After a major storm makes landfall, it can be very difficult to predict what recovery timelines, cleanup periods and claims will look like.
How soon following a hurricane can repair work for claims start? What types of repairs will be needed? And how long will businesses affected by storms be forced to close their doors?
These questions and more may seem elusive. However, historical and current building construction data can provide insight into recovery efforts after catastrophic storms. By looking at historical construction activity for some of the country's costliest storms, forward-looking recovery estimates become clearer.
Here are four things carriers should know about construction history data and hurricane recovery:
The average primary recovery period — when the majority of remodeling activity takes place — averages about 14 months. (Photo: Shutterstock)
Post-storm construction activity helps anticipate recovery duration
By examining construction activity after three of the costliest storms in recent U.S. history, future recovery efforts can be estimated and anticipated. The analysis below shows remodeling permits pulled before, during and after Katrina, Sandy and Ike.
(Photo: Courtesy of BuildFax)
Based on data from these storms, the cleanup period — the time between a storm's landfall and the beginning of remodeling activity — lasts about three months on average after landfall. Additionally, the average primary recovery period — when the majority of remodeling activity takes place — averages about 14 months.
While every storm is inherently unpredictable and has varying impacts on properties, the data from past storms and their ultimate recovery costs can help estimate timelines for future rebuilding efforts. Based on estimated recovery costs for recent hurricanes Harvey and Irma, valuations may indicate recovery periods for these two storms could extend well above the average of the three costliest storms in recent U.S. history.
(Photo: Courtesy of BuildFax)
Storms produce an abundance of data
As remodeling commences following the cleanup period, permits are pulled for a variety of repairs in the geographical areas each storm affects. To ignore remodeling permit data is to turn a blind eye to a vast array of data that can improve the accuracy of future loss estimates.
Every storm is characterized by different classifications of damage. Some storms bring higher winds, while others cause more rainfall and flooding. Effects from wind, rain and flood damage are illustrated by construction activity for major systems such as roof, electrical, plumbing and mechanical after each storm.
For example:
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Katrina saw a peak in roofing and electrical five months after the storm.
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Sandy experienced an uptick in electrical activity three months post-storm.
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Ike saw spikes in roof and electrical one month after the storm.
Do the characteristics of catastrophic events predict reconstruction types? Can reconstruction predict labor and material demand, or even the geographic areas with the highest needs for said labor and material suppliers?
Permits associated with post-storm rebuilding efforts corroborate that repairs were inspected and completed. (Photo: Shutterstock)
Construction activity post-storm shows that properties are made whole again
Looking at construction activity following a major weather event is extremely useful for helping carriers verify that properties have been made whole again. Permits associated with post-storm rebuilding efforts corroborate that repairs were inspected and completed.
Since construction permits have an "applied for" and "completed" date recorded, this improves the accuracy of timeline estimates for storm-related restorations, resulting in more accurate business interruption loss adjustment efforts.
Permitting details follow the thread of who completed the work as well as what work was done, while also detecting fraud and providing an extra layer of confidence that claims payouts were used appropriately for repairs.
Insight into construction activity allows carriers to take a targeted approach to their inspection processes. (Photo: Shutterstock)
Post-storm strategy to stay informed
Post-storm construction activity (or lack thereof) can give carriers a way to profile properties that are more apt to incur future loss by examining with a deeper level of detail how those properties were repaired. For instance, if there are some properties without roof repairs within the path of destruction (where roof damage was rampant), those properties may warrant further scrutiny in the future.
After a storm, a bifurcation of properties into those that were made whole and those that were not can be a great strategy for carriers to optimize inspections. Insight into construction activity allows carriers to take a targeted approach to their inspection processes. Carriers can avoid inspecting low-risk properties, moderate-risk properties can be reviewed based on underwriting need, and high-risk properties can be flagged for inspection.
When carriers actively seek this type of information for remodeling and construction activity following a major weather event, they're not just collecting intelligence for current recovery efforts, but are gaining access to a helpful window into future storm recovery while collecting a myriad of data useful for future loss estimates.
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Holly Tachovsky is the CEO and co-founder of BuildFax, the leading provider of property history and condition insights for the largest lenders, insurers and real estate companies. She can be reached at holly@buildfax.com.
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