In the two decades since hurricanes Ivan and Katrina struck the coast of Alabama, availability and affordability of coastal property insurance have presented challenges to consumers along the Gulf Coast. More recently and more broadly, property insurance markets present seemingly intractable problems throughout the country, as the frequency and severity of catastrophic losses appear to increase.
This study presents the first empirical evidence of a technological solution to property insurance availability and affordability concerns. We find that IBHS Fortified construction performs at least as well as modeled in a strong category-two hurricane. By building houses to the Gold Fortified standard, and retrofitting roofs to the Fortified Roof standard, communities can substantially reduce the cost of insurance and out of pocket costs (deductibles) when an event occurs.
We also find houses that earned the Fortified designation performed better than houses built to an identical code, but without a Fortified designation. This evidence suggests that the private enforcement mechanism included in the Fortified process adds value on its own.