In the aftermath of Hurricane Harvey, residents are beginning to look for answers for the destruction of their property. One answer is lax building codes. Experts agree that Irma could have caused much more damage to Florida’s infrastructure if it had not been for increased building safety codes. Because the state of Texas does not have a statewide code adoption mandate, the state’s policymakers will soon discuss strengthening these codes.
Christopher Miller, the technical coordinator for the Building Code Effectiveness Grading Schedule (BCEGS) and the commercial underwriter for ISO, spoke about these building codes and regulations at the recent Verisk Monday Web Seminar Series.
Because of high loss natural disaster in the 1990s, mainly Hurricane Andrew in 1992 and the Northridge Earthquake in 1994, BCEGS was created. Modeled after ISO’s Public Protection Classification Program, which has been in place for nearly a century’s time, this program evaluates local communities.
Miller explains that this program is meant to be a cooperative effort between the insurance companies and the United States federal government. Upon request, insurance companies pointed out, “what mattered in terms of resilience of buildings, as well as what mattered from a loss standpoint and actual risk from the insurance industry.”
According to Miller, many jurisdictions were found to have these building codes on the books, but many were not enforced. Upon conducting inspections, even though some building codes require the presence of hurricane straps or clips, these safety tools were often either found to be either fastened incorrectly or absent.
Regarding benefiting from the enforcement of the codes, the program reviews the codes that have been adopted by various communities to make sure that they are appropriately utilized while measuring that the resource for the codes is being used effectively. This data that the program collects analyzes individual employee personnel, employee experience, employee education, and the amount of time that employees have actually spent investigating on-site buildings. The data is collected through in-person interactions with the employees, as opposed to phone conversations or Internet Q&As. Currently, 1300 data points are used.
According to Miller, the goal of BCEGS is to improve building code enforcement, which will inevitably lead to better catastrophe resistant buildings, as well as reduce insurance losses. In addition, Miller also goes on to explain that insurance companies will also get a better idea of the risks that they are accruing from the policies that they are endorsing.
The program’s classification covers 87 percent of the U.S. population. In addition, the program has collected more than 43 million sets of data to date.
Inclusion into the program requires, at the minimum, a particular community to have a building department in place with a particular set of building codes, or standards with regularly trained employees, a structured plan of review, and regular building inspections. The building rating system is assigned on a scale of 1-10 and is typically updated every five years.
Community ratings 1-10 as explained by Claims Journal:
Meanwhile, industrial/commercial, as well as personal, lines are rated separately.
Based on a 100 point scale, there are three points of review, according to Miller, which include administering the codes (54 percent), a preview of building plans (23 percent), and field inspections to make sure the building codes are being followed properly (23 percent). The scale starts at zero and builds up from there.
While the participating in the program is voluntary, there are some consequences for refusing the program. Specifically, if a community chooses to opt out of the program in the state of Florida, the state charges that community a one percent surcharge.
The results from the data that is gathered for this program are used in the Federal Emergency Management Agency (FEMA) reports, as well as being written into two of three hazard mitigation programs.
Miller cites academic studies as having shown a correlation between a higher score in the program and fewer losses reported. One of these studies, which took place at the Wharton School at the University of Pennsylvania, showed that losses from windstorms, as a result of statewide Florida codes, fell as much as 72 percent.
In light of Hurricane Harvey and Hurricane Irma, Miller went on to describe the BCEGS ratings for both Florida and Texas, based on 2015 statistics. For both states, their scores do not factor in communities that do not have one of these departments. Regarding Texas, the state’s BCEGS average stood at 58/100 with a class five and 54 residential with a class six. For Florida, the state’s BCEGS average came out to be 78/100 with a class three and 72 residential with a class four.
Even though both Florida and Texas have building codes, Texas allows amendments to be made to their codes, which weaken their codes. This is a practice that does not happen in Florida, a state where building inspection certification is mandated. This certification must be updated every two years, along with a specific amount of re-training that must take place. On the other hand, Texas does not require building inspection certification, nor does Texas require building contractor licensing via exam requirements and training, nor registration, all of which Florida does require. In Texas, communities are allowed to decide for themselves whether or not they wish to adopt and/or enforce any building codes because Texas does not have a statewide code adoption mandate in place.
It is too early for Miller to be able to properly speak about the effects that both Harvey and Irma will have on building codes because the effects of these storms are yet to be fully realized. However, Julie Rochman, the president and CEO of the Insurance Institute for Business & Home Safety (IBHS), cites the areas that had enforced codes as having sustained much less damage than those areas without enforcement codes.
Rochman says, “I don’t think there’s anybody – including homebuilders or public policymakers, given that they may not be huge fans of codes – who were saying that codes didn’t matter in these storms. I also have not heard anybody say that houses weren’t built to code did better. I hope it is one of those moments that crystallizes for consumers the need to be more involved and to ask for, to agitate for, to advocate for strong, well-enforced building codes. It’s a really important topic for community continuity.”
After Harvey was finished destroying many Texas areas, the IBHS sent a team of engineers to the damage sites of Texas coastal towns.
In 2015, the IBHS sent out a report that rated buildings codes in states that are likely to suffer hurricane damages. The findings of this report are very similar to the findings from the BCEGS report, which said that Florida has much better building codes than Texas. While Texas merely scored a 36/100, Florida managed a score of 94/100.
The report is entitled “Rating The States,” and will be updated every two years. Rochman is not hopeful that Texas will achieve a higher score because the Texas legislative counsel only convenes every two years and will not meet again until 2019. This long wait will make it less likely that policymakers will still have building codes on their minds in two years, in Rochman’s view
According to Rochman, “There is sort of like a time and space element to disasters and what people learned and followed through on. The farther away in time you get from a disaster, the less likely people are to do anything to actually enact the lessons that are learned.”
As an example, Rochman cites how it took the state of Louisiana two years to adopt stricter building codes, in the aftermath of Hurricane Katrina in 2005. Rochman furthers her analysis by adding, “That was a defining event for New Orleans and Louisiana in a way that Harvey was not a defining event for coastal Texas” because, for the most part, Harvey is viewed as simply being a flood event.
Rochman anticipates conversations in Houston to mainly focus on codes pertaining to land use and building elevation.
Rochman finishes by saying, “In Texas, they’ve been building in place they shouldn’t have been building, from a flood perspective, and they have just created so much impermeable surface and there is just nowhere for the water to go.”