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Get wind of Mississippi: statewide building codes protect against greater Hurricane force.

In a quiet catastrophe season, the insurance industry should stress to policyholders the importance of preparing their homes for natural disasters and becoming both physically and financially ready for whatever Mother Nature has in store. Additionally, insurers can use these mild years to build up capital reserves so they can afford to pay claims when events do occur. The quiet years also allow policymakers time to develop longer-term solutions that can ultimately strengthen Homeowner insurance markets.

The enactment and enforcement of tough standards for building codes, property development and other loss prevention and mitigation requirements are key components to long-term natural catastrophe preparation. As an example, following devastating tornadoes in 2013 that ravaged central Oklahoma, the City of Moore took action this March and became the first in the nation to adopt building codes that are specifically designed to address the impact of tornadoes. Moore's new residential building codes include requiring roof sheathing, hurricane clips or framing anchors, continuous plywood bracing and wind-resistant garage doors. The homes will be built to withstand winds up to 135 miles per hour rather than the accepted standard building requirements of 90 miles per hour.

According to data from National Oceanic and Atmospheric Administration, the Southeast has experienced more billion-dollar disasters in the past 30 years than the rest of the country combined.

This is why it is so important for states including Alabama, Mississippi and Texas to explore ways to strengthen building codes that can protect residents from excessive damage in the event of severe weather.

It can take several years to achieve significant reforms and the enactment of statewide building codes is often an issue that requires a sustained, multi-year effort to achieve the goal.

Mississippi is a case in point. Just this November, the state implemented its first statewide building code after several years of work. These new standards, which became effective Nov. 28, could potentially save lives, reduce damage after a major weather event, and lower insurance costs. The stronger building codes will ensure that residential and commercial buildings are built to withstand greater hurricane force wind and impact from flying debris.

Insurance Commissioner Mike Chaney, Governor Phil Bryant, the legislature and the insurance industry worked diligently to enact S.B. 2378 and put in place a statewide building code. The Property Casualty Insurers Association of America (PCI) and its members have been working to push for stronger building codes since 2005, when the state was hit by Hurricanes Katrina, Dennis and Rita. According to the August 2013 report issued by the Insurance Institute for Business and Home Safety, Mississippi had the weakest building standards of all hurricane prone states.

Meanwhile in Texas, the House Insurance Committee and the Land and Resource Management Committee held hearings to examine coastal resiliency, hazard mitigation, building codes and the role of insurance in protecting the coast. Although Texas has good code enforcement in some coastal areas, it can be less stringent in other areas. For greater consumer protection, PCI is urging that the code be made mandatory for the entire area and that the statewide building code be updated.

While building code legislation did not pass in Alabama, lawmakers seriously considered adopting H.B. 614, which was very similar to the law enacted in Mississippi. Alabama is no stranger to extreme weather conditions and with a long history of devastating catastrophes, it has had its share of hurricanes, tornadoes, flooding and severe storms. The April 27, 2011, tornado outbreak, which was part of a series of destructive tornado activity from April 25-28 across the eastern third of the country, was unimaginable. Among the various states ravaged, the central and northern Alabama regions were the hardest hit with 235 fatalities. Alabama's outbreak alone--its deadliest since 1932--is ranked among the top 10 worst natural disasters in U.S. history, resulting in more than $4 billion in insured losses primarily in the Tuscaloosa, Birmingham and Huntsville metropolitan areas. Additionally, Alabama experienced damage from other record-setting storms such as Hurricanes Gustav in 2008, Katrina and Rita in 2005 and Ivan in 2004.

While the frequency and severity of weather events cannot be controlled, something can be done to help control the cost impact on consumers. As was done in other states, it is now Alabama's time to address its vulnerability to catastrophic losses and take proactive steps toward ensuring a healthy and competitive private homeowners market. In turn, Homeowners insurance will become more available and affordable for Alabama's residents.

Loss mitigation should be at the forefront of any property insurance solution as the state promotes public safety, minimizes property damage and preserves communities hit by natural disasters.

With 2014's legislation, it is important to build upon the momentum and push for stronger building codes and encourage the hardening of residences.

More property carriers will operate in Alabama and invest capital in the state. Increasing construction standards to make buildings more resistant to damage will decrease the frequency and severity of property claims over time and provide a positive stabilizing effect on costs. Lesser amounts of property damage from a natural disaster speeds up the recovery process, causes less disruption for property owners and puts less pressure on the insurance marketplace.

Jeffrey Brewer

[tweeter] @JeffreyLBrewer

Jeffrey Brewer is assistant vice president at Property Casualty Insurers Association of America, where he leads PCI's state public affairs activities.
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Author:Brewer, Jeffrey
Publication:Property Casualty 360-National Underwriter
Geographic Code:1U6AL
Date:Jan 1, 2015
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