{"id":1917,"date":"2024-12-16T12:00:55","date_gmt":"2024-12-16T17:00:55","guid":{"rendered":"https:\/\/blogs.edf.org\/markets\/?p=1917"},"modified":"2025-12-04T10:04:41","modified_gmt":"2025-12-04T15:04:41","slug":"unlocking-insurance-to-rebuild-stronger-and-greener-after-disasters","status":"publish","type":"post","link":"https:\/\/blogs.edf.org\/markets\/2024\/12\/16\/unlocking-insurance-to-rebuild-stronger-and-greener-after-disasters\/","title":{"rendered":"Unlocking Insurance to Rebuild Stronger and Greener after Disasters"},"content":{"rendered":"

This blog was authored by\u00a0<\/span><\/i>Talley Burley,<\/span><\/i><\/a>\u00a0Manager, Climate Risk & Insurance and\u00a0<\/span><\/i>Carolyn Kousky<\/span><\/i><\/a>, Associate Vice President for Economics and Policy.<\/span><\/i>\u00a0<\/span><\/p>\n

This is the third blog in a <\/span><\/i>multi-part series<\/span><\/i><\/a> on how insurers can support decarbonization and the energy transition. This series explores opportunities and challenges and highlights emerging insurance innovations that can drive emissions reductions. In this post, we discuss how insurance can support climate-friendly rebuilding after a disaster.\u202f<\/span><\/i>\u202f<\/span>\u00a0<\/span><\/p>\n

In the United States, buildings account for <\/span>more than a third<\/span><\/a> of national CO2 emissions and many buildings are not able to <\/span>withstand<\/span><\/a> the impacts of future climate extremes. As the risks of climate disasters grow, our buildings require updates to decarbonize and improve energy efficiency and better protect inhabitants from intensifying weather-related events. State and local <\/span>building codes<\/span><\/a> are <\/span>important tools to shrink emissions and improve resilience for new buildings. But 75% of existing residential buildings <\/span>will still be standing in 2050,<\/span><\/a> which means these structures will need retrofits in the coming years to improve efficiency and resiliency.\u00a0<\/span>\u00a0<\/span><\/p>\n

The rebuilding process after a natural disaster can be an opportunity to build back stronger and greener. Insurance can help to drive climate-smart upgrades and support retrofits that lead to savings over time from lower future losses and reduced energy use. Unfortunately, too often post-disaster rebuilding proceeds without these upgrades, replacing the structure and its components exactly as it was before. This is due to a variety of factors: high upfront costs, households lacking information on what changes to make, a shortage of appropriately trained builders or contractors, or concern that changes to the building will slow the recovery process. Insurance can also be a barrier, because of common restrictions that require covered repairs to restore the original structure.\u00a0<\/span><\/p>\n

Climate endorsements<\/span><\/i> —<\/span> offered through homeowners insurance policies — coupled with cross-sector partnerships to support deeper policyholder engagement during reconstruction could address some of these barriers. As discussed in our <\/span>first blog of the series<\/span><\/a>, endorsements are optional riders that provide policyholders with additional funding for certain activities following a claim during rebuilding.\u00a0 A climate endorsement, for example, could provide additional funding to support the installation of climate-friendly building materials, electrification, energy efficient systems, or certified construction techniques that minimize future damages from extreme weather.\u00a0<\/span>\u00a0<\/span><\/p>\n

These types of endorsements are not new. The Insurance Institute for Business and Home Safety (IBHS) has developed the <\/span>FORTIFIED<\/span><\/a> roof certification. A roof built to this standard can withstand high winds, helping to reduce property losses after a hurricane. Beginning in 2020, the Mississippi Windstorm Underwriting Association (MWUA) <\/span>began offering a FORTIFIED endorsement<\/span><\/a>. For MWUA policies where the claims process finds that 50% or more of a roof needs to be replaced, the endorsement provides extra funding to install a FORTIFIED roof. If climate-smart endorsements, like these, could be offered by all homeowners insurance providers at low cost\u2014 accompanied by outreach and education programs\u2014the insurance industry could help to drive significant reductions in building-related emissions and increase climate resilience.\u00a0<\/span>\u00a0<\/span><\/p>\n

An endorsement that incorporates climate-friendly rebuilding practices could provide multiple benefits:<\/span>\u00a0<\/span><\/p>\n