During the past decade, uncharacteristically strong storms have ripped through some parts of the US, causing billions in damage. From Superstorm Sandy pummeling the Northeast in 2012 to more recent snowstorms crippling the Southeast, the weather is growing more unpredictable. With a consensus among the scientific and insurance communities that the climate is changing, super storms are becoming the new normal.
The growing frequency of 'Frankenstorms' is bad news for property insurers, who already have experienced extensive losses from recent disasters. Check out some recent losses from climate related events, according to a report by Aon Benfield:
Climate change poses a complex and potentially debilitating problem that has professionals from all industries scratching their heads. However, there seems to be one promising solution for insurers and property owners alike – green building. Because it in most cases is sturdier than conventional building methods, sustainable construction can help property owners reduce their insurance costs.
While some politicians continue to debate the science of climate change, one thing is for sure. From commercial to residential properties, green building is a booming industry. In fact, in the US alone, green building is predicted to represent over half of all commercial construction by 2016, according to McGraw-Hill Construction's 2013 Dodge Construction Green Outlook Report.
Green building's growing list of benefits includes a smaller carbon footprint and higher energy efficiency. For the insurance industry, one benefit stands out from the rest – safety and durability. A 2011 report from the US Green Buildings Council and the University of Michigan suggests that green buildings are more resilient than structures built using standard construction materials and techniques. The study documents that efficiency-focused features may help green buildings and their occupants ride out both long-climate shifts and short-term disasters such as floods or high winds.
Despite some concerns over green building fire safety, insurers have begun warming up to sustainable buildings to their lower risk of storm damage. Storm damage accounts for the majority of property insurance losses. In 2013, severe thunderstorms alone cost insurers $10.3 billion, according to the III. Average homeowner claims from wind and hail damage average $7,177. Commercial building losses can be much larger – buildings are larger and often are filled with expensive equipment and products. With more green buildings, that number could get smaller and smaller.
The durability factor
So what exactly makes green buildings better withstand storms? The biggest reason is that green buildings are often constructed with stronger, more sustainable materials than traditional buildings. Some LEED-certified roofs, for instance, use highly reflective, energy efficient materials such as steel or aluminum on at least 75% of the roof's surface. These materials are some of the strongest, most durable, and fire-resistant materials available. Roofs such as these can be more expensive, but they are made to withstand hurricane level winds and don't need to be replaced as soon.
Roof damage is present in as many as 95% of wind and water related insurance losses, according to The Insurance Institute for Business and Home Safety. With more green roofs made from recycled steel and aluminum, especially in hurricane prone areas, roof damage from weather related incidents could drastically decline.
Another win for green buildings is that they are designed for energy efficiency, which means they are generally better sealed and less drafty. This is mainly to promote better insulation; however, it also works to reduce storm damage. Small cracks in buildings are weak points that allow wind and water to infiltrate much easier. These openings can actually worsen wind and water damage from hurricanes and tornados.
Stronger storms, stronger buildings
Along with green building, many property insurers are looking to stronger building codes and better planning to combat the stormy effects of climate change. Today's building codes, for instance, are designed for historic regional weather conditions. However, the longer climate change takes its toll, the less reliable past regional weather patterns will be as a tool to predict losses.
Looking toward the future, many property insurers have joined the sustainability movement by offering preferred policies – with lower premiums – to homeowners who buy LEED-certified homes or retrofit their current homes with certified green features. A growing number of insurers are even starting to offer green commercial property insurance policies and endorsements.
As areas of the US experience stronger storms, it's becoming apparent that residential, commercial, and industrial buildings need to be stronger. The durability and environmentally friendly nature of green building might be one big piece of the puzzle.
Carrie Van Brunt-Wiley is a New York native with a background in journalism. She has been the community manager and editor of the HomeownersInsurance.com blog since 2007.
