Building to Florida Code Reduces Losses, Is Cost Effective

Source: The 2018 study and report “Building Code Economic Performance Under Variable Wind Risk,” from the journal Mitigation and Adaptation Strategies for Global Change. 

Damage reduction from wind loss

Fig 1.  Based on insurance loss data from 2001-2010, the Florida Building Code demonstrated an overall wind loss reduction for the state, showing a 72 percent reduction statewide. 

Benefit/Cost ratio by construction cost and regionFig 2.  Benefit/cost ratios for various cost levels of improvements to homes in the non-wind-borne debris region and the wind-borne debris region. The data shows that impact-glazing systems in the WBDR offer a benefit/cost ratio of 1.58, meaning for every $1 spent on the improvements, future losses are reduced by $1.58. 

Do enhanced wind codes provide benefits that exceed implementation cost? The answer is yes, according to a recent study published in the journal Mitigation and Adaptation Strategies for Global Change. In the study, “Building Code Economic Performance Under Variable Wind Risk,” researchers looked to Florida and its stringent Florida Building Code as a case study to quantify the benefits of stronger codes relative to the increased costs. 

The Florida Building Code was adopted in response to Hurricane Andrew, a Category 5 hurricane that hit the state in 1992 and caused a record $16 billion worth of damage in insured loss. The code divided the state into two zones, the wind-borne debris region, or WBDR, and the non-wind-borne debris region, N-WBDR. The WBDR, considered more at risk for wind-borne damage, exists mostly along the coast and requires that residential structures are built with impact protection for windows and doors, such as exterior coverings or impact-resistant glazing systems.

Minimized losses

The study used insured loss data across 10 years from more than 1 million homes. During the studied timeframe—2001 to 2010—seven hurricanes made landfall in Florida, three of which were Category 3 or higher. 

The researchers used property and casualty insurance industry data from the Insurance Services Office to review insurance claims after hurricanes. During that time, $5.1 billion was paid in losses due to windstorm hazards, the single largest reason for housing loss in Florida, and the most frequent source of loss claim. 

Researchers found that residences built to code in the high-risk WBDR region were 64 percent less likely to be damaged than those that were not (see Fig. 1). Per the study, the Florida Building Code lowers the probability that the housing stock will experience a loss and reduces the magnitude of losses that do occur.

Cost-effective improvements

Building more resilient homes to meet the stringent codes comes with added costs. However, the study also found that, in addition to demonstrating hurricane-resistance, the Florida Building Code was cost-effective during the time period studied. 

In determining cost-effectiveness, researchers reviewed insurance loss data for homes, and compared loss data for newer homes built to the Florida Building Code with the loss claims of older homes that were not built to code. Researchers found that the overall benefit/cost ratio for the state of Florida was 6.06. This means that for every $1 spent in increased cost, whether on impact systems or lower-cost options like hurricane shutters, future losses are reduced by $6.06. This marks an overall cost benefit to building to Florida Building Code. 

Looking at the benefit/cost ratio in different parts of the state, the ratio is higher in the N-WBDR zone, located in the interior of the state (see Fig. 2). This area requires less expensive improvements in protection, making the up-front costs lower. In the high-risk WBDR, lower-cost protections, like hurricane shutters, have an average benefit/cost ratio of 6.65. Higher-cost impact glazing systems also offer a net-positive cost-benefit, showing an average ratio of 2.20.

The report was authored by Kevin Simmons, professor of economics, Austin College,; Jeffrey Czajkowski, managing director, University of Pennsylvania’s Wharton Risk Center; and James Done, project scientist, the National Center for Atmospheric Research. It is available for purchase and download at