Spotlight shifts away from wind insurance costs, toward home mitigation at forum in Mobile

By Michael Finch II | mfinch@al.com
on December 04, 2013 at 8:50 PM, updated December 05, 2013 at 12:04 AM

MOBILE, Alabama — Much attention has been paid to the cost of property insurance along the Gulf Coast, the sky-high premiums and deductibles most homeowners cannot afford.

Industry leaders met Wednesday to discuss one of the solutions: home fortification.

The concern of property owners, insurance agents and home builders should be focused on an emerging standard for building and upgrading homes called FORTIFIED, a group of speakers said at a symposium at the Battle House Renaissance Hotel and Spa.

“It’s not just about insurance — it’s about making sure that our community is still here in the next storm,” said Alex Cary, executive director of Smart Home America, a nonprofit that promotes building homes to withstand natural disasters. “If you’ve been through Mississippi after Katrina, they don’t have community in some of those places. We don’t want that to happen in Alabama.”

The goal outlined at the forum, which was organized by Smart Home America and the Coastal Alabama Partnership, is to have residents of Mobile and Baldwin Counties improve the quality of their home’s construction to one of three standards — Bronze, Silver and Gold — codified by the Insurance Institute for Business and Home Safety.

The upgrade, which often costs more money up front, pays off in the long term, officials said. Premium prices could fall by as much as 60 percent for a residence with gold-level certification when a state regulation goes into effect in July 2014. Less lucrative, but significant savings can still be achieved today.

Improving the roof of a home is the surefire way for homeowners to reap savings. But seldom is that the case, Carey said. “Although we have discounts in the state of Alabama — mandated discounts for insurance, a lot of agents are not as familiar with the FORTIFIED program and they should be doing when they get an application.”

Educating the many homeowners, insurance agents and building contractors is key. The state Department of Insurance is administering a program which offers grants for retrofitting homes in the region.

Financially backed by the Federal Emergency Management Agency, the Strengthen Alabama Homes pilot program has already attracted 461 applicants for about 120 slots, Deputy Insurance Commissioner Charles Angell said.

The program does not include condominiums, mobile homes or businesses. “We’re just trying to get to the people that has the most effect in terms of resiliency and being able to stay in their homes after a hurricane first,” Angell said.

But officials expect a $100 million surge in RESTORE Act funding from the Deepwater Horizon oil spill to boost that number to 22,000 residences. Alabama Gov. Robert Bentley has vowed to put funding toward the program.

In the meantime, the Department of Homeland Security has launched a program to carry the same message as IBHS called Resilience Star. The project will focus on Alabama, which currently leads the nation in the number of FORTIFIED homes, said Matt Fuchs, deputy director of resilience policy.

The initiative aims to further encourage stakeholders across the country to build according to the IBHS standards.

“The problem is pretty easy to identify; there is a tremendous amount of risk out there,” Fuchs said. One-fifth of the agency’s mission is to “ensure resilience to disasters,” which has mostly focused on prevention.

“That really represents a shift for us from trying to prevent disasters, we still will do that to the extent that we are able to,” Fuchs said. “There is a level of pragmatism that disasters are going to happen; we need to plan for and mitigate against (them) assuming that some are going to happen — especially natural disasters.”

Last month, the Alabama Department of Insurance announced the creation of a wind mitigation grant program that would aid residents of Mobile and Baldwin counties.

The program, which is funded by the Federal Emergency Management Agency, is a pilot for a potentially larger initiative Gov. Robert Bentley vowed to support with RESTORE Act money from the BP penalties.

The program that is currently running on FEMA dollars will only provide grants to about 120 homeowners between the two counties.

 

 

Follow up quote from SSIA’s President Taylor Norton, “Personally, I think the fortified program is great way to market and educate the public on better built, more resilient homes.  Insurance companies have always rewarded clients who mitigate their homes by offering discounts to those who built stronger homes.  Smart Home has done a great job working with the Department of Insurance to define the discounts and create regulations forcing the admitted carriers to offer them to customers.  I personally feel insurance pricing is a statewide issue and should be solved on a statewide basis.  Although I love the program, I would rather support the $100M in BP fine money be allocated to educating the public of the benefits associated with building stronger, more resilient homes.  Pushing for the adoption and enforcement of statewide building codes that meet the fortified standard would benefit everyone in Alabama, not just the 20-25,000 homeowners who would qualify for the grant.