ICT panel: Trust the science of a statewide building code

With insured catastrophe losses occurring with greater frequency and rising to higher costs, the Insurance Council of Texas/AFACT Property Casualty Symposium offered insurers insight on what can be done to build a more resilient future. The highly credentialed panel, moderated by ICT Executive Director Albert Betts, included Louis Gritzo, Ph.D., vice president and manager of research, FM Global; Pamela Williams, executive director of Build Strong Coalition/FEMA advisory council, and Mark C. Bove, meteorologist and senior vice president of natural catastrophe solutions, Munich Re.

The panel reviewed the climate conditions that sound the call for building not merely for affordability, but for resilience. A statewide building code is an essential component for a resilient future, agreed the scientists on the panel.

Gritzo and Bove recommended that Texas codify the standards that provide the resilience in the form of a statewide building code. “The decision not to have a statewide building code affects Texas year in and year out,” said Bove. “The science (of building) is not out to get you,” he said.

Bove was firm in his view that increased frequency of natural catastrophes, especially damaging rainfall, is the new normal. “Warming atmosphere holds more water,” he explained, and the atmosphere drops the water in populated areas. So called 500-year events occur far more often than that. Hurricanes that reach land, Bove said, are more frequent and more intense. “The insurance industry can no longer depend on past experience to predict the future.”

Risk models based only on history are no longer valid predictors of risk, warned Gritzo. He pointed to the warming of our climate that has led to greater frequency of soaking storms. Rainfall builds up as surface water and rivers rising, he explained. The cumulative effect when soil is oversaturated is trees fall down, bringing electric wires with them.

Williams sees sharing the data that insurers gather as an opportunity to have the private and public sectors work together for better planning. The insurance industry has a tremendous role to play, said Williams. She stressed that insurers need to talk to local government officials, so they can confidently require structural resilience through building codes and land use codes. “Planning is key,” she said. “It’s hard, emotionally and politically.” But planning and building for resilience work, she said, noting that the strengthened levees built in Louisiana post-Katrina resulted in less damage from Hurricane Ida.

Natural disasters join manmade factors to contribute to significant losses, said Betts, pointing to the failure of the Texas electric grid during the Texas winter storm. Bove said the industry was blindsided by the magnitude of the loss from uncharacteristic low temperatures across Texas and the failure of the power grid. The same event in a less populated state, such as Oklahoma, would have had significantly lower financial impact, said Bove. Infrastructure in Texas has not kept pace with the demands of the explosive population growth, he added.

Whether the climate change is a natural phenomenon or there are significant manmade components to it, said Gritzo, the result is an increased vulnerability that must be addressed. When people build to affordability, the mindset is short term. In the process of building, the layout of the earth is altered. Managing growth makes sense for the long term, he said.

Gritzo said that the majority of losses are preventable through engineering. Because of the strength of the Texas economy, Gritzo said, Texas should embrace its role as a leader in the build-for-resilience strategy. Reducing adverse impacts of storms means communities and economies bounce back sooner, he said. “Welcome the new technologies that help build better,” he advised.

Bove agreed. “A lot of losses in Texas are driven by hail events, and hail damage can be mitigated,” said Bove. The technology exists to produce roofing materials and roof decking that can withstand hail, a large-loss insured event that Texas sees with significant frequency.

These panelists appeared virtually on Sept. 2, the second day of the symposium. Other presentations over the two-day period included Robert Hartwig, Ph.D., director of the Risk and Uncertainty Management Center, University of South Carolina; Jay Thompson, AFACT lobbyist and partner with Thompson Coe Cousins and Irons; Angie Cervantes, ICT’s government and legislative affairs manager; Pat Callahan, personal lines president, Progressive Insurance; Doug Slape, chief deputy commissioner, TDI, and motivational speaker Courtney Clark. Recordings of their presentations were made available to symposium registrants.

In other business, ICT elected representatives of member companies, Chubb, CNA and Kemper, to serve on the ICT board.

Tony Gonzales, senior vice president of UPC Insurance and president of the ICT Education Foundation, updated members on the recent accomplishments of the foundation. In 2020, 43 students enrolled in insurance and risk management curricula in nine universities shared in scholarships totaling $72,000. Since the ICT scholarship program started in 2002, $1.3 million has been awarded to 628 scholarship recipients.