Take Action to Reduce Property Losses

Property loss mitigation materials and techniques are increasingly affordable and available, and there are encouraging signs that property-related safety measures are receiving needed attention in public policy decision-making. And there is increasing evidence that homeowners, businesses and communities that embrace the use of these materials and techniques are likely to see less damage from natural disasters.

In the public policy arena, we've recently seen a movement toward strengthening disaster-resistant building codes in a number of key jurisdictions, including Texas and North Carolina.

Various organizations, including insurance industry representatives, worked to strengthen the International Residential and Building Codes as the Texas Windstorm Insurance Association adopted it for use along the states coast. The new requirements for asphalt shingles and mandatory wind-borne debris protection inland–as well as on the barrier islands–provide some of the nation's strongest building code protections against windstorms.

When strong winds enter a building because flying debris has punctured windows or doors, internal pressures can soar, blowing the building apart. When windows and doors are protected, they keep out these damaging winds, as well as water that can cause major damage to a buildings contents.

According to a study commissioned by the Institute for Business & Home Safety and its partners to look at the impact of this stronger code, in 10 years, insured losses after each severe hurricane in the affected parts of Texas could drop about 40 percent, or $155 million, when compared to potential losses today. The estimated savings from each such storm in 20 years climbs to $377 million.

A similar public policy achievement recently occurred in North Carolina, where the states Building Code Council approved a windborne debris region that extends 1,500 feet from the Atlantic Ocean along the state's entire coast. This means buildings in those areas will need to have either built-in window and door protection or be designed to withstand high internal pressures, which is also the case under the new Florida building code.

Insurers should know, however, that if high winds and rains find their way into a structure built only to withstand these pressures, the building may stand, but everything inside it will likely be ruined.

Aside from wind, insurers know that hailstorms also can produce expensive property damage, as they did in April this year in the Dallas/Fort Worth area of Texas. Our research shows the average annual loss from thunderstorms–primarily hail–between 1994 and 1999 was about $4.7 billion. That is more than the total insured losses from Hurricanes Opal and Floyd combined.

In cooperation with a leading engineering firm, we developed a hail map for the National Fire Protection Associations Model Building Code. The map will be used to implement hail-resistant construction requirements in hail-prone regions of the country.

If just 5,000 homes hit by hail sustain no damage due to roofing work made to these specifications, and the average replacement cost of a residential shingle roof is $4,000, the savings to insurers would be $20 million, less deductibles.

Top elected officials in a number of states have decided to take further steps to protect lives and property.

In North Carolina, for instance, the governor last year signed an executive order designating the state as an IBHS Showcase Partnership for Disaster Resistance & Resilience. The order commits the governor's office and state agencies to cooperate among themselves and with insurers to bring about loss mitigation and disaster planning.

North Carolina joins Oregon and Rhode Island on the Showcase state roster.

Individuals and businesses, themselves, can also take relatively simple and often inexpensive steps to avoid or reduce disaster losses. In addition to using hail-resistant roof coverings and installing storm shutters or impact-resistant glass in windows and doors, they can insist that builders make better connections at the roof, walls and foundation to improve a building's disaster resistance.

For example, new studies weve helped support show that residential roof sheathing is often not attached as well as it should be. But the good news is that a strong roof connection can be more consistently achieved simply by using certain kinds of ring-shanked nails in a prescribed pattern. For a 2,000 square foot home, the upgraded nails could cost just $7.60.

Even landscaping can play a role in reducing exposure to disaster. For instance, in the case of wildfires, the wrong landscaping designs and materials can actually help these fires spread to buildings.

IBHS is helping to demonstrate these and other techniques in cooperation with our member insurers as part of our "Fortified for safer living" program. This national, all-risk program features connections from the foundation to the roof, together with a series of other disaster-resistant construction methods and materials. The result is a home much better able to withstand whatever local natural hazards threaten it, usually for just a few extra dollars a month over the life of a mortgage.

In the case of small commercial lines, we know its important to mitigate the chance of loss before disaster strikes. And there are often simple nonstructural steps these firms can take to do so, by securing bookshelves and other furniture in an earthquake prone area, for instance. We also know its critical for them to know what recovery steps to take following a major event, such as where they might secure temporary office space.

The price of not taking such actions can be high. According to our studies, about 25 percent of businesses closed by a natural disaster never reopen. But consider this: If just 5,000 small businesses, with an average net income of $2,000 per week, were able to open their doors one week earlier after a disaster because they had continuity plans in place, they have saved $10 million in lost income. And if they have business interruption coverage, their insurers have saved as well.

Property insurance professionals can influence their natural disaster and severe weather-related losses by working directly with agents and customers, or collectively through trade associations, to reduce the element of chance and increase the degree of choice over the frequency and severity of these events.

Harvey Ryland is the president and CEO of the Institute for Business & Home Safety in Tampa, Fla. IBHS is a national non-profit initiative of the insurance industry to reduce deaths, injuries, property damage, economic losses and human suffering caused by natural disasters.

Reproduced from National Underwriter Edition, June 23, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved. Copyright in this article as an independent work may be held by the author.