The Emerging Success Story of States Treating Home Resilience as a Public Investment

​Disaster funding often flows after a disaster strikes—through insurance claims, federal assistance, or emergency appropriations. 

When investments in a structure’s resilience are made before a disaster, the ROI is high: For every $1 invested in pre-disaster mitigation and resilience, communities save $4 to $17 in recovery and repair costs they would have incurred later.

The challenge is that individual homeowners are historically the ones footing the bill. But that is beginning to change. States have found multiple ways to pay for resilience upgrades.

A new set of case studies and a policy brief from Duke University's Nicholas Institute for Energy, Environment & Sustainability, produced in partnership with The Resiliency Company, lay out how states are financing property-level resilience improvements that reduce disaster losses, improve housing affordability, and stabilize stressed insurance markets.

Intended to serve as a roadmap for legislators, insurance regulators, housing finance agencies, philanthropies, and other decision-makers, the publication highlights financing approaches in six states for the Insurance Institute for Business & Home Safety (IBHS)’s FORTIFIED Roof standard (Alabama, Florida, Louisiana, North Carolina, Oklahoma, and one Midwest state, whose program has yet to be launched).

For wind- and storm-related hazards, the IBHS FORTIFIED Roof is considered the gold standard for reducing losses from roof damage. It combines a clearly defined construction standard, third-party verification, and measurable insurance outcomes. It is the primary example described in the publication because it is the hazard mitigation strategy integrated into a growing number of state financing programs.

Together, the research, case studies, and policy brief show what’s possible when states embed property-level resilience standards into local programs and policies.

FORTIFIED is a resilience success story

A study by the Alabama Department of Insurance and the Center for Risk and Insurance Research at the University of Alabama found that during Hurricane Sally in 2020, FORTIFIED Roof construction reduced how often homeowners filed a claim (loss frequency) by 55%-74%, reduced how large that claim was (loss severity) by 14%-40%, and reduced how much insurers paid out in claims relative to the premiums they collected (loss ratio) by 51%-72%.

The authors of the Alabama study estimated that if conventional homes had been built to the FORTIFIED standard, policyholders would have saved more than 61% on deductibles and insurers would have saved more than 65% on total claims paid.

In North Carolina, an analysis of hurricane claims by the Institute for Advanced Analytics found that homes with FORTIFIED Roofs had roughly 35% fewer claims and 23% lower damage severity following major storms than comparable homes with standard roofs.

Five levers to fund property-level resilience

The publication’s authors found five levers states use to fund property-level resilience.

1. Direct public appropriations: State governments allocate public funds for grant programs that reduce the upfront cost barrier facing homeowners and housing providers.
2. Insurance sector funding mechanisms: States reinvest a portion of resources generated within the insurance system itself—premium taxes, regulatory fees, underwriting surplus, and assessments—into risk-reduction activities that lower future claims and improve market stability.
3. Tax code incentives: States use the tax code to make resilient construction standards financially attractive, reducing tax burdens or improving access to development-related tax incentives such as the Low-Income Housing Tax Credit.
4. Capital market structures: States engage capital markets, such as bond issuances and insurance-linked securities, which transfer catastrophe risk to capital-markets investors, to support resilience investments that reduce future losses.
5. Blended capital resilience finance: States combine philanthropic capital and insurance-sector participation into structures that aim to capture avoided losses from more resilient buildings, establishing a direct link between resilience investments and the future economic value they create.

Not every state used every financing mechanism, but some states used multiple levers. The Nicholas Institute researchers also found five common design features across the six state programs they studied.

1. Payment based on verification: State programs wait to disburse resilience funding until after the upgrade is completed and is verified to meet the FORTIFIED standard.
2. Insurance discounts: State insurance regulators in Alabama, Louisiana, and Oklahoma require private insurers to offer premium discounts on the wind portion of homeowners’ policies for homes with a FORTIFIED designation.
3. Risk-based targeting: Many state programs prioritize eligibility by risk, focusing limited funds on high-risk geographies or hail-prone ZIP codes where upgrades are expected to avoid the greatest losses.
4. Need-based access: Different programs are designed to meet different needs across states, targeting homeowners of different income levels, condominium associations, and affordable-housing builders.
5. Justification and reinvestment: Tracking and quantifying avoided losses has helped justify further state investment or private investment, with savings from many programs recycled back into the roofing programs themselves to expand their reach and benefits over time.

Investments in resilience can reduce a state’s future liabilities

The broader lesson from these state programs, according to the researchers, is that “resilience investments are increasingly evaluated not simply as construction upgrades, but as financial interventions that reduce future liabilities. States are experimenting with ways to connect verified risk reduction to insurance pricing, capital allocation, and public investment decisions. As pressure grows to build more housing and maintain affordability, these programs demonstrate that resilience and housing production need not be competing priorities.”

“The objective is not merely to build more homes, but to build homes that remain durable, insurable, and economically valuable over time,” they said.

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Upcoming Webinar: Six States’ Approaches to Financing Resilient Homes

The Resiliency Company and the Nicholas Institute are co-hosting a webinar with the publication's authors on October 2nd, at 12pm ET, to go deeper into the case studies and design features across all six states. Register here.

​​Read the full publication, including all six case studies, here.

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