Maybe You CAN Fool Mother Nature
New IBHS Research Lab Delivers Findings Out of the Gate

By Dave Willis

“We can’t stop severe weather from happening,” said Stephen McAnena, Liberty Mutual Insurance’s chief product officer and Institute for Business & Home Safety board member, “but if communities are better able to withstand it, then both insurers and consumers win.” Therein lays the foundation for insurance industry support of IBHS and its new research lab in rural South Carolina.

In April 2008, IBHS announced plans to build the state-of-the-art, multi-peril lab to allow testing that could lead to construction of more durable homes and businesses. Later that year, the institute decided to locate the research and training facility in rural South Carolina – between Charlotte, North Carolina, and Columbia, South Carolina.

The 90-acre site was chosen because of the climate, which accommodates year-round testing; the distance from the coast, which reduces possible hurricane damage to specimens sitting outside the lab; the ability to provide adequate noise barriers; the presence of a high-power transmission line carrying electricity generated by renewable resources; and the proximity to other centers of excellence, academic institutions, relevant business sectors; and interstate access to major airports.

Fully staffed, the center will employ researchers with expertise in wind, water damage, building science, wildfires, structural fires, statistical analysis and data mining, and public policy/sociology; communications support, including a public information officer and professional photographer/videographer; and on-site construction professionals as well as administrative support.

Findings from lab research will drive aggressive consumer education and advocacy campaigns and supply vital data to developing public policies in areas such as building codes and land use.

The journey
IBHS is a 30-plus-year-old non-profit organization dedicated to reducing losses from natural disasters, which was formed as the National Committee of Property Insurance, then renamed the Insurance Institute for Property Loss Reduction, and focused first on public education and advocacy. “The group was addressing standards, working with organizations such as the National Fire Protection Association and building code groups, which we still do,” explained Julie Rochman, IBHS president and CEO. “Early work involved providing input into existing processes based on insurer loss costs.”

Later, IBHS began developing practical, comprehensive building and life safety programs. “The focus became aggregating and analyzing existing information, adding some original research, and publishing it in programmatic form,” Rochman said. Popular IBHS offerings include an “Open for Business®” business continuity program and a suite of FORTIFIED programs addressing safe construction and retrofitting.

Creation of the IBHS Research Center in 2010 ushered the non-profit into a new era. “We’re becoming more of an applied science organization,” Rochman said, “similar to the Insurance Institute for Highway Safety,” an industry-sponsored facility that conducts vehicle crash tests to drive auto safety advocacy. Rochman served as an IIHS senior executive and then board member.

The center can produce simulations of Category 1, 2, and 3 hurricane-force winds, extra-tropical windstorms, thunderstorm frontal winds, wildfire ember showers, and wind-driven rain and hailstorms in a 21,000-square-foot test chamber. Capabilities are driven by a massive array of more than 100 large electric fans that generate wind up to 130 miles per hour.

A 750,000-gallon water tank supplies 200 test chamber nozzles capable of creating up to eight inches of “rain” per hour. Hailstones, burning embers, and different types of “debris” can be introduced into the wind stream via a series of ducts and other mechanical systems.

Timothy Reinhold, Ph.D., IBHS’s senior vice president of research and chief engineer, believes the facility will help “get through smokescreens that follow catastrophic events where people point fingers and nobody takes ownership. We can lay bare the issues, get to the heart of the problems, and, hopefully, change residential and commercial construction practices.”

Industry Engagement
Funding the new center represents what Rochman calls, “a huge leap of faith. Investing $40 million in the worst economic downturn in decades proves supporters’ long-term commitment to making buildings safer and stronger. NAMIC and its members have been tremendous partners.”

NAMIC has had a close working relationship with the IBHS and its CEO. “We’ve known Julie [Rochman] for many years, and we knew she was right to lead IBHS and this project,” said Chuck Chamness, NAMIC’s president and CEO. “Our confidence in this was confirmed when she spoke to our board about the center at a very early stage. It secured NAMIC’s support for this project, and our members have been among the largest financial contributors and supporters.”

Mission alignment between IBHS and insurers drives support. “As a founding IBHS member and longtime advocate of research to prevent and mitigate auto and homeowners losses, USAA sees the Research Center as supporting its mission to facilitate the financial security of its members and their families,” said Stuart Parker, USAA Property & Casualty Insurance president.

“Many [USAA military members] are assigned to posts and bases in locations throughout the United States at high risk from natural disasters,” Parker added. “The center is committed to helping identify new ways to improve building design, construction, and maintenance to help protect the homes of the people who protect our country.”

Liberty Mutual’s McAnena sees it similarly. “IBHS’s aim to reduce the impact of catastrophes is closely aligned with Liberty Mutual’s mission of helping people live safer, more secure lives,” he said.

Disaster preparedness is a challenge requiring “a concerted effort, based on objective research and real-world solutions. Creation of this center has been one of State Farm’s top loss prevention priorities,” according to Rod Matthews, State Farm Insurance’s underwriting vice president and IBHS’s immediate past chairman.

Carl Hedde, CPCU, Munich Reinsurance America’s head of risk accumulation and IBHS’s vice chairman, added, “At Munich Re, we’re committed to improving how buildings are built for life safety and property loss reasons. When we lose houses, the impact on the economy and people is huge.”

According to Henry Pippins Jr., Main Street America Group’s Midwest region president and IBHS board member, the center’s findings will benefit Main Street America’s independent agent customers and their insureds while enabling the company to improve its loss ratio significantly.

Many IBHS supporters encourage employees to roll up their sleeves and assume board and committee positions as well as other roles. State Farm staff, for instance, helped with functional elements of the lab, including lighting, photography, and power and site development.

Supporters derive benefits from IBHS’s work. For instance, Main Street America provides its agents with various IBHS materials from how to prepare homes and commercial buildings to withstand high winds to winter safety tips.

State Farm coverage areas use IBHS materials for customer and associate education, and Liberty Mutual’s claims professionals use IBHS publications, maps, and wildfire reports as reference material. Munich Re uses post-event reports and taps the organization for state-level advocacy work.

Early Success Soon after the IBHS Research Center’s grand opening, it delivered useful, actionable findings. “In conjunction with the grand opening, we conducted a number of different wind tests,” said Hedde. “In the first, the front door blew open and the house was destroyed.”

The second time, the house wasn’t destroyed, but the side door blew out. A post-mortem revealed the builder used finishing nails to hold the side door in place until he could go back and secure it properly. Then he forgot to go back. When the side door blew out, it reduced the loads on the building, allowing it to survive.

“This house was constructed under controlled circumstances,” Hedde observed. “Imagine what happens on the lot when someone’s house is being built.”

When preparing for another test, a building inspector checked construction at each step. Everything was done correctly, but the test still delivered findings. With the front door left open to allow pressure buildup, engineers observed a poor connection between the second floor framing and sidewalls. “That’s overlooked in existing high-wind design guidance,” said Reinhold.

The fix was simple. “I went to Lowes, bought $20 worth of strapping, and installed it,” Reinhold recalled. “An inexpensive solution, but something we were missing because nobody has looked at a house as a system quite like this before.”

Hedde noted, “Nobody intended to get all of this information from the initial demonstration.”

Zeroed In
Useful data is what the IBHS lab is all about. “We want to help people who are in harm’s way right now, giving them things to do to strengthen existing structures,” said Rochman.

Roofing is an initial focus. “The insurance industry is the largest customer of the roofing industry,” Rochman explained. “We replace millions each year. A compromised roof leads to all kinds of disasters. If you can’t keep out wind, water, or fire, then ceilings collapse, ruining the interior structure and contents.”

Various roofing systems and materials will be tested. “The payoff,” said Reinhold, “will come when we go into the building code arena and argue for changes to make properties more resilient.”

For instance, two standards exist for rating shingles. “We’ll work with manufacturers to make sure the science is right and then do testing,” Reinhold explained. “We hope to get to the point where a 150-mile-an-hour-rated shingle will stay in place in 150-mile-an-hour winds.”

That’s important to insurers. “We want to make sure that when consumers pay for high-rated shingles, the shingles actually stay on the house at those wind speeds,” McAnena said. “The lab will also test how roofs age, which will allow us to better advise our customers on how to maintain their roofs and avoid damage.”

Insurers are also concerned about rooftop systems. “We’re hearing more from the carriers about expensive, roof-mounted power-generating systems,” Reinhold said. “In hurricane-prone regions especially, you need to be careful placing things on roofs that can fly off. So we’ll look at those, too.”

The ability to study roofing performance in a controlled environment carries tremendous benefits. “When storms hit, nobody is sitting around watching,” said Hedde.” You don’t have slow motion, high-quality video. You’re running for your life.”

Future Prospects
“The lab will close a gap between theoretical and actual building performance,” said Rochman, offering companies a handle on exposures. “They can review models with a critical eye and look at their pricing, underwriting, loss control, and claims functions and, hopefully, improve them all.”

Matthews concurs. “The Research Center is a game-changer for building science,” he noted. “With this center, we will no longer need to rely so heavily on costly research laboratories with names like Hugo, Andrew, Katrina, Charley, and Ike. We’ve had to learn from disasters that have left too much destruction, too much devastation, and too many shattered lives.”

Hedde, whose firm already has a robust modeling capability, says the facility will “change the equation for us. Once we start getting research data from the lab, we’ll use it to validate and improve our own models. That’s the direct impact. The bigger impact comes when we can change building behavior.”

Parker agrees on the bigger impact Hedde describes. “It is important that the research that comes out of this facility is shared with consumers, builders, regulators, community leaders, and other stakeholders,” he said. “We hope this will improve building science and lead to wider adoption of stronger and safer building standards.”

“Just as the Insurance Institute for Highway Safety has created demand for safer cars,” said Pippins, “the IBHS Research Center will accelerate the demand for safer homes, businesses, and other structures.”

“The visuals that come out of here will be convincing, demonstrating the value proposition to homeowners, business owners, realtors, and lenders that buildings that stand up to natural hazards are better investments,” Reinhold added.

“Arm people with the right information and they can make decisions and take action,” Rochman said. “That’s ultimately what will drive change. Just talking is no good. If people actually act on it and retrofit structures or build better, that will create a much safer built environment.”

IBHS is poised to quickly and efficiently do this arming. “We can immediately integrate findings into our existing programs without having to wait for codes to catch up,” said Reinhold. “By getting findings to the public through these programs, we can influence behavior right away.”

Industry Benefits
Rochman sees broad insurance industry value in the lab’s work product. “There’s no limitation to who in the industry will find our information useful,” she explained, “from single-state writers and niche players to super-regionals and national and international carriers to reinsurers and intermediaries.”

Pippins agrees. “Any insurance company that has property exposure to catastrophes would benefit from the findings that will be generated by the IBHS Research Center,” he said. “This is invaluable information that will enable carriers to reduce their loss costs.”

Broad industry involvement can boost benefits. “Donating to the Research Center offers companies the opportunity to be leaders and change agents in our industry by even more strongly encouraging and supporting innovation in resilient construction and retrofitting of homes and businesses,” Matthews said.

Hedde foresees research including more home types from more regions. “For instance, I’d like a mobile home manufacturer build a home for testing,” he explained. “I’d also like to see construction materials and methods from other countries tested.”

He also wants more commercial modeling companies coming to the table. “The contribution is minimal compared to what they’d get out of it,” he said.

“This will affect how we build for generations to come,” Hedde continued. “It’s the biggest facility in the world, and it allows us, for the first time, to test a whole structure and not rely on trying to determine after an event what happened.

“IBHS was a good thing to be part of before the research facility was built,” he concluded,” and a great thing to be part of now.”

Dave Willis is a freelance insurance writer and frequent IN magazine contributor.

Not long after the Institute for Business & Home Safety opened its new research lab facility in South Carolina, IN magazine asked IBHS supporters from a number of NAMIC member companies for insight into the lab and its value. Included were: Carl Hedde, head of risk accumulation, Munich Reinsurance America, Inc.; Rod Matthews, underwriting vice president, State Farm Insurance Companies, and immediate past chairman of IBHS; Stephen McAnena, chief product officer, Liberty Mutual Insurance; Stuart Parker, USAA Property & Casualty Insurance president; and Henry Pippins, Midwest Region president of The Main Street America Group and IBHS board member. Here’s what they shared:

Why does your company support IBHS and why did you help fund development and construction of the lab?

Matthews: Disaster preparedness is a national challenge. It calls for a concerted effort based on objective research and real-world solutions. Creation of this center has been one of State Farm’s top loss prevention priorities. We’ve been a proud sponsor of IBHS for more than 25 years and are excited to support IBHS in this state-of-the-art research center. The research fits with State Farm’s mission to help people manage the risks of everyday life, recover from the unexpected, and realize their dreams. Our investment in the Research Center will help us find ways to not only build stronger, safer homes and businesses but also save lives and prevent losses.

McAnena: IBHS’s aim to reduce the impact of catastrophes is closely aligned with Liberty Mutual’s mission of helping people live safer, more secure lives. The new lab will be able to look at some perils, like hail, that haven’t been studied as extensively but regularly cause significant damage.

Hedde: At Munich Re, we’re committed to improving how buildings are built for life safety and property loss reasons. When we lose houses, the impact on the economy and people is huge. IBHS had the foresight to recognize they could affect how buildings are built, similar to what the IIHS facility did with cars. Twenty years ago, car manufacturers didn’t want to build safer cars, but when you put the pictures out and consumers see them, they say, ‘I want a safer car.’ You force them. It will be the same with builders. People will want safer homes for their families; this will show you can build a safer home.

How does your organization already use information and data from IBHS, internally and/or externally?

Pippins: The Main Street America Group has been using the invaluable information provided by IBHS for many years with our network of independent agent customers. We provide them with a variety of materials produced by IBHS. This includes everything from how to prepare homes and commercial buildings to withstand high winds to winter safety tips. In turn, our agent customers provide this beneficial information to their insureds.

Hedde: While we do much research on our own, having access to information from lab research helps bolster our activities. IBHS has a great set of engineers. They put good post-event reports together. They’re our advocate at the state level, doing building and building code work on our behalf.

McAnena: Our claims organization uses several IBHS publications, such as well as the hail maps and wildfire reports as reference material.

How will work done at the new facility help your firm beyond what IBHS offers/does now? For example, how will your company use information or data generated from work the lab does?

McAnena: IBHS already has a great deal of useful information, but the new lab offers the chance to explore building systems in greater detail. One of the first areas of research the lab plans to focus on is shingle performance. We want to make sure that when consumers pay for high-rated shingles, the shingles actually stay on the house at those wind speeds. The lab will also test how roofs age, which will allow us to better advise our customers on how to maintain their roofs and avoid damage. These two studies will be valuable for both hurricane-prone areas as well as inland regions susceptible to wind and hail damage.

Parker: Many military members don’t get to choose where they live. Many are assigned to posts and bases in locations throughout the United States at high risk from natural disasters. The center is committed to helping identify new ways to improve building design, construction, and maintenance to help protect the homes of the people who protect our country.

Matthews: The Research Center is a game-changer for building science. With this center, we will no longer need to rely so heavily on costly research laboratories with names like Hugo, Andrew, Katrina, Charley, and Ike. We’ve had to learn from disasters that have left too much destruction, too much devastation, and too many shattered lives. The facility has tremendous long-term value in improving the performance of buildings, exposing the public and media to the need for safe, wind-resistant construction, and creating demand for stronger homes. It’s our hope that the work conducted at the facility will lead to improved building codes and enhanced equipment; cost-effective retrofit techniques that improve the wind resistance of buildings; and increased public demand for better construction of homes and businesses.

State Farm believes that mitigation is the key to preventing losses or minimizing the effects of a loss. The data and knowledge we’ll gain from the IBHS Research Center will allow us to enhance our loss mitigation efforts and better help our customers protect themselves and their property.

Hedde: IBHS was a good thing to be part of before the research facility was built and a great thing to be part of now. The lab is really going to change the equation for us. Munich Re has a robust modeling capability of its own. In fact, we had CAT models before the commercial CAT models were available. Once we start to get research data from the facility, we’ll use it to validate and improve our own models. That’s the direct impact. The bigger impact is, if we can change behavior on how people build, that’s a bigger impact on us down the road.

We want risk-adequate pricing within the industry. This research will better inform the models that are used for pricing. So higher or lower? If buildings perform better, then that’s better risk-adequate pricing.

What, if anything, does your firm contribute to IBHS in terms of staff expertise, data, etc. to help in the effort to improve building safety?

Hedde: We’ve been a member of IBHS for a long time. I’ve been involved as have others. We’ve put on the research advisory council a structural engineer, an earthquake expert who works out of our Munich, Germany office. We’re helping to form the research facility agenda over the next couple of years.

Pippins: The Main Street America Group is a very active member of IBHS and provides much expertise to the organization. I have served on the board of directors since 2005 and am also a member of its Audit/Finance Committee and Commercial Lines Committee. Mark Friedlander, our head of corporate communications, is chair of the IBHS Communications Committee; and Gary Pedigo, one of our personal lines product managers, is a member of the IBHS Personal Lines Committee.

Matthews: We provide counsel and insight to how our customers lives are affected by storms. Additionally, we have provided staff to assist with the functional elements of the lab (lighting, photography, power, site development, etc.).

McAnena: Liberty Mutual is represented on the Research Advisory Council, which helps to direct and prioritize research at the center.

Should other companies like yours get involved in supporting IBHS and the lab? If so, why and how?

McAnena: Absolutely. We can’t stop severe weather from happening, but if communities are better able to withstand it, then both insurers and consumers win.

Pippins: Any insurance company that has property exposure to catastrophes would benefit from the findings that will be generated by the IBHS Research Center. This is invaluable information that will enable carriers to reduce their loss costs.

Hedde: One of the things I’d like to see is a mobile home manufacturer build a home for testing. While they might worry that a mobile home doesn’t hold up, you might find it performs better than you’d expect. One of my disappointments is we only have one of the commercial models involved in the facilities. The contribution is minimal compared to what they get out of it.

Matthews: Donating to the Research Center offers companies the opportunity to be a leader and change agent in our industry by even more strongly encouraging and supporting innovation in resilient construction and retrofitting of homes and businesses. The objective data coming from these tests will lead to stronger, safer homes and businesses and less volatile results for our industry. IBHS is making real-world building safety science available to everyone – much like the Insurance Institute for Highway Safety did in the 1990s. Through the partnerships that support this center, IBHS will help us find ways to not only build stronger, safer homes and businesses but also save lives and prevent losses.

Is there anything else you’d like to mention about the IBHS or its new research lab?

Hedde: The impact of natural disasters is not in the United States alone. It would be interesting to see how a house built to European standards performs. For developing nations, you could come up with building designs and codes and practices unique for their locations that are cost effective and save a lot of lives. Wind is wind, no matter where you are.

At the end of the day, the lab will produce data that not only helps our industry financially but also in terms of public recognition. For years insurance companies have supported research that reduces loss and improves safety, the IBHS lab will help us highlight this activity more broadly. It’s another way we can show our interest in preventing people from getting hurt, in reducing property losses, and in saving lives.

Matthews: We must continue to work together across industries, government agencies, and organizations to find better ways to protect lives, homes, and personal property. The state-of-the-art, multi-peril applied IBHS research and training facility will have a unique ability to test full-size structures in addition to building materials and systems. IBHS has already signed and is considering requests to sign several memoranda of understanding and joint research proposals with leading property-related research organizations, universities, and government agencies. These partnerships will include wind, water, wildfire, and hail testing.

Pippins: With the leadership of CEO Julie Rochman and chief engineer Dr. Tim Reinhold, IBHS has a top-notch management team in place to ensure the Research Center provides great value to insurance carriers and insureds.

Parker: It is important that the research that comes out of this facility is shared with consumers, builders, regulators, community leaders, and other stakeholders. We hope this will improve building science and lead to wider adoption of stronger and safer building standards.

Posted: Thursday, April 21, 2011 11:31:28 AM.