Closing the structural mitigation gap before Hurricane landfall

Transcript:

Allie Barefoot: Welcome back to Data in Context. I'm Allie Barefoot with Cotality. When we talk about natural hazards, we often get caught up in the macro-level numbers—trillion-dollar exposures, massive loss modeling, and shifting environmental risk baselines. But at Cotality, we believe housing data is powered by numbers, but it's lived by real people. And there's a massive, often overlooked preparedness gap between understanding a natural hazard threat on a map and actually hardening a physical structure to survive the storm. Today, we're going to be bridging that gap. Joining us is Dr. Ian Giammanco, Managing Director for Atmospheric Science and Lead Research Meteorologist at the Insurance Institute for Business & Home Safety, or IBHS. Let's put the data in context.  

Welcome to Data in Context, Ian. Thank you so much for joining us.  

Dr. Ian Giammanco: Yeah, absolutely! It's—it's great to be here.  

Allie Barefoot: Yeah, and we're talking a little bit today about property preparedness. And Ian, I kind of want to start with the concept of that preparedness gap specifically, especially since we're towards the beginning of hurricane season right now. At Cotality, our risk reports highlight where risk is escalating. But knowing the storm is coming is really only half the battle. From a physical science side, what does that gap actually look like when a hurricane makes landfall?  

Dr. Ian Giammanco: Yeah, so when we talk about sort of the—the gap in understanding protection and what we actually still deal with every time a hurricane makes landfall these days, it really centers a lot around the building envelope itself. So, we can—we have made so much progress when we look at our building codes in the hurricane-prone states, really if you think about all the way from Maine all the way around to Texas. There are places that have made such progress, and what this has done is really helped reduce the chances for structural damage, especially in these sub-design level kind of hurricane wind events. So we've made great progress there. But when we look at the gap, it starts to turn toward things that we talk about a lot at IBHS around loss prevention: What are the pieces of the building envelope that start to lead to those dollars that just start piling up? It may not be structural damage, and the place that that often starts first, both for residential and commercial construction, is the roof, right? It's sort of your first line of defense, if you want to think about it that way. When that material fails—in the case of residential, often times that could be an aged asphalt shingle—now you have the chance for wind-driven rain to come in. In a commercial space, that could be something like flashing that leads to a failure of, say, a membrane roof. And again, you have that damage amplification that comes from water. The same goes for windows, doors—think about garage doors, roller doors. Garage doors are one of those weak spots in a home, especially in a high-wind event like a hurricane, where you can have it damaged, and again, water and wind are going to come in, and you're just going to amplify the potential for damage that otherwise wouldn't have happened. So when you look at sort of the gap where we sit today, it's a lot around those features of the building envelope that help keep it all nice and sealed up—one, to reduce the amount of damage from material on the envelope that gets damaged, like wall cover or shingles, but also that amplification that comes. So I think that's where today, when we see hurricanes happen, those loss drivers are still sitting in that gap around the performance of those materials that comprise our building envelopes.  

Allie Barefoot: Right. And when I think of flooding, you know, it typically comes from the ground up, or I think of a leak in the roof. But I didn't even realize how many other sections of that building envelope where that water can seep in and cause problems when a natural hazard comes through. And historically, the insurance industry priced risk strictly based on where that property was located. But our recent reports—and IBHS has done groundbreaking research on this—show that the roof's materials, its condition, its structural integrity... you know, that is the absolute ultimate baseline for a building's survival when a storm hits. So talk to me a little bit more about taking care of that roof and the mitigation of the roof.  

Dr. Ian Giammanco: Yeah, I think, you know, even just 16 years ago when I started in the industry, I think we sort of had that lens of focusing on, "We're going to let the hazard characteristics be what we can observe really, really well," and we didn't know everything about a building. We didn't know everything about the components and how they perform. Well, that's been one of the roles at IBHS we've tried to fill, is understand what is the performance of those components. And you mentioned roof—we've done tons of work on roofing materials. And that's exactly right. We've sort of moved now, adding more pieces of that puzzle and starting to complete the picture more about the durability of all these materials. And that's exactly what happens. These things have a performance expectation when they're new, whatever component it may be. There's a performance expectation of when it ages, and what does that look like? And then, when you start piecing the building system together, you're like, "Okay, is this one of those features—like, we'll just take garage doors for example—could it serve as a bigger, weakest link to something worse if it gets damaged? And what kind of amplification of damage happens when that component actually is damaged or fails?" So there's sort of a funnel that we're working on now about these building components that helps us understand a lot more about the expected performance. So it's not just about the hazards and the frequency and the severity—that's still there, and we still observe those characteristics really well, and we're getting better by the day. But now, starting to bring in the building component aspect of performance, and how do we start integrating that into the way we look at risk and vulnerability of whole communities, all the way down to individual structures.  

Allie Barefoot: Yeah, that research is exactly why we at Cotality value and integrate IBHS's data into our own property insights. Because for underwriters, claims professionals, and even property managers, relying on old policyholder self-reports or historical snapshots is basically like betting on luck, right? So how does having that high-definition, granular data on actual roof age change the game for mitigating these losses before the hurricane season really even peaks?  

Dr. Ian Giammanco: Yeah, I think, you know, when we take the roof itself, especially when we look at asphalt shingles, which has the biggest sort of predictive variable, really comes down to its age. We've watched how these shingles become more brittle with time, their sealant starts to fail, and that is the first weakest link when a hurricane event and its winds come along. You start prying up those shingles, and then that cascade of damage starts to happen. So we want to, you know, basically figure out what that curve looks like with age, so we can apply it, right? We can understand what is the potential for damage. Like, a new roof, right, a new asphalt shingle that's very well sealed down, is going to perform. And we want to understand that. But when we reach some of the thresholds where the aging effects really start to kick in and accelerate out at that 7- to 10-year window, we know the probability for, one, damage is going to go up, the probability for a claim is going to go up, and that changes also the threshold of severity of the event which is going to drive those other factors. So this is just, you know, another layer of information. And as all of our tools get better and better and better, we can apply that to much more precision ways that we evaluate the vulnerability of a structure. We can also give folks credit for the things that they do on the positive, like putting on a new roof, or going to a more high-performance roof cover material. We've done work trying to illustrate, "Hey, what are the differences between asphalt, metal, tile? What is the probabilities of damage based on different types of hurricane severities?" And all that really does work towards this building intelligence factor, where we're just getting more information, we have more predictive power, and we can actually turn all those knobs way more effectively.  

Allie Barefoot: Yeah, and knowing you have all those resources at your fingertips, essentially... if there was an owner or a commercial manager that was looking at this data and realizing their property is exposed to this season's storms, I want to dive a little bit deeper there into what we talked about about switching shingles on your roof. Is it as simple as that, or is there a broader strategy to this exterior?  

Dr. Ian Giammanco: Yeah, so—so it comes down to, one, what is your building, where is it, when was it built under what building code? Because you may actually have a lot of the great features already if you were built under one of the modern code regimes, especially in a place like Florida that's had their strong code system for a long time, Virginia as well, Louisiana's catching up really, really fast. And then, in some of those places, you may—can take a more finer look at, "Hey, what are the little things I might need to do around my structure because I've got some of the big things?" Take Florida, for example, we'll just use a residential building—most of the state, you know, you've got the sealed roof deck provisions in there. You don't actually need to worry about that; when you reroof, you're going to get those by code. But you may want to think about, "Hey, I do want to update, upgrade maybe my garage door, or I want to replace my windows with something that's impact-resistant." You can start to actually go look at the things that are going to give you the best sort of bang for your resilience dollar, or your renovation dollar, whatever it may be. You could think about that on a commercial building, too: "Hey, my structure was built under some of the weaker codes, say, maybe the '70s or '80s. I need to do a new roof system, and I need to replace all my big roller doors because they're not wind-rated." And so it gives you a look as to what you can do. And I think that's sort of one of the missing links we've been thinking very hard about over the last really 20, 30 years, is how do we give people the right solutions for their building in the right place who deal with the myriad of hazards that may come at them. And I think that's the thing we talk about even at IBHS, is a little bit about the right material, the right components for the right place. And all of this kind of work builds towards that—of being able to provide somebody, some homeowner, some business owner, all that information to make really good decisions and get the most out of the choices that they make.  

Allie Barefoot: Being able to have that data and those resources determine what this specific structure needs, you know, I think that that's going to help move the needle not just for this hurricane season, but for many, many to come in the future. And Ian, I just have one final question here for you: It's about how it really highlights that the data and the physical science, they have to act as the connective tissue for the property industry, especially when these natural hazards come through. And as we face the realities of this hurricane season and those to come, what do you think it's going to take to truly close this preparedness gap and change the trajectory of post-storm recovery?  

Dr. Ian Giammanco: Yeah, so I think, you know, step one, we've been talking about it here right now, is the combination of this added layer of data—let's call it granularity, but it's not just the granularity about observing what's on the building, it's knowing the performance that goes with it in a real-world capacity. The next step of that actually to get scale in closing that gap is: How do these things that we now know, what are their standards that underlie them? What is the test programs that lead to their product approvals and integration in building codes? For the longest—really a very long time—we've been focused on, "Hey, does this product 'qualify'?" Let's think of it like that. Is it a pass/fail? Is it a qualification? But what if we now take all this information we're gathering and turn that into performance-based standards that actually have all those relativities built in? Now, you get, one, incredible predictive power to know, again, right component, right material, right place, right hazards. And that is that gap-closing element we're talking about. So we're taking that step. We got to know what's on structures, and we got to know how it performs in the field. We then got to take that back, we got to make sure that if that product has tests with it, or product approvals, things like that, those are up to date and move out of this sort of qualification view into the performance. And we've shown this can be successful through some of our enhanced standards from a voluntary standpoint—think the FORTIFIED program, the Wildfire Prepared Home program—that's often for us the place where science lands first. We can show this whole process does work; we just have to work at applying it at scale. And this building intelligence piece of it is such a huge component. So, I think we're—we're on the right steps. The next piece is figuring out how to take that beyond and how to get it into those places where we can help all these measures start to scale. And that's the really crucial part toward closing that gap. And I will say, I think we are making progress there. I look at sort of the influence of the Florida Building Code on losses post-Hurricane Ian, even things like—we've seen some of that performance improvement in Louisiana through the 2020-2021 hurricanes. And now, the piece is getting that scaled to larger geographies, and then we'll start to actually, really, realistically shave off losses. That's where we start, and then we'll eventually bend down the loss curve. You hear us at IBHS say that a lot. We're a long ways from that right now [laughs] and a lot of times we see the big numbers and losses come at us every season, right? Every quarter sometimes. But I do think we've shown models that work, we're on the right pace from a building technology standpoint and observing how these components work in the field, and then now it's just taking it into the scalability aspect.  

Allie Barefoot: It sounds like definitely moving in the right direction. As you said, it's not going to be something that's going to be solved by the end of this hurricane season, but having that data, having the resources, and having the people, that's going to continue to make this product and this research work is just—it's just great to hear that. And you've honestly given me a lot to think about. I'm going to go just take a quick lap around my house after this and just say, "Where are my weak spots heading into this hurricane season?

Dr. Ian Giammanco: Well, I tell you what, after—after now closing in on 16 years of doing this, I will judge your roof. I will look at your roof and I will judge everyone. I will judge my own roof [laughs]. And that is one of the reasons why we do what we do at IBHS, is really that hyper-focus and we have a passion for this work. But I do think you mentioned it: Like, this isn't going to happen overnight. I wish we could flip the switch and that the next hurricane everything we've talked about is right there in place. But the key is to continue this incremental progress. We've been on a really good vector, we got to keep the momentum going, and we have to leverage all the new technologies that are coming at us to actually solve this problem and get us through this first step, which is the building intelligence aspect, move into this really big way to look at a building in fine detail, and then determine, hey, what matters: the right place, right material, right hazards, and let's get this off to the bigger geographies so we can make a big difference.  

Allie Barefoot: Absolutely agree. Thank you, Ian. Thank you again to Dr. Ian Giammanco for joining us here on Data in Context, and thank you so much for listening. If you haven't already, subscribe to Cotality's YouTube channel, and as always, if you want to find out more information, head on over to cotality.com.  

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