Hurricane Protection to Increase in Coastal Areas IHPA task force looks to the future.
by Don Leggett
The
forecast for another active hurricane season with increased
landfall probability has become the problem of many Americans. A
landfalling hurricane along with the inability of the insurance
industry to gage the extent of damage, and thus set adequate rates, has
left many Americans searching for answers concerning hurricane damage
and the ability of modern hurricane protection systems to protect homes
and businesses that are located in hurricane-prone areas.
To help untangle some of the issues and assist in
providing a framework to increase the availability and affordability of
hurricane safeguards, a task formed by the International Hurricane
Protection Association (IHPA) looked at the future of hurricane
protection.
Florida, being a leader in hurricane protection
activity, was used as the sampling site. The characteristics common to
coastal states—population growth rates exceeding 20 percent, migration
of coastal counties from non-hurricane areas exceeding 50 percent,
densely populated coastline with increased property values, income and
education levels exceeding the state mean and the age of the housing
stock—are strikingly similar. Although many of the statistics used in
this article were formulated from Florida data, the statistical
relevance to the surrounding coastal states is quite pertinent.
No discussion about hurricane protection would be
complete without some information about Katrina and the ongoing
rebuilding program taking place in the Gulf Coast region.
KATRINA AND RITA 2006
The area affected by these storms had a total
population of almost five million people. The storms lead to:
• Fatalities: More than 1,300
• Estimated economic losses: $70 billion to $130
billion
• Estimated insured losses: $45 billion to $65 billion
• Disaster assistance requested: More than 2.6
million applications for assistance have been received from victims of
hurricanes Katrina and Rita
• Federal aid provided: Over $88 billion dollars.
Damage was observed in major buildings,
infrastructure and residential construction due to high winds, storm
surge, flooding or the combined actions of one or more of these
environmental effects. Storm surge and flooding prevailed as the
primary source of structural and non-structural damage along the
immediate coastal areas and tidal waterways.
Although the majority of the damage pictured in
media presentations shows damage caused by storm surge, there was a
significant amount of wind damage away from tidal areas. In addition to
shattered windows and splintered roofs, high winds damaged
non-reinforced masonry walls and caused the collapse or partial
collapse of older non-reinforced masonry buildings and some metal
building structures. High sustained winds and extreme gust aggravated
the damage to all types of roofing and rooftop equipment. Rooftop
aggregate as well as roof-mounted ventilation systems became wind borne
projectiles.
In light of the destruction, what mitigation
techniques will offer the most resistance to the next round of storms?
Several surveys have been compiled to enlighten the
coastal communities about hurricane damage mitigation. First, the
survey found that at the times Rita and Katrina struck, there were no
statewide building codes in Louisiana, Mississippi, Alabama or Texas.
Second, eyewitnesses reported significant damage in many instances
where the winds were lower than those levels referred to in standard
building codes (design event), which suggests that the structures did
not withstand the effects of the storms as expected. Third, older
structures—only required to meet building codes in effect when they
were built—were particularly vulnerable to wind damage.
Recent building codes and standards contain
provisions for the design of structures to withstand hurricane force
winds and, particularly, enforcement of such codes and standards in
hurricane-prone regions can greatly improve the performance of
structures. In reviewing the evidence from the storms, newer buildings,
those built after 1994, sustained far less damage than those built
earlier. This fact will shape the scope and depth on future storm
losses.
Because many coastal structures were totally
destroyed, the particular cause of destruction is quite difficult to
ascertain. As this edition of Hurricane Protection magazine goes to
press there were "thousands of suits," arguing that flood exclusions in
policies do not apply because a house totally destroyed by a flood was
partially damaged by wind, and that the insured should get the full
amount. The main issue being litigated is flood versus wind damage. The
outcome of the lawsuits will shape the rebuilding process in the
damaged areas. In New Orleans over 90 percent of the structures
destroyed had wind insurance, only 20 percent of the structures had
flood insurance.
AREAS TO WORK ON
The destruction of the past two storm seasons has
contributed to an increased awareness of the value of hurricane
protection. The perceived value of hurricane protection is impacted by
five distinct variables.
1. Housing characteristic and hurricane mitigation
awareness
2. Household demographic characteristics
3. Income levels of the housing residents
4. Hurricane experience
5. Incentives to provide hurricane protection
The government information apparatus has been
successful in informing citizens of the need for some type of hurricane
protection; yet, the government has done a poor job of defining the
effectiveness of different hurricane protection systems. Both local and
state officials have yet to mount a significant legal challenge to the
makers of window film, which works quite well as a thermal barrier,
effectively reducing a structure’s energy needs, but is an ineffective
barrier to hurricane winds. Most films on the market allude to being
hurricane stoppers, but once the manufacturers are contacted the
effectiveness of film as a hurricane safeguard is downplayed. Again,
the government has not been as mindful of illegal trade practices and
false advertising in areas where window film is being portrayed as
hurricane protection.
Furthermore, the building profession also must be
encouraged to provide the public with the options to significantly
upgrade the hurricane safety of their homes beyond code requirements
should they choose. The design for internal pressure needs to be
addressed and the unsuspecting public should be asked to sign a
disclosure stating that they understand that their newly purchased
structure is designed to have the windows and doors removed by the
storm and the inside of their home scoured by hurricane-force winds and
wind-driven rain.
In Florida, 54 percent of current homeowners
indicated that hurricane safety features were important when purchasing
their homes. This fact clearly identifies the builder or seller of the
home as a source of information on the availability and performance
standards available for new structures.
Once a home has been built to minimum standards it
will take thousands of additional dollars to upgrade the hurricane
protection system. Unfortunately for many new homebuyers they were not
aware of the deficiencies or differences of hurricane protection
methods.
Another telling statistic that points to the need
for the builder community to help communicate the need for hurricane
protection is that during the last five years 65 percent of new
homebuyers considered hurricane safety features as somewhat or very
important in their decision. This interest represents an opportunity to
shape the market demand for these systems. Clearly, over the life of a
mortgage, financing a few thousand dollars of hurricane protection
shutters would add little to a monthly mortgage payment, yet would
significantly reduce the likelihood that the resident will have to bear
the cost of paying a hurricane deductible to repair damage from a named
storm.
More than 75 percent of Florida coastal residents
have someone in their families with hurricane experience.
Interestingly, only 28 percent of the coastal population has reported
hurricane damage and only five percent of coastal residents reported
major storm damage—clearly, large numbers of households that consider
themselves experienced have survived a near miss. These survivors are
less likely to adequately prepare for the next big storm assuming that
their last experience would be equal to the next big storm.
SOME GOOD NEWS
There is some good news from the IHPA task force. A
large portion of the housing stock of single-family owner occupied
homes is relatively new with more than eight percent built since 2000
and an additional 30 percent built since 1990.
The chart, above, illustrates that 30 percent of the
single-family homes have been built since 1990. The information that
has the insurance industry concerned is that the average home statewide
is almost 25 years old with a median age of 22. The housing with the
oldest average age is in Southeast Florida followed by housing in the
Panhandle, both recent destinations for large, destructive hurricanes.
Nearly 48 percent of Florida’s owner-occupied
single-family homes have no window protection at all. Interestingly,
most homeowners, 64 percent, who choose shutter protection systems
install them after the house has been purchased. The markets for
retrofit doors and sliding glass doors are also extensive with just 50
percent of homes with sliding glass doors offering complete hurricane
protection. Reinforced garage doors are equally lacking.
The average reported value of a single-family home
in Florida is $169,000. Most homeowner policies now have a hurricane
storm deductible of five percent. Simple logic would illustrate that a
homeowner would be better served by spending dollars on hurricane
protection than on repairing hurricane damage. There are an estimated 4
million residential structures in Florida representing $1.2 trillion of
value. If Florida suffers a major storm that generates true event wind
speeds, the economic loss will make Katrina look mild.
INCENTIVES
Finally, the members looked for incentives that
would increase single-family home purchasers to provide hurricane
protection. The top three answers were:
1. Tax incentives
2. Insurance reductions
3. Low interest loans offered by a government agency.
Chris Rafferty, Insurance Office of America,
reported that nearly 22 percent of the single-family homeowners in
Florida are receiving some form of insurance discount for their home’s
hurricane safety features. Unfortunately, government studies indicate
nearly 46 percent of homeowners have no idea if their insurance
carriers offer any form of mitigation incentives. Clearly, the
insurance industry needs to do a better job of informing the public of
discounts that are available.
The No. 1 answer for Floridians polled on ways to
increase hurricane protection was on property tax reductions or
credits. Most local governments are opposed to a tax reduction. With
growth rate percentages in the teens, most municipalities need the
increased revenue to build the infrastructure necessary to maintain
growth. The ability to reduce taxes to increase hurricane protection
will play out in Florida just as it did in Louisiana. The government
can spend millions of dollars over a period of time protecting
citizens, or it will spend billions of dollars aiding in the rebuilding.
Don Leggett is owner, Advanced Risk Management, Inc and Membership
Chairman for the International Hurricane Protection Association.