OIR summit tackles tough issues
Elevated homes with tin roofs in Florida to protect them from wind damage. Courtesy, GAO
The topic of home-hardening has been a hot button issue in Florida for years, as the miles of exposed coastline, low-lying construction, and constant threat of hurricanes loom over homeowners new and old alike. But one topic has come to the forefront of the discussion recently: wind mitigation – which even had its spotlight moment during “The Resiliency Panel” at the Florida Office of Insurance Regulation (OIR) Insurance Summit, held in Tallahassee last month.
Currently, Florida has the My Safe Florida Home program the largest wind-mitigation grant program in the country, to incentivize homeowners with insurance premium discounts. However, professors, actuaries, and insurance experts at the summit were all adamant that the program is not targeting the homes that would produce the biggest benefits for all involved parties: insurers, homeowners, and the state of Florida itself. The biggest question at hand was if retrofitting and mitigation costs produce equal value in insurance savings and damage prevention, why aren’t more developers and homeowners joining in on the action?
The short answer is the costs and the benefits are not exactly equal at the moment. Charles Nyce, professor of risk management and insurance at Florida State University stated that constructing true “code-plus” hurricane resistant homes would add somewhere between $20,000 and $30,000 in costs. The current My Safe Florida Home matching grant limit? $10,000.
Among the long list of benefits associated with wind-mitigation, many are intangibles − things like peace of mind and avoiding future hassle of insurance claims and paperwork. They aren’t upfront savings that can be marketed to the frugal homeowner who needs to see cold, hard numbers when making such large investments. But others, like former state representative and insurance policy expert Donald Brown, push back on this line of reasoning, and cite clear evidence of tighter building codes saving homeowners thousands in damages. In a LinkedIn article he penned after attending the summit, Brown references the infamous concrete Sand Palace that survived Hurricane Michael, and a lesser-known group of volunteer-built Habitat for Humanity homes that also weathered the storm with barely a scratch. The homes were built on a non-profit budget but above code and are standing the test of time, and added “as little as three to five percent to the (construction) cost.”
A paper published by the LeRoy Collins institute at FSU shows other experts agree – the solution lies somewhere in a public-private partnership and improving the state building code. Other recommendations include innovations in tax rules, a comprehensive uniform grading system for home storm resistance measures, and a pilot program to incentivize lenders to amortize mitigation costs up front or over a longer period. Most interestingly, Nyce argues that future-facing construction firms could begin to sell their own property insurance, as Tesla does with its cars. One thing’s for certain; the wind mitigation status quo will not suffice for homeowners or insurance companies in the long run.
On the same subject, we learned at the summit that OIR is planning to create a database of the information it gleans from the new mitigation forms in its updated wind mitigation discount program – a database that insurance companies will be able to access. OIR believes this will make it very efficient for companies and homeowners in providing policy discounts for property improvements. We’ll continue to monitor the progress of the program and report back to you here.
LMA Newsletter of 5-4-26
