Planet Money
00:22:00 · Alexi Horowitz-Ghazi, Julie Rochman
[00:22:00] S2: Now it's true that the research IBHS does provides all these companies with a common body of knowledge they can use to tweak their business models, But each of them is also creating super secret formulas from their own specialized data sets to try to determine whether to offer coverage and how much to price their premiums so they can get an edge on their competitors. Julie says IBHS figured out a way for their funders to communicate their needs without breaking the antitrust rules. And IBHS has been able to build out a dizzying array of experimental programs, some of which they've published for the general public. [00:22:33] S4: It's to show people the data and to teach people which questions to ask so that overall, we are putting in place better building stock. We're not just putting the same types of buildings in the same vulnerable places where they will be demolished by the same natural forces again and again and again. And that's what we had been doing. I mean, we've basically been building with steel and brick and what... You know, in the same way for a couple hundred years.
00:22:59 · Alexi Horowitz-Ghazi
[00:22:59] S2: Julie retired from IBHS back in 2018. The research center has continued to build a growing body of research that insurance companies can, in theory, use to evaluate their premium pricing or to choose who to approve or deny for coverage. It's also research that developers can use to decide what kinds of materials they use and that governments might use to update their building codes. So this one corner of the private sector, well, this nonprofit research organization for the insurance industry, is producing a sort of semi public good. It's only semi because not all of their research goes to the public. It is a membership organization after all. But the information they do share can benefit a bunch of homeowners and neighborhoods and cities by potentially reducing the amount of destruction from storms and wildfires and other mega events, which also happens to help the insurance company's bottom line. After the break, we head back to South Carolina to see how these researchers put the destruction in the destruction lab. We hear some of the lessons they've learned, how their research is being put to use on the ground, and how the insurance market itself might be making it harder to convince people to fortify their homes against disaster.
00:24:22 · S3, S0, Alexi Horowitz-Ghazi, S5
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00:25:25 · S5, Alexi Horowitz-Ghazi, Ann Cope, S0
Ad[00:25:25] S5: NPR Plus is a great way to support independent journalism. But did you know it also saves you time? Over a year of fresh air, NPR Plus listeners can save more than seventeen hours with sponsor free episodes. As a thank you for your support, get more NPR in less time, plus bonus content and dozens of other sponsor free shows. Sign up today at +.npr.org. [00:25:52] S2: When I visited the insurance industry's destruction lab in South Carolina a few months ago, I got to see all the catastrophic research programs in action and to find out what they've learned from all this high octane experimentation. Experimentation. IBHS chief engineer Ann Cope took me on a little tour of destruction. There was, of course, the giant hangar for lighting houses on fire or blasting them with wind and rain. But outside the facility, there were even stranger sites. Ann points to a curious cluster of disembodied roofs standing on stilts in the distance. It's something they call the roof aging farm. [00:26:26] S1: Those are asphalt shingle roofs just sitting out here in the nice South Carolina sun, and we're watching what's happening to those shingles over time. [00:26:33] S2: Ann says the plan is to leave them out there in the elements for as long as twenty years. [00:26:37] S0: You're just waiting for them to ripen? [00:26:39] S1: Well, that's the kind of stuff that we're studying here. [00:26:42] S2: Periodically, some samples from those roofs are also harvested, and yes, that is the technical term, and then brought into a different part of the research campus.
00:26:42 · Alexi Horowitz-Ghazi, S0
[00:26:42] S2: Periodically, some samples from those roofs are also harvested, and yes, that is the technical term, and then brought into a different part of the research campus. [00:26:50] S0: Welcome into the Hail Lab. This is where we do all of our hail impact testing on building materials. [00:26:56] S2: Hail scientist Jake Sorber explains that parts of those roofs are then mounted on a wall and turned into targets for artificially manufactured hailstones of varying density and speed. [00:27:05] S0: Hail is actually being made right now. It looks like he's about ready to be done with this specific rod.
00:27:10 · Alexi Horowitz-Ghazi
[00:27:10] S2: These lab grown hailstones are then shot out of a cannon. We're gonna shoot in three, two, one. Wow. The hail team then examines the piece of roof they just pelted using a three d scanner. And Jake says this kind of research addresses a growing problem for the insurance industry. See, before 2008, hail was a relatively small line item on insurance loss profiles, often averaging below a billion dollars a year. But in 2008, hail losses started to climb dramatically. These days, hail damage can cost insurers tens of billions of dollars, and the choice of shingles that somebody uses on their house could mean a difference of tens of thousands of dollars in damages. So now, in part because of this kind of hail lab research, insurers can evaluate their coverage decisions according to which shingle somebody has, and builders and homeowners have more information about whether fancier shingles might be worth it for lower insurance and repair costs. Chief engineer Ann Cope tells me the destruction lab has discovered all sorts of news you can use. For instance, they've tested out different building techniques for how much wind driven rain might leak into your attic during a hurricane and found that adding an extra layer of relatively cheap waterproofing to your roof, sealing the deck, that could prevent up to 95% of that kind of damage. Ann says these techniques have already made a big difference in communities where they've been implemented at scale. Take the state of Alabama. Insurance regulators there offered direct grants to homeowners to fortify their roofs to an IBHS standard to prevent wind and rain from getting in. They mandated insurance company discounts for people who installed them. And over 50,000 people in Alabama have fortified their roofs and says it's already helped homeowners there.