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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. |
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