In Texas, as the state continues to grapple with escalating insurance costs, experts are pushing for one of the most straightforward solutions: making homes more durable. The idea is simple but effective—by reinforcing homes, particularly those vulnerable to storms, homeowners can minimize losses, and insurance companies can reduce the number of claims they have to pay. This would result in both fewer insurance claims and lower premiums, ultimately helping to alleviate the ongoing insurance crisis.
State Rep. Tom Oliverson, a Republican from Cypress, highlighted this point in June when speaking to lawmakers. He emphasized that while it’s impossible to stop storms from occurring, there are practical steps that can be taken to reduce their impact on properties. "You can’t change the frequency [of storms]," Oliverson said, "but you can certainly impact the severity on a property claim by changing the materials you use and how it’s constructed."
As the chair of the House’s insurance committee, Oliverson has been actively thinking through ways to encourage more resilient construction. He recently introduced a bill aimed at creating a state program to fund home retrofits and structural upgrades, signaling a potential shift toward prioritizing the durability of homes.
The Need for Stronger Homes
The concept of building stronger, more resilient homes is not new. Experts have long advocated for tougher construction standards to mitigate the financial damage caused by extreme weather events, especially hurricanes and other severe storms. This is particularly relevant in Texas, a state that frequently faces weather-related disasters.
Experts argue that one of the most effective and immediate ways to address this crisis is by incentivizing homeowners to invest in home upgrades that make properties more storm-resistant. When homes are more durable, it not only protects the homeowners’ investment but also helps insurance companies by reducing the number of claims that need to be processed. This in turn benefits the overall insurance market, potentially bringing down the overall cost of premiums for many residents.
What Other States Are Doing Right
In the quest to make homes more resilient, other states have already taken the lead, offering valuable lessons on how such initiatives can work in Texas. Ten states, including Alabama, Louisiana, South Carolina, and Minnesota, have introduced incentive programs to promote resilient retrofits and structural upgrades. These programs often provide grants to homeowners and offer discounts on insurance premiums for those who invest in making their homes more durable.
Alabama, in particular, has been a pioneer in this area. Since 2016, the state has provided homeowners with grants of up to $10,000 to upgrade their roofs. These upgrades include denser nail patterns, stronger framing connections, and sealed roof decks to prevent water intrusion. These measures, collectively known as the "Fortified" standard, have been supported by insurers and are designed to help homes withstand severe weather.
The results in Alabama speak for themselves. While only 8,000 of the 50,000 Fortified homes in the state received public funding through the grant program, the program has successfully spurred market demand for more resilient home construction. As a result, homeowners are taking steps on their own to build or upgrade their properties to meet these higher standards.
Other states, including Louisiana and South Carolina, have followed Alabama’s example, requiring insurers to offer premium discounts to homeowners who build or upgrade homes to resilient standards. This has created a win-win scenario where homeowners benefit from the long-term savings of reduced insurance premiums, while the state benefits from fewer claims being made after storms.
Support From Insurers
A key question when considering such programs is whether insurance companies will support the effort to promote more resilient construction. In Texas, researchers at Texas A&M University of Galveston conducted a study on how investments in resilient construction standards could help mitigate losses, particularly in coastal areas. The study surveyed insurance companies writing homeowners insurance in Texas, and the results were promising.
About one-third of insurers responded to the survey, and the majority of those who did said they would support a state program designed to help homeowners retrofit their homes to higher construction standards. In fact, most insurers indicated that they would offer "reasonable premium discounts" for policies covering homes built to resilient standards. On average, insurers said they would offer discounts in the range of 10-12% for homes built or retrofitted to Fortified standards.
While there’s strong support for such programs, some insurers did express concerns about mandatory discounts, preferring instead to offer them voluntarily based on their assessments. Nonetheless, the idea of incentivizing homeowners to make their properties more resilient appears to be a step in the right direction.
The Challenge of Coastal Coverage
Even with these incentives in place, building more resilient homes doesn’t guarantee that insurers will start covering more homes along the Texas coast, where the risk of wind and hail damage is particularly high. The Texas Windstorm Insurance Association (TWIA) currently provides wind and hail coverage for a significant portion of homeowners along the coast, but many homeowners are still left without coverage from private insurers.
In fact, more than half of the insurers surveyed by Texas A&M indicated that they were unlikely to begin offering more coverage along the coast, even if a resiliency incentive program were implemented. This is a significant issue, as many coastal homeowners rely on TWIA for their windstorm coverage.
However, even if the number of policies under TWIA doesn’t increase, experts believe that a statewide incentive program could still help reduce the cost of claims during future storms. By encouraging homeowners to adopt Fortified standards, Texas could reduce the overall severity of windstorm damage, helping to preserve the state’s insurance pool and reduce future costs.
The Value of Mitigation Investments
While the upfront costs of retrofitting homes may seem daunting, research suggests that investments in resilient construction can pay off in the long run. A study published in the Southern Economic Journal found that Fortified homes in coastal Alabama were worth significantly more than non-Fortified homes—by as much as 15%. This price differential far exceeded the additional costs of building or retrofitting homes to meet Fortified standards, making it a smart financial decision for homeowners.
Moreover, a 2022 survey of apartment residents across the South revealed that 74% of tenants would be willing to pay higher rent for an apartment in a Fortified building, showing that the demand for storm-resistant properties is high. This suggests that homebuyers and renters alike value the added security and peace of mind that comes with living in a storm-resistant home.
The National Institute of Building Standards has also found that for every dollar spent on mitigation, six dollars are saved in future disaster costs. This highlights the long-term economic benefits of investing in wind damage mitigation and resilient building practices. Additionally, studies have shown that upgrading roofs to be more resilient to wind and hail can reduce insurance losses by up to 79%, depending on the level of retrofitting.
Encouraging Resilient Home Construction in Texas
Despite the clear benefits of resilient home construction, Texas currently lacks a statewide residential building code, which can be a significant barrier to progress. While cities are required to adopt and enforce building codes, counties have the option to opt out. As a result, Texas has some of the weakest building codes among states on the Atlantic and Gulf coasts, according to the Insurance Institute for Business & Home Safety.
Building codes play a critical role in preventing wind damage. For example, in Florida, homes built under modern wind-resistant building codes experienced 72% fewer damage claims than those built before such codes were implemented. Studies have also shown that every dollar spent on enhanced construction in Florida saved six dollars in avoided damage over the life of the structure.
If Texas were to implement stronger building codes and incentivize resilient construction practices, it could significantly reduce the risk of damage from severe weather events. This would not only protect homeowners and their properties but also help stabilize the state’s insurance market, providing long-term benefits for both residents and insurers alike.
In conclusion, the time is ripe for Texas to embrace resilient construction as a way to reduce the financial burden of storms on homeowners and insurers. With a well-designed incentive program, Texas could follow the lead of other states like Alabama, creating a more secure future for its residents while also addressing the state’s ongoing insurance crisis.
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