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Research & Grants

Research
An important function of the Center is to coordinate and disseminate research that benefits consumers, businesses, and public policy makers. Original research underway includes the following studies:

Grants
The Center also seeks out grant opportunities to leverage its base funding and lend our research expertise towards the resolution of timely and relevant topics.  Grants awarded to the Center include:

  • Home Hardening Incentives Programs: Innovative Finance Concepts for Wind Mitigation and Home Hardening. Funding provided by a matching grant from the Residential Construction Mitigation Program (Florida Department of Community Affairs, Division of Emergency Management). A final report will be available in June 2010.
  • Hurricane Mitigation Inspection System Study. Funding provided by the Florida Department of Financial Services. (Appendices available upon request.)

Project Descriptions and Reports

Subsidies in the Florida Property Insurance Market  (back to top)
The following research defines the groups that benefit from or pay subsidies, the unintended consequences, and the impact of subsidies on market functions.
      Papers Available: 

  • Subsidies in the Post-Loss Assessment Structure of Florida's Property Insurance
     Market          
    When Florida’s state-sponsored insurance and reinsurance entities (Citizens Property Insurance Corporation, Florida Hurricane Catastrophe Fund, and Florida insurance Guaranty Association) incur a deficit from a major hurricane or series of hurricanes, the state’s citizens are assessed fees through their insurance policies to make up the difference. But are these “post-loss” assessment procedures equitable or are there subsidies that benefit policyholders in some counties to the detriment of policyholders in other counties? This analysis determined the existence and magnitude of subsidies within the post-loss assessment structure of the state’s property insurance market.
  • Pre-Loss Subsidies in the Florida Property Insurance Market 
    This study discusses the magnitude of pre-loss subsidies in the pricing of policies written by Citizens Property Insurance Corporation.  Using information provided by Citizens, the magnitude of pre-loss subsidies inherent in its rate structure is calculated for the three largest personal residential policy types.  The analysis is conducted at the territory level and is done on both a percentage and a dollar basis.  Also, the impact of the 2009 “glide path” legislation is analyzed to determine how long it will take for Citizens to achieve actuarially sound rates.
  • Granularity in the Florida Property Insurance Market   
    Much has been made in the press about north vs. south and inland vs. coastal subsidies with regard to property insurance rates and accuracy of pricing.  But even at zip code level, expected loss costs vary enough to warrant more granular pricing of risk than is currently used in property insurance rating systems.  As evidence of the need for granular pricing with regard to the wind peril in the residential property insurance market, this research examined the role that distance to the coast plays in the relationship between expected loss costs and wind premiums in the coastal areas included in Citizen’s Property Insurance Corporation’s High Risk Account.  
  • Residual Market Subsidies in Florida's Property Insurance Market: a Conceptual and Historical Framework ; Executive Summary 
    Citizens Property Insurance Corporation and the Florida Hurricane Catastrophe Fund were designed to supplement the Florida property insurance market. These entities have been controversial since the 2004-2005 hurricane seasons. The controversy has been whether the levels at which their rates have been established and the procedures they are required to use in imposing deficit assessments have created subsidies. This paper discusses the nature of subsidies (good and bad), the effects of legislation designed to keep property insurance affordable, the fairness of these subsidies, and the effects of deficit assessments. 
  • Insurance Residual Markets: Historical and Public Policy Perspectives 
    The purpose of this paper is first to describe the essential features of the private sector
    solutions, the shared market solutions and the public solutions for providing insurance
    coverage that the admitted market cannot or will not provide. In addition, the report will identify and address a number of relevant public policy issues associated with residual market solutions that may assist legislators, regulators and others in understanding the special nature of the residual market and the various components of that market.

A Comparison of Hurricane Loss Models  (back to top)                                                             
Hurricane models are a significant tool used in estimating loss costs in catastrophe-prone areas. While the major hurricane models consider a consistent set of factors, there are variations in how the factors are treated in the models. This can lead to consideration variation in the modeled average annual losses (AALs), even at the exposure level, based on the catastrophe model used. This paper uses a large dataset of wind-only policies in order to analyze the impact of housing, insurance, and mitigation characteristics on AALs for four hurricane loss models.  Paper Available: A Comparison of Hurricane Loss Models - Working Paper* (Charts)

Florida Hurricanes and Damage Costs  (back to top)
Hurricanes at landfall generate large financial losses. Hurricane climatologists have recently developed models to anticipate the level of hurricane activity from climate conditions. Motivated by the usefulness of these models, this project proposes a way to identify and articulate climate signals in historical insured property loss data from hurricanes affecting Florida. Results will help inform Florida consumers, businesses, and public policy makers about the influence climate variability and climate change will have on future catastrophic losses.  (Paper)

The Capitalization of Stricter Building Codes in Miami, Fla., House Prices  (back to top)
Research shows that newer homes built under tougher building codes perform better in hurricanes. However, while houses built after the implementation of the stronger building codes in South Florida could be presumed to be “safer” based on previous research, no study has measured the extent to which these stricter building codes are valued by consumers. This study addresses this issue by measuring the capitalization of the stricter building codes into house prices. In addition, the study examines whether homebuyers attach greater value to the stricter building codes after the “reality check” of the 2004 and 2005 hurricane seasons.  (Results Summary - Miami), (Final Report - Miami)

The Capitalization of Stricter Building Codes in Jacksonville, Fla., House Prices  (back to top)
This study follows up on recently completed research on the capitalization of stricter building codes in Miami, Fla., house prices.  It will examine consumer buying behavior in a market that has seen a more recent strengthening in building code followed by heightened hurricane activity in 2004 and 2005.  As such, this research will address the value to consumers of safety as signaled by the institution of a stronger building code in a setting where this change is more recent. The Jacksonville area has historically enjoyed a lower risk exposure to storm disaster.  Using the Jacksonville data will allow the examination of the stricter building code to consumers whose risk exposure expectations may be different/lower than consumers in South Florida. (Results Summary - Jacksonville), (Final Report - Jacksonville)

Improved Analysis and Understanding of the Meteorology Underlying the Various Components of the Hurricane Risk Problem  (back to top)
Given the growth of the coastal population, an ever increasing number of citizens who have never experienced hurricane force winds, and a growing uncertainty about the future and role of climate change, there is a greater than ever need for breakthroughs in hurricane observations, analysis, understanding, forecasting, and risk mitigation. This project begins with an examination of the role that wind shear plays in the genesis stage of a hurricane. The second component of this project seeks breakthroughs in improved understanding and forecasting of short-term hurricane intensity change. Finally, the third part of this project will address the question of how to extrapolate the Doppler-radar winds, which are hundreds to thousands of feet above the ground, to the surface where we live. (Final Report)

Preparing Public Libraries to Meet Catastrophe Challenges  (back to top)
Individual Florida public libraries have proven to be effective team members in government preparation for and response to hurricanes and other disasters. This project seeks to reduce the state’s overall risk by raising the readiness level of all the state’s public libraries to meet the challenges posed by these catastrophes. Specifically, this project will:  

  • Identify and then organize relevant public library hurricane related information resources, services, roles, and best practices;
  • Identify, aggregate, assess, and organize successful individual Florida public library experiences and best practices related to hurricane preparedness and response;
  • Develop model plans, standards, guidelines and recommendations – which will be made available via print and through an interactive website;
  • Offer strategies to assist state and regional public library and government officials with disaster coordination and organization responsibilities; and then,
  • Disseminate to Florida’s public libraries, agencies, and other organizations, via print and project website, information resources, services, experiences, best practices, plans and guidelines to coordinate Florida’s public library managers and government partners to better prepare for and respond to hurricanes.

These activities will improve the state’s overall disaster preparation and response, reduce risk, and contribute to these tragedies’ mitigation. (Press Release) (Video Presentation) (Abstract) (Project Web site) (Lecture/Panel Discussion Program) (1st Quarterly Report, 2nd Quarterly Report, 3rd Quarterly Report, 4th Quarterly Report, Project Web Site Evaluation Report)

Determining Capital Market Capacity of Catastrophe Risk  (back to top)
The markets for catastrophe insurance, reinsurance, and other sources of financial capital have been adversely impacted by recent global economic events. This project seeks to develop realistic models for catastrophe financing in light of the current market conditions. Special emphasis is given to the challenge of financing catastrophic Florida windstorms and the value of public private partnership. PowerPoint Presentation

Cataloguing, Evaluating, and Fostering Mitigation Efforts in Florida  (back to top)
The area of Emergency Management Mitigation has had tremendous growth over the past decade. Numerous projects throughout the state have been funded and completed using resources from all levels of government. This project will identify, catalog, and analyze state and federal programs/projects related to risk and mitigation. The catalog of mitigation and its accompanying analysis will allow program coordinators to better evaluate and assess project success. The project will also evaluate existing programs and make recommendations for integration and partnership opportunities. 

Who Mitigates Against Potential Catastrophic Storm Damage and Why?  (back to top)
This study seeks to provide an empirical test of some of the motivations for mitigation provided in prior research through the decision of Florida homeowners to participate in the My Safe Florida Home Program. The data include information on both those who participated in the home inspection portion of the project as well as those who participated in the grant portion of the program. Additionally, survey information from two customer satisfaction surveys will provide preliminary evidence of the participants’ perceptions of the mitigation process. Researchers will examine whether the individuals participating in each portion of the program were in the high-risk areas of the state, in homes built to current building codes or prior codes, and in homes with high or low values. Further, they will review the potential size of insurance discounts provided as well as the types of mitigation selected for the mitigation grants. The overall goal of the study is to better answer the question of who participates in mitigation programs and what incentives appear to drive that decision.

Determining How Floridians Decide Whether to Evacuate When a Hurricane Threatens  (back to top)
Existing studies, usually conducted several months following hurricane threats, fail to adequately explain inappropriate responses to evacuation orders, although certain general factors have been identified consistently as being important. Most coastal residents evacuate or not based on their perceived need to do so for safety, not because of constraints to their being able to evacuate. Federally-sponsored surveys were conducted with Floridians following the unusually active 2004 hurricane season to evaluate FEMA and the US Army Corps of Engineers Hurricane Evacuation Study Program. The surveys identified the need to better understand beliefs held by residents during a hurricane threat regarding the need to evacuate, including: whether the threatening storm would strike the respondent’s location; whether officials had indicated that the respondent should evacuate, and; whether the threatening storm would pose a threat to the respondent’s safety if the storm did strike the respondent’s location. Using real-time data collected from survey respondents in areas under order to evacuate ahead of a hurricane this research will document how Florida residents make decisions about whether to evacuate by measuring their beliefs about the safety of their homes during hurricanes and the effect of those beliefs on evacuation and mitigation decisions. 

Investigating the Issue of Rain Penetration Through the Building Envelope  (back to top)
Water intrusion into buildings remains a critical, recurring issue during hurricane impacts. Although most homes / businesses survived the 2004 and 2005 storms structurally, a significant number experienced enough rain penetration to require extensive interior restoration, resulting in occupant displacement / business interruption until the completion of repairs. This project will investigate the water penetration issues for existing and new infrastructure. (June 2009 Project Update)

Testing of Connections to Improve Hurricane Resistance of Aluminum Structures  (back to top)
Aluminum structures such as pool/patio enclosures, carports, or open structures are commonly used throughout Florida. Since they are highly vulnerable to hurricane damage, they represent a significant portion of hurricane-related losses in the state. This project aims to provide engineering solutions to the hurricane vulnerability of aluminum structures so that long-term instability problems are solved or mitigated.

Landfalling Hurricane Wind and Storm Surge Behavior  (back to top)
This study addresses the issue of which medium, wind or water, caused a loss.  For instance, the ocean responds to extreme wind forcing with damaging waves and storm surge, but the relative timing between the arrivals of peak surge, maximum inundation extent, and the most energetic waves in relation to the tropical storm force winds, hurricane force winds, peak eye wall winds cannot be easily generalized. In addition, the sensitivity of the ocean response to various storm properties (wind field extent, wind intensity, radius of maximum winds, direction and speed of approach, and point of landfall) are either not known well enough or are location specific. 

The first phase of this study will investigate these relationships by examining two to three cases in detail:  Hurricane Ike of 2008, and either or both of Hurricanes Ivan and Dennis of 2004 and 2005, respectively.  Hurricane Ike, with its huge wind field, is a natural choice for study due to a comprehensive set of pressure gauge measurements of water levels and high water marks, as well as a complete set of hurricane wind field analyses conducted with support from an Army Corps of Engineers grant.  Hurricanes Ivan and Dennis made landfall as intense hurricanes near Pensacola.  Ivan introduced us to the destruction that waves can cause even to reinforced concrete bridge spans, and it caused the collapse of large beachfront condominiums.  All of these storms included contributions to storm surge by winds remote from the actual site of landfall. 

To better understand the ocean’s responses to hurricane wind fields of varying size and speed, existing storm surge models will be extended over the Gulf of Mexico using unstructured grids along with flooding and drying algorithms to resolve important embayments and coastal population centers.  These models in some instances will also include the effects of waves.  Building upon previous studies idealized model investigations will also be conducted to develop further understanding of surge model sensitivity to storm and wind field parameters and local geometry factors (e.g. shelf width and coastline shape).  The second phase of the study will use a set of wind and storm surge model simulations to develop a parameter space for the construction of a simplified surge model for use in stochastic evaluations of the combined storm surge and wind risk , resulting in 100 and 250 year return period maps of wind, surge, and joint wind/surge events.

Developing an Innovative, Computer-based Approach to Testing the Effectiveness of Alternative Approaches to Encouraging Mitigation Before They Are Launched  (back to top)
It is increasingly recognized that the most cost-effective approach to manage losses from natural hazards is to mitigate them before they are incurred. Yet, it is also widely recognized that residents and communities are often loathe to undertake such investments voluntarily. While in some cases this accrues to such pragmatic constraints as limited liquidity, more often the culprit is psychological; as decision makers we are not naturally inclined to expend resources now to achieve benefits that are likely to be realized over a long period of time and of uncertain size. The purpose of this research is to develop an innovative computer-based approach to testing the effectiveness of alternative approaches to encouraging mitigation before they are launched. The approach uses the technology of Information Acceleration, which is one of the new emerging methods used by firms to test new-to-the-world product innovations and promotion methods in marketing. (Enhanced Project Description)

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