A new set of case studies and a policy brief lay out how states are financing property-level resilience improvements that reduce disaster losses, improve housing affordability, and stabilize stressed insurance markets.
The Weekly: States' Resilience Investments Are Easing Housing Costs and Steadying Insurance Markets
A new set of case studies and a policy brief lay out how states are financing property-level resilience improvements that reduce disaster losses, improve housing affordability, and stabilize stressed insurance markets.
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- Feature: The Emerging Success Story of States Treating Home Resilience as a Public Investment. - From the archive: The Great Unlock: How Public, Private, and Philanthropic Leaders Can Scale the Next Chapter of Climate Resilience. - In the news: The Commercial Case for Making Buildings More Sustainable.
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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.
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).
Five levers to fund property-level resilience
The publication’s authors found five levers states use to fund property-level resilience.
Direct public appropriations: State governments allocate public funds for grant programs that reduce the upfront cost barrier facing homeowners and housing providers.
Insurance sector funding mechanisms: States reinvest a portion of resources generated within the insurance system itself into risk-reduction activities that lower future claims and improve market stability.
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.
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.
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.
The Nicholas Institute researchers also found five common design features across the six state programs they studied.
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.
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.
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.
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.
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.”
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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.
You can read the full publication, including all six case studies, here.
The Great Unlock | Xavier de Souza Briggs and Matt Posner | How public, private, and philanthropic leaders can scale the next chapter of climate resilience. A national call to action prepared for Chicago Climate Week and Aspen Ideas: Climate.
Insurance Markets Don't Collapse Overnight | The Epicenter | Insurance markets don't become uninsurable overnight. But the transition from insurable to uninsurable is the final stage of a sequence that can take years or decades to play out.
Manhattan’s Flood Walls Are Almost Done. What Will Mamdani Do Next? | Grist | New York City is nearing completion on its post-Sandy flood resilience projects, but protecting the city’s remaining 500-plus miles of coastline will require difficult choices about where to spend limited dollars. Seawalls, marsh restoration, buyouts, and other approaches are all on the table.
FEMA’s Reform Reckoning | Climate Proof | FEMA is undergoing a sweeping overhaul. In this podcast episode, Andrew Rumbach of the Urban Institute breaks down what the changes could mean for disaster finance, including whether a smaller federal role will leave states and communities carrying more of the financial risk.
How Japan Is Turning Flood Resilience Into Economic Growth | World Economic Forum | A flood resilience case study from Japan, where a mix of large-scale engineering, nature-based solutions, and new technology is handling worsening flood risk. Underground flood channels, rice paddies designed to hold stormwater, and other investments are reducing losses and supporting local economies.
Read more about resilient public infrastructure and government solutions on The Epicenter here.
Real Estate & Construction
Material Intelligence for Climate-Resilient Design | Meer | Material choices made during construction increasingly have implications for how much damage buildings sustain. Reflective surfaces can reduce urban heat, high-performance envelopes can limit heat loss, and flood-resistant design can help buildings withstand heavier rainfall.
The Winners and Losers of Maine’s Race to Armor Its Shoreline Against Climate Change | Inside Climate News | Maine’s response to rising seas and stronger storms is creating a boom in demand for the rock used to armor vulnerable shorelines. Permits for shoreline stabilization nearly tripled from 2022 to 2024, while the number of new quarry registrations has also surged.
The Commercial Case for Making Buildings More Sustainable | JLL | A key finding of JLL’s latest report is that climate risk is becoming a real estate cost, with heat, flooding, storms, and drought threatening buildings, operations, and property values. More sophisticated climate modeling and scenario analysis tools can guide resilience investments.
Read more about resilient real estate on The Epicenter here.
The Statistic of the Week
68%
Global insured catastrophe losses are now expected to average $171 billion annually, according to Verisk. The United States accounts for 68% of that modeled insured catastrophe risk.
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The Epicenter helps decision-makers understand climate risks and discover viable resilience solutions. The Epicenter is an affiliated publication of The Resiliency Company, a 501(c)3 nonprofit dedicated to inspiring and empowering humanity to adapt to the accelerating challenges of the next 100+ years.
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