Category: Uncategorized

Estimating the Effects of Wind Loss Mitigation on Home Value

Thirty-five catastrophic hurricanes have caused more than $341 billion (in real 2021 dollars) of insured losses along the east coast and gulf coast of the United States since 1999.1 During the same period, coastal property homeowners’ insurance rates in the U.S have increased substantially. Nonetheless, population growth in coastal areas has consistently outpaced that of inland areas, resulting in skyrocketing property value that is exposed to hurricane risk. Large value at high risk caused a decrease in the availability and affordability of property and casualty insurance. For example, the insurance premium for a house in Gulf Shores, Alabama (the city in our sample that is closest to the coast) is 3.15 times greater than that of an identical house in Huntsville, Alabama (the major city in Alabama furthest from the coast). For houses at the coast, the wind portion of insurance premiums is about 80% of total premium.2

Given the location of a house, the only way to decrease the probability and/or severity of a hurricane loss, and thereby reduce the insurance premium, is to install loss mitigation features. Toward this end, the Insurance Institute for Business and Home Safety (IBHS)3 offers the FORTIFIED Home™ (henceforth “Fortified”) program to promote construction of homes that are resilient to natural disasters. Fortified is a set of engineering and building standards designed to strengthen new and existing homes through system-specific building upgrades. The Fortified houses we consider in this study are built to mitigate wind and wind-driven water damage from hurricanes. In addition to promulgating construction standards, IBHS also trains contractors and evaluators to build and inspect houses to meet the standards. A trained and certified evaluator must inspect the house at several specific points in the building process for a house to receive the Fortified designation.

State law requires insurance companies in Alabama to give discounts for houses that earn the Fortified designation.4 There are three levels of Fortified designation: Bronze, Silver, and Gold. The differences in these levels are explained at the IBHS website.5 Table 1 presents benchmark discounts for each level prescribed by the Alabama Department of Insurance. These discounts only apply to the wind portion of a homeowner’s insurance premium. While insurers may offer larger discounts, they may not offer discounts smaller than the benchmark levels.

New Reports Reveal the State of Auto Theft in America

TUSCALOOSA, Ala. – Someone steals a vehicle every 36 seconds in the U.S., according to a recent report by the National Insurance Crime Bureau (NICB). Overall, there were 880,595 motor vehicle thefts nationwide in 2020. This 10 percent increase from the previous year is a sharp departure from several years of modest declines in auto crimes. The NICB notes that the pandemic created multiple national crises that correlate with the surprising increase in car theft rates.

The experts at have examined the state of auto theft in the U.S. in 2022 and determined that you are much more likely to experience motor vehicle theft in certain regions, states, and cities compared to the national average. The average motor vehicle theft rate is highest on the West Coast, with an average of 302 thefts per 100,000 inhabitants. Meanwhile, the rate is 1 percent lower in the South. Alabama saw a 7.5 percent drop in auto crimes, from 12,252 in 2019 to 11,336 in 2020, with an average car theft rate of 222 per 100,000 inhabitants. Florida and Georgia also saw rates decline by 3.3 percent and 3.5 percent, respectively. These three southeastern states were among the ten states to experience a decrease in motor vehicle thefts in 2020.

“Auto thefts saw a dramatic increase in 2020 versus 2019 in part due to the pandemic, an economic downturn, law enforcement realignment, depleted social and schooling programs, and, in still too many cases, owner complacency,” said David Glawe, president and CEO of the NICB. “For many people, a car is the second largest investment they will ever make behind a home. As such, it is important to take simple steps to protect your investment–lock your car and take your keys, no matter where you live.”

With auto crimes on the rise nationally, drivers should be vigilant and familiarize themselves with their insurance coverage. Comprehensive coverage helps pay to repair or replace a covered vehicle that is stolen or damaged by something other than a collision. However, it won’t cover items stolen from a car (like laptops) or aftermarket upgrades (like custom parts). Instead, a standard homeowners or renters insurance policy would cover personal property under the “off-premises coverage” clause. Drivers who have unfortunately fallen victim to car theft should take steps such as filing a police report, having the proper paperwork on hand when talking to their insurance company, and remembering to file a stolen vehicle report with the DMV.

This article was written by Reginald Allison II, Business Manager of ACIIR, with contributions from Aliza VigdermanDirector of Content of 

How Risky is Distracted Driving?

TUSCALOOSA, Ala. – Dr. Lars Powell, director of the Alabama Center for Insurance Information & Research (ACIIR), and Dr. Boyi Zhuang, an associate research professional at the ACIIR, presented on the riskiness of distracted driving at the 2022 Risk Theory Society Seminar on Saturday, May 21, 2022, at Baylor University.  

There is substantial and perhaps surprising disagreement among public policymakers, researchers, and citizens about the danger of distracted driving. Drs. Powell and Zhuang and their co-authors attempt to address this lack of consensus in the academic literature by analyzing data on fatal crashes.  

Their analysis suggests that distracted drivers are three times more likely to cause a fatal crash than focused drivers and that distracted drivers represent three to four percent of drivers on the road at any given time. Additionally, the societal cost (externality) of distracted driving is between $.03 and $.07 per mile. The insurance surcharge for a distracted driving citation that could internalize the avoidable insurance losses is approximately $424 per year. These findings extend the literature on distracted driving and traffic fatalities, and can help inform policymakers on the traffic safety and economic consequences of distracted driving.

Click here to view their paper co-authored by Florida State University associate professors Dr. Bradley Karl and Dr. Charles M. Nyce. 

Alabama Department of Insurance Renews National Accreditation

TUSCALOOSA, Ala. –  The Alabama Department of Insurance has been re-accredited by the National Association of Insurance Commissioners (NAIC). The renewed accreditation was approved by NAIC’s Financial Regulation Standards and Accreditation Committee during NAIC’s Spring National Meeting in Kansas City, MO, on April 4–8, 2022.

“I want to thank the NAIC for their rigorous review as well as the employees of the Alabama Department of Insurance for their professionalism in ensuring we continue to meet and exceed standards and lead the way in insurance regulation,” said Alabama Insurance Commissioner Jim Ridling.

The NAIC is the U.S. standard-setting and regulatory support organization created and governed by the chief insurance regulators from the 50 states, the District of Columbia, and five U.S. territories. The NAIC has a formal certification program to accredit each state’s insurance regulator, requiring risk-focused financial surveillance to include on-site examinations, and requires solvency-related model laws, rules, and guidelines that have been adopted through consensus and collaboration. Accredited insurance departments undergo a comprehensive review by an independent review team every five years to ensure the departments continue to meet baseline financial solvency oversight standards. The Alabama Department of Insurance has been continuously accredited by the NAIC since 1995.

12 Insurance Companies Among the ‘World’s Most Ethical Companies’ for 2022

TUSCALOOSA, Ala. –  The Ethisphere Institute, a global leader in defining and advancing the standards of ethical business practices, named 12 insurance companies to its 2022 list of “World’s Most Ethical Companies.”

The 16th annual list recognizes companies “that have demonstrated a commitment to ethical business practices through programs that positively impact employees, communities and broader stakeholders, and contribute to sustainable and profitable long-term business performance.”

This year, 136 honorees from 22 countries and 45 industries earned the coveted designation. Of those honorees, 12 companies were recognized in the industry categories of Accident & Life Insurance, Health Insurance, Insurance Brokers, Insurance, and Property & Casualty Insurance. Those 12 companies are:

  • Aflac Incorporated  
  • Allianz Life Insurance Company of North America
  • Blue Shield of California
  • Cambia Health Solutions
  • CareFirst BlueCross BlueShield
  • Gallagher
  • Health Care Service Corporation
  • Marsh McLennan
  • Pacific Life
  • The Allstate Corporation
  • The Hartford
  • Unum

Marsh McLennan is one of 14 first-time honorees this year, and Aflac is one of six 16-time recipients, having received the award every year since its inception in 2007.  In addition to the 12 insurance companies, Ethisphere also recognized three pharmaceutical companies (Eli Lilly, Lonza, and Pfizer), one health care products company (Henry Schein), and one medical device company (Edwards Lifesciences).

To identify the world’s most ethical companies for 2022, Ethisphere used its proprietary Ethics Quotient rating system to evaluate participating organizations on more than 200 data points across five categories: ethics and compliance programs (35% of overall score), culture of ethics (20%), environmental and social impact (20%), governance (15%), and leadership and reputation (10%). 

Ethisphere updated the evaluation this year to include questions regarding programmatic changes made due to the COVID-19 pandemic. It also added a new area around risk assessment to address the U.S. Department of Justice’s recent emphasis on the effectiveness of a company’s risk assessment effort.

“The moment is now, and the data is clear—companies must lead on sustainability, social issues, and governance. The World’s Most Ethical Companies understand that the capitalism of today and tomorrow is one that demonstrates how we turn our ideals into action,” said Ethisphere CEO Timothy Erblich in a news release. “Congratulations to the 2022 honorees for their dedication to advancing business integrity, for leadership on tough issues, and demonstrating that doing good is key to successful, long-term performance.” 

Ethisphere will honor this year’s laureates at the Virtual Honoree Gala on April 12, 2022. The event will feature keynote addresses by Academy Award®\–winning actor Matthew McConaughey and six-time Sports Emmy Award winner Ernie Johnson.

Crawford Defends Dissertation

TUSCALOOSA, Ala. – Shane Crawford successfully defended his dissertation, “Econometric Modeling Framework for Measurement of Resilience Dimensions and Enhanced Spatiotemporal Data Collection Tools to Support Resilience Models,” in August and will officially graduate in December with a doctorate in civil engineering. He has accepted a post-doctoral research position at Colorado State University in Ft. Collins where he will work for roughly four months before moving to the National Institute of Standards and Technology to work as a post-doctoral researcher.

In his work with Dr. Andrew Graettinger in the College of Engineering, he has worked with Colorado State and NIST researchers in the past and will continue to build those relationships as he works directly with them. Crawford will continue to pursue community resilience research which looks at the rate and standard of recovery after a natural disaster takes place. Previous research has collected qualitative data, Crawford’s specialization looks to collect quantitative data that can be used to inform future recovery efforts.

“I’ve had the great opportunity to work in the GIS research lab that is well-funded and we have this equipment that we can learn new methods for analysis,” Crawford said. “About half of my dissertation was updated data collection methods using new technology.”

Crawford’s dissertation focused on filling the gap in resilience measurement science and defining the standards that researchers use to determine recovery. He helped develop a way to take a theoretical resilience curve that has been used in previous literature and applied numbers to it that created empirical curves for Tuscaloosa post-2011 tornado. He then used econometric models, a form of regression analysis, to correlate characteristics of the community with those measurements.

“Natural disaster research collaboration was key to my research and working outside of engineering to find ways for engineering and insurance to work together and figure out how to account for the interrelated parts of the two domains has been really beneficial,” Crawford said.

The Alabama Center for Insurance Information and Research funded Crawford’s assistantship to further drive the center’s mission to fund and participate in research relating to improving insurance conditions for Alabama residents. Catastrophe research like Crawford’s will help inform future building codes and construction standards to lessen the effect of natural disasters on the state’s infrastructure. This will lessen the impact on insurance companies and reduce the risk of rate increases.

“Shane did an excellent job,” said Graettinger, Crawford’s dissertation advisor and committee chair. “His resilient community research is some of the most interesting and engaging research that I have been involved with. Many students and faculty attended his defense to learn from a true expert in the field of resilient modeling. Dr. Shane Crawford will be an excellent research in the future and I am looking forward to working with him in the future.”

Crawford additionally holds a bachelor’s of science and master of science in civil engineering from the University of Alabama.

Partners in Education and Research: ACIIR and LIFT

The Alabama Center for Insurance Information and Research began partnering with the Culverhouse LIFT program in 2017 to help advance the goals of both the center and the program. ACIIR researchers and LIFT Founder and Director Lisa McKinney work together to identify and recruit survey participants for an ongoing analysis of insurance and financial literacy in adult populations through the courses offered by the LIFT program.

The mutually beneficial partnership provides a random sampling of survey participants for the ACIIR staff’s research. The LIFT program receives financial assistance through a grant from the center and the opportunity to better understand how to acquire grants in the future.

“It makes us think more about what we are doing and it makes us think about the potential for obtaining grants,” McKinney said. “It makes complete sense to connect this program with research for it to be funded. All of it makes sense. It’s a nice fit.”

Culverhouse LIFT was founded in August 2015 by McKinney and a graduate student, David Hose. They saw the opportunity to help further The University of Alabama’s mission to educate and better the lives of the people of Alabama. Since it began the program has grown every year. In the spring of 2018 more than 400 student volunteers from the College of Business taught more than 45 different classes in 15 locations around the state.

“Right now, we have so many community partners, I am right now not trying to grow,” McKinney said. “I want to get better at what we do, and I want to work with people to assess if we are doing a good job.”

LIFT offers courses to high school students, adults, veterans and inmates. The courses include professional development, financial literacy, and GED preparation. A full list of the LIFT programs locations and courses can be found at Lift classes range in size from 10 people to full-size high school groups of 30 students.

The program is entirely student-run with McKinney acting as an adviser and general overseer. Graduate students, class leads and student volunteers work together to organize logistics and scheduling. Students have the opportunity to learn new skills themselves and build their resumes as instructors and community helpers.

ACIIR researchers train LIFT students to educate community members about auto insurance and how to administer the survey to working-age adults at neighboring community centers during financial literacy and money management courses. Participants receive insurance information and education in addition to the curriculum provided by LIFT volunteers.

“Partnering with LIFT offers us a great opportunity to fulfill our center’s educational and outreach purposes,” said Boyi Zhuang, ACIIR post-doctoral researcher who works directly with the LIFT program. “The surveys we did before and after the training provide us some valuable data that is beneficial to the center’s research.”

The continued relationship between the ACIIR and LIFT exemplifies the Culverhouse tradition of fueling successful partnerships across industry and education. The ACIIR staff will continue to seek out and seize opportunities to work with talented industry and education groups like LIFT.

Inter-professional Breakfast Highlights Center’s Achievements

The Capstone College of Nursing organized an interprofessional research breakfast in Capstone Village on April 5 to highlight the ongoing work of the ACIIR. Dr. Lars Powell was asked to speak before the group of twenty nursing undergraduate and graduate students as well as administration from the College of Nursing and representatives from the College of Commerce.

Powell’s presentation gave a brief overview of the center’s mission and goals before detailing a few of the completed and ongoing projects that the ACIIR is currently pursuing.

“I didn’t even know that [FORTIFIED HomeTM retrofitting] was an option,” said Christine Ferguson, a graduate student studying nutrition. “I just bought a home, and I know we will have to replace the roof in a few years, so that’s just something to consider. It’s eye-opening.”

The interprofessional breakfasts are designed to increase awareness and strengthen connections between the University of Alabama’s various colleges. The breakfasts are typically held twice a year and feature presentations from researchers, authors and community professionals.

Rebeckah Gaydosh, a junior majoring in nutrition, said she was most interested in the resale value of homes that have a Fortified standard since it is applicable to everyday life.

The next interprofessional breakfast is scheduled to take place in the fall semester of 2018.

Meet Our Partners in Resiliency

Strengthen Alabama Homes program (SAH) was initially funded in 2016 by the Alabama State Legislature and private donors including the Federal Home Loan Bank and the AIUA. Since then the program has completed 1,043 fortifications and awarded 1,266 grants to help Alabama homeowners afford wind mitigation construction on their homes to protect against severe storms, high winds, and wind-driven rain. The program is currently available for existing, owner-occupied, single-family homes in Mobile and Baldwin counties in Alabama. However, inland homes will be eligible for the next round of funding.

SAH requires the Bronze or Silver standard of the FORTIFIED HomeTM program developed by the Insurance Institute for Business and Home Safety (IBHS) be met to qualify for the grant program. The FORTIFIED program is designed to construct or retrofit homes to a high resiliency focusing on roofing, entry points and the continuous load path.

Grants provided by SAH will pay 100 percent of the mitigation costs up to $10,000. Any additional costs are the responsibility of the applicant. The grant is only applicable to homes that reach at least the Bronze standard and are certified by a FORTIFIED evaluator.

The work that the SAH is doing will lower insurance rates in Alabama and make homes more resilient and resistant to weather-related damage. When homes are built to withstand wind and rain, insurance companies don’t have to pay out as much, therefore, helping to lower the premiums charged to individuals.

Since it’s implantation SAH has received a healthy supply of applications. Currently, they are unable to accept new applications as they work to raise additional funding. Due to the success of the program so far, the State of Alabama is at the forefront of the country in home mitigation efforts and in the midst of a planning process to determine how to expand their efforts now and in the future.

After completing the SAH home mitigation, homeowners in Alabama are eligible for discounts on their wind damage coverage.

Another reason to fortify your home is to increase its resale value. ACIIR partnered with FORTIFIED to evaluate the resale value of homes after achieving a FORTIFIED designation. The study finds that homes sell for roughly seven percent more than equivalent, non-FORTIFIED homes.

Together SAH, ACIIR and FORTIFIED HomeTM are working to better protect against loss during a severe weather situation and increase resiliency in Alabama communities which are vulnerable to catastrophic hurricanes and tornadoes.

Prepare for Theft with Comprehensive Coverage

There are many reasons to purchase a home or auto insurance policy such as financial protection in case of fire, storm or earthquake damage, requirements set by local regulations and help with replacement costs in the event of an accident. However, one reason that often gets overlooked is the possibility of theft.

Homeowners, renters, and auto insurance offer options that can help cover the cost of replacing broken, damaged, or stolen items. However, insurers can only help when the insurance policy is in place.

In 2016, the total value of stolen property was $257,279,623 in the state of Alabama alone, according to the State of Alabama Law Enforcement annual crime report.  Only 17 percent of the property was recovered.

While Tuscaloosa has seen a general declining trend in burglary, robbery, auto theft, and unlawful breaking and entering of a motor vehicle over the past 10 years, there were still more than a hundred of each crime reported to the Tuscaloosa Police Department in 2016 according to TPD’s annual report.

Anyone who owns a home should review and update their policy to cover cases of theft and property damage from unlawful activities.

Tenants who rent or lease their space should invest in low-cost renters’ insurance policies. The Alabama Center for Insurance Information and Research has published a brochure to help streamline the process of choosing and purchasing a policy. This resource can be found here.

While property stolen from an automobile is covered by homeowners or renters insurance, automobile owners should talk to their agents about comprehensive coverage that covers the costs of repairing damages to their vehicles from a break-in as well as the cost of a stolen vehicle.