challenges on the road to qualifying for increased disaster funding.

Politically, the past few years of debate on natural disaster policy have been weighed down by a misguided proposal that continued the backward focus on only post-disaster efforts. For instance, the "Beach House Bailout" measure was a misguided attempt at creating a federal backstop for Florida’s woefully underfunded disaster fund.

The so-called "Homeowners’ Defense Act" would have established a Fannie Mae-style "private" consortium. A board of government officials would have been charged with underwriting catastrophic natural disaster losses for private homeowners’ insurers. The U.S. Treasury would have been required to lend money to states that suffered natural catastrophes. And loan guarantees would have been given to a Florida hurricane catastrophe fund and to California’s government-mandated earthquake insurer. According to the bill’s supporters, all of this would have magically cost taxpayers nothing.

While the proposal might have helped Florida state lawmakers in Tallahassee (and their counterparts in Sacramento) breathe a bit easier in the short term, it did not address the systemic problems of natural disaster policy. And it would have shifted a potential enormous financial burden onto the back of taxpayers as well.

Prospects for passage of the Safe Building Codes Incentive Act are considerably improved in the wake of the 2010 elections. The chief proponent of the Florida bailout approach, Rep. Ron Klein, D-Fla., was among those defeated last November, improving the climate for a more sane debate on the topic in the current Congress.

"Every year following a natural disaster, the federal government and the private sector invest billions of dollars in disaster relief to rebuild communities," Gannon said. "By taking action before the catastrophe, homeowners, federal and state governments can mitigate losses with the adoption and enforcement of building codes."

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