Alabama University study highlights economic value of FORTIFIED Multifamily

The Alabama Center for Insurance Information and Research (ACIIR) at the University of Alabama’s Culverhouse College of Business has released a report measuring the economic value of using FORTIFIED Multifamily, a voluntary beyond-code construction and re-roofing method developed by the Insurance Institute for Business & Home Safety (IBHS).

The analysis found that the return on investment for resilient construction of multifamily properties can be as high as 72%.

ACIIR Director and Senior Research Professional, Dr Lars Powell, commented, “Our study found that resilient construction can provide an impressive return on investment, both in coastal and inland areas.

“I think many people will be surprised not only by the low cost of the program, but also by the substantial expected savings and revenues.”

The FORTIFIED Multifamily program was developed based on research by IBHS to identify ways to strengthen homes, commercial buildings and multifamily properties against severe weather, including hurricanes and tornadoes.

Buildings can be constructed to a FORTIFIED standard for either Hurricane or High Wind, and property owners can choose from three designation levels, including Roof, Silver or Gold.

The ACIIR study predicts that the lower insurance costs due to reduced risk, coupled with increased revenue, more than pay for the incremental cost of achieving a FORTIFIED designation.

The size of return on investment varied based on where the project was located and which FORTIFIED designation was sought, though the report suggests it ranged from 8.1% with added hail protection in inland areas to 72% for a Gold designation near the coast.

IBHS CEO Roy Wright, states, “With more than 60 million Americans living in multifamily housing, our nation cannot meaningfully reduce the impact of natural disasters without building stronger multifamily communities.

“Our research clearly demonstrates that a significant amount of storm damage can be avoided simply by investing in resilient construction, and this new study shows it’s financially beneficial to do so.”

Fred Malik, managing director of the FORTIFIED program, added, “Past research has demonstrated when high winds from severe weather events like hurricanes and tornadoes impact a FORTIFIED building, the resiliency will pay off in terms of reduced damage and loss of use.

“This study by the University of Alabama shows even before that happens, it literally pays to build resilient multifamily communities.”

Source: Reinsurance News, https://www.reinsurancene.ws/alabama-university-study-highlights-economic-value-of-fotified-multifamily/