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New Report Finds Building Codes in Disaster-Prone States Aren't Up to Snuff — What This Means for Insurance Agents

by Precise Leads

April 6, 2018

The Insurance Institute for Business & Home Safety found that many states at greater risk of natural disasters have lax building codes. Updating them could help them protect residents from heavy losses.

Even after the battering the South endured from hurricanes and flooding last fall, a recent study found that many of the states most vulnerable to severe storms have either moved to unwind stringent building codes or gone without statewide construction standards altogether. An analysis of the building codes of 18 Atlantic and Gulf Coast states by the Insurance Institute for Business & Home Safety (IBHS) revealed that none achieved a perfect score on its 100-point scale and that several have no mandatory building statutes within their borders.

Among the states that have yet to enact a statewide building code is Texas, which was devastated by Hurricane Harvey. Mississippi and Alabama do not impose construction standards on a statewide basis, as well. Georgia, meanwhile, has building codes on the books, but defers to local officials when it comes to enforcement.

Florida Relaxes Its Codes

Perhaps the most interesting example of a state relaxing its construction standards despite its heightened risk of natural disasters is Florida. Although IBHS gave the state its highest score (95), Gov. Rick Scott signed into law in June a measure allowing the state to adopt building codes based on the “specific needs of the state”.

The new law puts to an end the state’s previous custom of updating its codes every three years in response to recommendations from the International Code Council, a nonprofit coalition of builders, engineers, local code officials, and other experts. The rule change was backed by the state’s builders, who argued that the strict codes put in place after Hurricane Andrew in 1992 caused construction costs to skyrocket.

Opposing the change was a coalition of insurers, building inspectors, firefighters, architects, and engineers that formed a group called Floridians for Safe Communities. Backed by the Florida Realtors Association, the organization urged lawmakers to continue to impose up-to-date building codes to ensure the safety of the state’s residents. A spokesperson for the association said that loosening buildings codes might lead to poorly constructed buildings.

After the Hurricane Irma tore through Florida last summer, most observers agreed that the strengthened building codes reduced property damage in the state. Bill Wheat, EVP and Chief Financial Officer at home-builder D.R. Horton, Inc., told the Wall Street Journal that newer homes constructed under Florida’s tougher codes withstood Hurricane Irma better. In the same article, Austin College Professor Kevin Simmons said that his preliminary research of insured loss data from 2001 to 2010 showed that the stricter building codes lowered windstorm losses by up to 72%, with every $1 spent on additional construction costs saving $6 in losses.

Agents Must Research Building Codes

To help their clients find optimal property coverage, insurance agents must know the building codes in their states and/or localities as well as when the age of the property. As Florida’s recovery from Hurricane Irma demonstrated, newly constructed homes may be more resistant to storms and other natural disasters because of the materials used or having to abide by stricter code standards. Those factors could lower home insurance premiums.

In contrast, older homes might be more susceptible to wind and water damage, and therefore would require more coverage. Agents can also encourage clients with older homes to maintain the roof and other fixtures to lessen storm damage. Even in states without building codes, insurance agents should help clients understand the benefits of following advanced construction and home maintenance practices so that their properties will come through natural disasters intact.

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