Building Code Adoption, Enforcement Critical to Reducing Losses

When building codes are adopted and enforced, there is a substantial reduction in loss, according to Christopher Miller, technical director for ISO’s Building Code Effectiveness Grading Schedule (BCEGS).

During an audio interview with Claims Journal, Miller explained that it’s not just about adoption and enforcement – the way building codes are modified is important as well.
Insurers benefit from better building codes, said Miller, because of their interest in building portfolios in risk opportunity. Insurers want to reduce uncertainty in anticipated losses, especially losses due to wind, seismic and fire events.

During the period of 1994-2014, hurricanes and tropical storms accounted for almost 40 percent of insured losses, he said. Tornadoes came in a close second at 37 percent. According to Miller, past studies have shown a substantial reduction in losses where building codes were both adopted and enforced.

Verisk’s 2016 Building Code Effectiveness Grading Scale report released last year included the revelation that it’s not just about code adoption, but also how well it is enforced.

“Having a code adopted is not enough, it’s also the rigor of enforcement,” said Miller.

Over half the states in the country improved their commercial and residential classification, he said. While code adoption and enforcement is important, Miller said that it’s important to understand how modifications to codes impact regions subjected to natural disaster.

“Are they making modifications to the codes that could possibly make them less resilient than the model codes’ intent,” Miller said.

States that were found to be the most improved, according to the report, included California and Oregon. The report found states in the Southeast and West also improved.

He said the report noted a substantial variation in code enforcement across the country. In addition, there are a variety of code adoption cycles among jurisdictions, he explained. Model codes are released every three years.

“However, many states do not adopt new codes every three years,” Miller said. “They may be on a six-year cycle, some of them are on a seven to nine-year cycle. So, there’s a lot of variability still across the country in terms of which codes are adopted and what statewide mandates there are in terms of enforcement.”