In the days prior to the landfall of Hurricane Ian in southwest Florida, the article entitled “Fortifying Against the Apocalypse” was published in the Fall 2022 issue of CLM’s Construction Claims magazine. In many ways, the article foreshadowed the damage left by Ian.
Hurricanes and other storms are getting stronger and fiercer, reaffirming to all of us that we must acknowledge that the ways of the past should not be the ways of the future. The closing of that article encouraged the embracing of a forward-thinking approach to modernizing building codes with the intent of reducing the ever-increasing apocalyptic-type images that fill our screens following a catastrophic event, whether a hurricane, tornado, flood, or fire.
Some of the immediate takeaways in the wake of Hurricane Ian opened our eyes in such a way that, hopefully, we are not caught off guard by the next imminent catastrophe. Moreover, Ian provided immediate evidence that foresight over hindsight through the integration of more resilient construction methods and the adoption of modern building codes were effective in reducing property damage and preventing further loss of life. This article explores what we have recently learned and what we desperately need to consider and apply to ensure we remain ahead of what is next by being proactive rather than reactive.
Unpredictability of Catastrophic Events
Hurricane Ian was classified as the fifth-strongest hurricane making landfall in the U.S. The Category 4 hurricane brought winds of 150 miles per hour to the coastal regions of Florida while producing more than 20 inches of rain throughout Central Florida. The hurricane will not soon be forgotten, nor are disasters of the recent past that left similar apocalyptic scenes elsewhere in Florida, Texas, California, and across the U.S.
Over 100 people were lost as a result of Hurricane Ian, with many wondering why forecasting models incorrectly predicted key factors such as where it would hit and the magnitude of the winds and surge. Arguably, the inconsistencies led to insufficient preparation by those who found themselves staring down the approaching storm without time to hunker down. However, while there is unpredictability with hurricanes and other natural disasters as far as where, when, and how they will strike, readying ourselves for the imminent risks associated with them should be a given due to the increased frequency of such events.
Damage, Defects, and Standard of Care
Following Hurricanes Andrew and Charley in 1992 and 2004, respectively, structures built within Florida (and beyond) were constructed to more stringent building codes and standards. Hurricane Ian was on par with Hurricane Charley in terms of intensity, making landfall with 150 mph winds. According to the Insurance Institute for Business and Home Safety, a study completed after Charley revealed building code changes in Florida implemented in 1996 reduced residential property damage claims by 60% and dropped the severity of damage to buildings by 42%. As discussed in the “Fortifying Against the Apocalypse” article, adopting hazard-resistant designs with new and existing buildings has shown to be an effective first step in reducing the extent of property damage.
Although damage to southwest Florida after Hurricane Ian was apocalyptic in nature, some questioned why the damage was not worse, specifically in Fort Myers and Punta Gorda where the eye passed directly over. The area was impacted by Hurricane Charley in 2004 and sustained significant damage and destruction, and many of the homes and buildings that were reconstructed to modernized building codes survived the passage of Ian. The survival of these structures is a testament to the advanced building codes that have been adopted in areas vulnerable to a catastrophe.
Beyond the adoption of modern building codes, advanced construction materials and industry standards made the difference between 2004 and now. One widely shared viral photograph from Naples, Florida depicted more than three feet of water standing against multiple full-height windows. The dramatic photograph was akin to an aquarium holding water on one side of the glass. The windows did not break from the water pressure even with significant storm surge in the area. Although water eventually got into the building through other means, it never entered through the windows, which remained intact. Had the windows been breached by floodwaters, the extent of interior damage and/or structural damage could have been exponentially worse. The examples extend far beyond windows—from securement methods to fortified design, the advances in construction materials are proving effective in resisting the effects of varyious catastrophes, from hurricanes to tornadoes, floods, and fires.
More importantly, the resilience and stability of a structure while enduring the effects of a catastrophic event are even more important when such structures are occupied. Resilience has a direct correlation to saving lives. We learn from our experiences; both Hurricane Andrew and Hurricane Charley exploited vulnerabilities in construction standards and methods. In turn, they both had direct impacts on the building codes in Florida, and, inherently, so will Ian.
Constructing to Minimum Standards and Beyond
Recent catastrophes have raised the question of whether constructing to the minimum standards of the building code is sufficient to resist the catastrophic events of tomorrow. Specifically, design and contractor professionals are constructing structures that are insufficient to withstand catastrophic events that have previously occurred elsewhere. In doing so, it would appear these professionals are walking a fine line. The design and construction may meet minimum standards, however, is the client/buyer aware of the potential catastrophic consequences in only meeting the minimum standard?
According to researchers with MIT’s Concrete Sustainability Hub, even when a building is constructed to meet building code requirements, such buildings may not be resistant to catastrophic events that could be expected in the same location. Construction defects are defined differently from state to state, but the International Risk Management Institute provides a simplified definition for discussion: “[G]enerally speaking, a deficiency in the design or construction of a building or structure resulting from a failure to design or construct in a reasonably workmanlike manner, and/or in accordance with a buyer’s reasonable expectation.” When it comes to a “buyer’s reasonable expectation,” it is not a stretch to expect that your new waterfront home built in 2022 would be constructed to withstand a hurricane event if such a home was constructed to meet minimum building code standards. Unfortunately, there are more variables at play.
Beyond whether a building is constructed to minimum code requirements or with fortification in mind, there is an inherent shift occurring with the standard of care for design and construction professionals as we continue to experience catastrophic events. The needle is moving with the push toward more resilient and sustainable construction, as well as a wider adoption of modernized, hazard-resistant building codes. What a buyer desires and expects will have to be better clarified. Buyers want their homes to withstand catastrophic events, however, is it reasonable to expect homes to withstand any event?
Outside-the-Box Thinking
Code upgrades have consistently been a staple within insurance policies, affording a nominal amount following a covered loss to ensure repairs conform to minimum building requirements. Given the inflationary impacts to the construction market, construction costs are on an exponential rise. In turn, the policy limits and/or terms for property coverage are not always sufficient to rebuild a property to pre-loss condition, let alone build to the code upgrades required on many homes that previously were exempted from meeting current minimum building codes. Moreover, we have yet to tackle the need to build beyond the minimum building codes. The cycle continues as repeated destructive events occur, rebuilding becomes prohibitive, and carriers continue to underwrite in vulnerable locations.
The approach from years past must change for the future. Our thinking must change to stop the insanity of doing the same thing over and over but expecting a different result. From at-will fortification of a property to increased premiums, changes must be considered to ensure we do not rebuild to standards that are insufficient to withstand the events of tomorrow. A balance of risk must take place between insureds and carriers. Insurance carriers could consider providing incentives for policyholders to build beyond minimum building codes, rewarding them for being a lower risk than those that build to minimal standards. Insurers could also require prospective insureds to meet and/or comply with certain minimum standards in order to obtain coverage. This latter approach would be similar to what the cybersecurity insurance market has done: requiring specific training, multi-factor authentication, and more.
Innovation requires deep thought and outside-the-box thinking, given that this approach could be a double-edged sword. Consider what is happening already in the builders risk space where many carriers are requiring the use of special monitoring devices for water intrusion; even requiring the use of particular companies, which drives up the premiums and makes it hard to be competitive. A partnering between all interested parties (i.e., developers, builders, carriers, and owners) could lead to a “help me help you” scenario, such as providing guidance for free or at a discount with tools to help avoid a catastrophic failure in exchange for reasonable insurance premium and terms. The space requires innovation and forward thinking to succeed.
Rather than doing the same thing repeatedly while expecting a different result, it would appear we are finally learning to observe, learn, and adapt. Specifically, this is being accomplished by using our resources to their fullest and exploiting new technologies. What can we be doing to help speed up the learning curve so we are more prepared tomorrow, next year, and beyond?
The adoption of new technologies, materials, and methods are at the forefront of our thinking, however, it can take years for the market to “catch up.” Insurance can be a risk-averse industry that stereotypically views risk in a “wait and see” approach.
In this case, is the risk worth taking? In short, yes, the risk is worth taking to build beyond building codes in areas vulnerable to catastrophes. Consider the emergence of mass timber: People want to build with it but cannot get insurance, or are not sure about the long-term performance. People are willing to take on risk with a relatively unknown, unproven product. Meanwhile, catastrophic damage is inherently going to occur and we’ve determined that fortification and building beyond the minimum standards works. So, why delay?