Continuing to focus on how to mitigate increasing economic consequences of extreme weather and other climate-related risks, especially as they relate to the architectural/engineering/construction community and the built environment, the White House hosted Forum on Smart Finance for Disaster Resilience. State and local government officials, along with insurance and financial services stakeholders, assembled last month to learn about new investment approaches and incentive programs presently deployed in communities, and to explore potential innovative financing mechanisms.
In conjunction with the Forum, the American Insurance Association, Insurance Institute for Business & Home Safety (note companion report, page 12), National Association of Mutual Insurance Companies, Property Casualty Insurers Association of America, and Reinsurance Association of America issued a joint statement touching on such matters as robust building and quality construction:
The property/casualty insurance industry is dedicated to managing risks related to weather and climate. To help individuals and communities better manage their own risks, the industry is interested in enhancing adaptation and resilience, as well as advancing research and education. A central theme of dialogue [with the White House] has been the importance of ‘building forward,’ rather than simply maintaining the status quo in vulnerable, at-risk locations over and over again.
These conversations have resulted in specific initiatives to: increase insurance sector use of National Oceanic and Atmospheric Administration-generated weather and climate data; support enactment of strong codes and standards to improve the resilience of the built environment; improve public awareness about mitigation and disaster preparedness; and discuss public and private sector incentives to encourage individuals, businesses, and communities to reduce risk. Each effort recognizes that public and private sector investments in physical loss mitigation and disaster resilience deliver a strong return on investment and represent sound social, fiscal and environmental policy.
The insurance industry remains committed to helping policyholders and the public in every region of the country: 1) understand weather and climate-related risks; 2) take effective actions to reduce these risks; and, 3) identify and understand insurance products that can provide financial protection.
Many individual insurers are developing new products to better manage risks associated with a rise in extreme weather events. For these types of products to succeed, both the marketplace and regulatory system must recognize the need for risk-appropriate insurance rates to reduce the incentives for poor land use, design, construction, repair, or maintenance practices that both create a greater likelihood of structural damage or destruction for new or existing buildings, and encourage effective property loss mitigation.
Along these same lines, the insurance industry commends recent Administration efforts to reduce the troubling trajectory of vulnerability, exposure, and loss. These efforts include Executive Order 13690 to improve the nation’s resilience to current and future flood risk [and] Executive Order 13717 to establish a federal earthquake risk management standard that requires modern seismic safety standards in federal buildings.
Insurers have a long-term commitment to addressing weather and climate risks and hope to maintain the current momentum with the next Administration, the groups added, concluding that “Building our nation’s resilience to natural hazards is simply too important for us to ignore.”