Transcript 0:00 [upbeat music] Hi, everyone, and welcome to Climate Proofers, the show all about those on the front lines of adaptation finance, tech, and policy. 0:13 I'm Louis Woodall, the editor of Climate Proof, which you can read at www.climateproof.news. 0:19 Even the smallest amount of weather damage to a home can cost owners tens of thousands of dollars in damages, not to mention the property insurers who often pick up the tab. 0:28 For example, just one inch of rain falling on a hail-battered roof can pour the equivalent of nine bathtubs of water into the home below, flooding attics, wrecking furniture, and giving rise to unhealthy mold. 0:40 Figuring out how to reduce weather and climate-related damages to homes is the organizing principle of the Insurance Institute for Business and Home Safety. 0:48 The IBHS is a research and communications organization funded by the property insurance industry, and it has a singular purpose, to close gaps in building science, and in doing so, strengthen American homes' resilience against severe weather and wildfire. 1:02 The organization even runs a campus in South Carolina, where scientists can recreate category three hurricane winds, generate wildfire ember storms, and fire realistic hailstones at building materials, all to figure out, with hard data, what actually keeps homes standing. 1:17 These experiments, in turn, have helped inform new construction standards designed to reduce the impact of these hazards. They are the FORTIFIED standard and Wildfire Prepared Home standard. 1:26 Frequent listeners to Climate Proofers will be familiar with these, since many previous guests have held them up as the best, most cost-effective way to make US homes safer and stronger amidst rising climate risks. 1:37 Today is the first in a double feature with interviewees from the IBHS. Today's guest is Michael Newman, the organization's general counsel and corporate secretary. 1:46 We get into the science behind IBHS's standards, cover the importance of third-party verification in policing these standards, and go over the thorny question of who gets left behind when we're building for resilience, and how to close these equity gaps. 1:59 Next episode, we'll turn to the challenge of how to communicate the benefits of building resilience with Rachel Penton Gauthier, meteorologist and science content producer at the organization. 2:08 Before we get started with today's episode, a reminder that if you enjoy Climate Proofers, to please give us a star rating on Spotify or Apple Podcasts, and if you have a spare minute, to write a review too. 2:18 It really helps get the pod in front of more listeners. Also, you can become a Climate Proof member for lots more adaptation insights, data, and analysis by heading over to www.climateproof.news/upgrade. 2:30 Right, in a minute, my conversation with Michael, but first, a rundown of last week's top adaptation and resilience stories. 2:37 [swoosh] In finance, public pension funds are pressing the US Securities and Exchange Commission to preserve its 2024 climate disclosure rule, arguing that repeal would raise costs and degrade investment decision data. 2:48 In response to the agency's proposal to scrap the rule, which was passed under the Biden administration, but yet to be put into effect, CalPERS, the largest US public pension fund, told regulators the move would shift the financial burden of understanding corporations' climate risk exposures onto investors and lead to a fragmented reporting landscape, with some states requiring more disclosure than others. 3:08 New York City and Maryland's pension systems joined the opposition, alongside Seattle's retirement fund, Sweden's AP7, and Canada's University Pension Plan Ontario. 3:18 [swoosh] In policy, the Federal Emergency Management Agency is entering the 2026 hurricane season with a depleted, underprepared disaster response workforce, a Government Accountability Office report has found. 3:28 More than 4,300 employees separated from the agency in fiscal year 2025, a 55% increase from the prior year, leading to a, quote, "loss of institutional knowledge and experienced personnel" and worsening longstanding workforce challenges. 3:43 FEMA also rescinded its latest five-year strategic plan in May 2025, and has yet to issue a replacement, leaving workforce planning rudderless. 3:52 The GAO, which is an independent watchdog that publishes nonpartisan information for Congress and the federal agencies, recommended that lawmakers require future decisions on FEMA's workforce to be grounded in formal analysis, and for the agency to report on workforce planning before each hurricane season. 4:07 [swoosh] And in tech, physical climate risk alone rarely makes adaptation technology investable, according to a new Bloomberg NEF report, with economic considerations more often driving investment. 4:17 The analysis centers on three case studies covering microgrids, renewables, and air conditioning, unpacking the extent to which capital flows to these technologies in response to escalating climate hazards versus traditional market signals. 4:28 While BNEF finds that climate change creates new demand, quote, "Investable growth depends on unlocking the means to adopt new technologies." 4:35 For example, when it comes to air conditioning, rising incomes have a stronger influence on market growth than rising temperatures. Vietnam's AC penetration hit 40% from near zero in 2000 as wages rose. 4:47 Policy changes also matter. 4:49 Mitsubishi Electric is expanding its production base in Turkey less in response to rising heat stress in the region, and more to take advantage of increased demand from Europe's decarbonization policies. 4:58 [swoosh] Right, that's it for this week's roundup. Now onto my conversation with Michael. 5:03 [upbeat music] Michael, you've been with the IBHS for six years now, and came to the organization from the US Treasury, where you worked on multiple climate and insurance issues. 5:14 Can you tell us a little bit about your career to date and why you chose to land at IBHS in 2020? Sure. So i- it's funny, I... My dad sold a house I grew up in, and I found this book, and it was a Dr. 5:26 Seuss book, and it was all about me. And one of the questions was, "What do you want to be when you grow up?" 5:30 Now, I didn't say I want to work at IBHS, but I did say I want to be a lawyer, so I guess mission accomplished from my childhood dreams. 5:37 It's also true that when I graduated law school 20 years ago, I never could have foreseen the career that I've had. 5:45 I did big law for a number of years, and I worked for a boutique law firm for a number of years, but I always had the public policy bug. 5:50 So in 2014, I joined the US Treasury in the Federal Insurance Office, and it was during that time I got to know IBHS. They invited me down as a visitor in 2015 or 2016. I got to see the facilities. 6:03 I got to meet with other federal Folks who wanted to talk about the science of IBHS, and I was just always incredibly impressed. 6:10 Then my career took another zig and I ended up doing another three and a half years of international cybersecurity policy. 6:18 Now, international cybersecurity policy is incredibly important, and I could never describe to my wife and my children what I did for a living. 6:25 [laughs] So in 2020 when the world shut down and IBHS came calling, I was just so incredibly excited to join and it has more than lived up to billing. 6:37 For those who don't know, IBHS is the Insurance Institute for Business and Home Safety. We're fully funded by the property insurance industry to conduct s- building science research. 6:49 Here where I am today in Richburg, South Carolina at our research campus, we're able to recreate severe weather. 6:57 And by recreate severe weather I mean we've got 105 fans over there that can generate cat three hurricane winds. We can recreate wildfire ember storms. 7:07 We can literally recreate realistic hailstones and then we've got the world's best potato cannon that fires them at, at products. And we do all of that not just because it's cool, although it is very cool. 7:22 We do that because we wanna better understand the vulnerabilities of the built environment, both our homes and our commercial buildings. 7:30 We're able in our facility to conduct full-scale testing and we do that to identify mitigation actions to reduce risk and we're looking for things that are affordable, effective and achievable. 7:42 And I've been invited in the past to some of these demos. I actually have to make sure I make my way to one of them one day 'cause it sounds fantastic. 7:48 [laughs] You all stand on a plane and watch a, a, a wildfire resilient home, uh, get attacked by fire and you see how that performs versus a house that does not have those resilience upgrades. 7:57 So it sounds like quite the day out. It is phenomenal to watch. It is one thing to hear about it, it's one- another thing to learn about it. 8:04 But to see the difference that science-based mitigation actions can take is great. 8:10 And a big plus for me is I've got a rising third grader and a rising fifth grader and they actually understand what I do for a living now. 8:17 I help make homes safer and they're always asking me, "Is that a fortified roof, Daddy?" And I say- [laughs]... 8:23 'cause I live in Northern Virginia, "Probably not," because we are not yet seeing a lot of fortified roofs in Virginia, but hopefully that's something that's gonna change. 8:32 So I think the fact that this is the insurance and property industries coming together is, is of interest because we know the climate crisis is an insurance crisis and I think people might be quite interested to know like how the insurance industry and the real estate industry came together to come up with IBHS and what role does it play in your eyes in addressing the insurability crisis? 8:56 Okay. So much to unpack there. I'm excited. Mm-hmm. Yeah. Um- We'll take it one-on-one. Yeah, let me start with your assertion that the climate crisis is an insurance crisis. 9:06 'Cause I'm, I don't think that I agree with you. I absolutely think that insurance is becoming more expensive. The market certainly tells us that. 9:15 And in some places it's becoming less available and that's front page news in a lot of communities. 9:21 But it's not just a severe weather risk issue and I don't wanna get into what types of severe weather are explicitly related to climate change versus not. 9:33 I actually wanna talk more broadly about the drivers of the insurance industry and what's impacting insurability. 9:40 So there's actually a lot of factors, in some cases independent from the weather, that are affecting the availability and the affordability of insurance. 9:50 You've got inflation, you've got rising costs of supplies and labor. We see population shifts where there are more and more people living in high-risk areas. 10:02 In the area surrounding Dallas-Fort Worth, Texas, which is probably ground zero for hail risk, you've got former cow pastures that are now big suburban developments with big roofs that make big targets for big hail. 10:19 You've got litigation abuse and the rising cost related to that. And yes, you've also got severe weather which is causing more damage to more families and more communities than ever. 10:33 And so we've got a whole set of factors that are impacting the cost and the availability of insurance. 10:39 Now, where I do think we should focus our attention and where IBHS comes in is that the only thing that any homeowner can do about any of those wide-ranging macroeconomic factors I mentioned is to reduce their risk, right? 10:58 The average homeowner can't do anything about inflation. They wish they could. We all wish we could these days. The average homeowner can't do anything about the litigation environment in this country. 11:07 The average homeowner can't do anything about the rising cost of labor. But what a homeowner can do is replace their roof with a more resilient option. 11:20 What a homeowner can do if they live in a wildfire-prone area is take the science-backed actions that will reduce the risk that their home will ignite in a wildfire. 11:30 And those types of actions that reduce their risk and can be verified are what the insurance industry are really looking for in terms of making insurance available and maybe also making it a little bit less expensive. 11:46 Yes. We come back to the triangle of disaster risk, right? Hazard, exposure, vulnerability. 11:52 And it sounds like what your focus on IBHS is helping homeowners reduce that vulnerability component by enhancing their property so that they can be more resilient to hazards which- I know from the science climate change is, is increasing the frequency and severity of, but the exposure is an interesting point as well. 12:09 The fact that the, the urban sprawl, the suburban sprawl of Americans into beautiful regions of the country, but dangerous regions of the country is absolutely a big driver of the increased insured losses we're seeing around the country. 12:21 And I think the challenge is that a lot of people don't realize when they're moving into an area, they might face this challenge of insurance prices or the availability of insurance coverage. 12:29 So it does feel like this is an issue that has grown in the re- in the last, I don't know, I'd say decade or so. 12:35 I'd be interested to know where you think, how you've seen this discussion about insurability evolve in your time at IBHS and before when you were at the Treasury. Yeah. 12:44 It's something that's grown in the six years that I've been at IBHS, right? It is something that is making the news more often. It's something that is being talked about in cap- state capitals all around the country. 12:55 It's being talked about on Capitol Hill in Washington, DC. 12:58 It's being talked about by more families and s- more small business owners, and more insurance agents who are sitting down with their customers and trying to sort all this out. 13:08 And that reflects a challenge and a pain that many people are feeling, right? 13:12 That where it used to be insurance, it wasn't an afterthought, but it was just part of their monthly mortgage statement, and now it's something that's making that monthly mortgage statement more expensive than it has been in the past. 13:25 And so I don't wanna discount the pain that people are feeling, but I also see it as an opportunity to reach more people and explain the nature of risk and, to your point, the vulnerabilities that have always been there in their homes. 13:40 Now, at IBHS, we think an awful lot about two terms. One is survivability and one is insurability. 13:49 Now, survivability is simply that we want homes and communities that can survive the severe weather we know they're going to face. 13:58 If you live in the southeast region that faces hurricanes periodically, we want your home and your roof to be ready for those hurricanes. 14:08 If you live in one of our more hail-prone areas of the country, we want you to have a roof cover that is able to withstand the hail that you're gonna see. 14:15 And if you live in one of the, frankly, growing states that has wildfire risk these days, we want you to undertake those science-based sets of mitigation actions that can collectively reduce the risk that your home is going to ignite. 14:31 And so I think there's more and more interest in that. 14:34 There's more growing awareness and this time of difficulty with people accessing the insurance markets, and it's really region by region, state by state, some of those challenges, but it's leading to growing awareness of the importance of risk reduction. 14:53 And there are many levers that need to be pulled to help with risk reduction, and I wanna get to those in a minute and how you work with partners on this. 14:59 But can we get into the technical aspects of the science-based programs you speak about, FORTIFIED program and the Wildfire Prepared Home program? 15:07 Can you talk a little bit about those, how they differ, and also how, how you're trying to get homeowners to adopt them? Yeah, absolutely. So I described earlier the science that we conduct here at IBHS. 15:18 I work with brilliant meteorologists and engineers and lab technicians as well as carpenters and welders and the like to build the full-scale specimens that we then subject to the forces of mother nature to identify the vulnerabilities and identify the mitigation actions. 15:33 That's really just the start of the journey. It is the engine that keeps IBHS moving forward, the filling of s- gaps in scientific knowledge. 15:42 But we then seek to translate that knowledge into action that everyday homeowners like you and I can undertake in our own homes to reduce the risk of severe weather. 15:54 And so FORTIFIED and Wildfire Prepared are the two programs you mentioned. FORTIFIED is our voluntary new construction and re-roofing program. 16:05 It's been around for well over 10 years at this point, and we just celebrated 100,000 designations. So it's a program that is really growing. There's a lot of interest in it. 16:17 There's a lot of new construction that's being built and a lot of retrofits to re-roof to our standard. 16:24 And essentially, it's a way of putting on a roof or building a new home to make it more durable, better able to withstand high winds, whether that's from a hurricane or a derecho or a thunderstorm or a tornado. 16:39 And it's really some basic steps. There are three levels of FORTIFIED. FORTIFIED Roof is that focus on the roof, and its most important element is the sealed roof deck. That's the decking of a roof. 16:52 I'm gonna go deep on roofs for just a moment. Yeah. Please do. But any roof has three layers. There's the roof cover, which is what we see. There's asphalt shingles or the metal. 17:01 Underneath that is underlayment, and underneath that is the roof decking. 17:04 Now, roof decking has gaps because it's made of sheets of wood or plywood or OSB, and that expands and contracts with the weather, so there need to be gaps. 17:14 The problem is when there is damage to the roof cover, water can pour through those gaps, and it's actually a lot of water. 17:21 We estimate that one inch of rainfall on a damaged roof cover can result in nine bathtubs of water pouring through the roof into the home below, and that means mold. That means contents that are destroyed. 17:37 It means the family has to leave and go find another place to live for a while, while all those issues are fixed and remediated. And so it's a small mitigation action that has a huge beneficial impact. 17:49 So that's FORTIFIED Roof. 17:50 There's also FORTIFIED Silver, which adds a focus on doors, garage doors, windows, openings and enclosures, and then FORTIFIED Gold, which adds a continuous load path, basically connections from the roof all the way down to the foundation. 18:03 Now a key part of the FORTIFIED program is its verification process. We've learned that verification is essential to the performance of FORTIFIED. We... 18:16 There's a third party independent, uh, evaluator who goes to the homes that are being re-roofed or being, being built. They collect documentation, they collect attestations from everyone involved in building the house. 18:27 That comes back to IBHS, we review it, and only if everything checks out do we issue a designation. And here's why we know that's important. 18:37 A study was done last year looking at the impact of Hurricane Sally on coastal Alabama, and the thing about coastal Alabama is that is the foundation of the FORTIFIED program. 18:48 It's where we have the most FORTIFIED homes, even back in 2020. And Hurricane Sally sat on top of coastal Alabama for seven hours. It dumped rain, it dumped wind. 18:59 It was a Class 2 hurricane, and it was a real test of the building stock that was there. 19:05 And so this study looked at 40,000 properties, and what it found was that FORTIFIED had a significant value to homeowners who had the designation. 19:16 It reduced claims by 70%, it reduced claim severity if there was a claim by 22%. And here's where it gets really cool, Louis. 19:26 The study looked at not just traditional homes versus FORTIFIED, but also homes that were built to coastal Alabama's current building code, which at the time was the equivalent of FORTIFIED. 19:39 And what we learned is that homes built to the FORTIFIED standard but not verified, versus homes that were FORTIFIED designated, mean- meaning they went through that evaluation, they went through that verification process. 19:52 FORTIFIED homes did 50% better than the homes that were built to an identical standard but not verified. So we know there's real performance and value for the verification process that's part of FORTIFIED. 20:06 Then you also asked about Wildfire Prepared, or we can just talk about FORTIFIED some more for a minute. What would you like? 20:11 I'll just dig into FORTIFIED a little bit and more about you have these different actors, right? So you've got the insurance industry, you've got kind of property construction, you've got the homeowner, right? Mm-hmm. 20:19 And FORTIFIED, as you said, science-based interventions to make a property more resilient to certain weather risks. And the issue is that these upgrades can cost more than the average kind of retrofit. 20:32 So that could be a challenge for homeowners. 20:34 And the insurance companies, obviously, who are supporting IBHS presumably like the idea of more buildings having FORTIFIED standards because that means that their own claim exposure is lower. 20:45 But then I'm also wondering, is there a danger that you have this kind of two-tier system where it's like FORTIFIED is seen as the gold standard, and if you're a homeowner who has a house that reaches that standard, then you have access to maybe lower insurance premiums, or at least you don't... 21:00 or you're less likely to see your insurance pulled away. If you're unable to afford that upgrade, you're shut out. 21:05 So I'm interested in kind of the equity side of this and how do you address at IBHS making sure that FORTIFIED can be achievable for all those who want it? 21:12 Yeah, it's such a great question, Louis, and I think what you're getting at is the question of accessibility. 21:18 And here at IBHS, we're constantly thinking, how do we make resilience accessible for all, regardless of their socioeconomic context? So we do a few things that we're trying to help move the needle. 21:31 We spend a lot of work, some of my colleagues and I, working with nonprofits, working with the affordable housing community to encourage them to build to FORTIFIED or to retrofit to FORTIFIED, because 50% of Americans are not homeowners. 21:46 And so those renters, and particularly those who are in the more vulnerable side of the country, they should have the opportunity to live in homes that can withstand severe weather as well. 21:59 So we do that work, and we engage with state housing finance agencies to encourage low-income housing tax credit programs to include incentives for FORTIFIED. 22:08 We work with the Federal Home Loan Banks to encourage their affordable housing programs to have incentives for FORTIFIED. 22:15 And I have to call out the Federal Home Loan Bank of Dallas, which has been a real leader in this space. They were the first Federal Home Loan Bank to lean in with FORTIFIED in- incentives. 22:27 They also created a grant program to help single-family and multi-family rental homes retrofit to FORTIFIED. So their leadership that they're displaying has just been terrific to see. 22:39 We also work with nonprofits, Habitat for Humanity affiliates, SBP, Team Rubicon, and others. And we try to lower the burden of reaching FORTIFIED for those partners. 22:52 So if you're a nonprofit builder, whether you're working in the post-disaster context or the pre-disaster context, which is the better, the better context if we can avoid, uh, getting the disaster in the first place, we wanna take it. 23:06 So we offer them that we'll waive our audit fee, right. 23:10 There's a very nominal cost involved with the audits that IBHS engages in for every single FORTIFIED designation in that quality assurance process I described earlier. 23:19 So we'll waive that fee, and we can offer these nonprofits reduced fee or free training so that they can get their roofers and their inspectors trained as certified FORTIFIED roofers or FORTIFIED evaluators so that they can then provide those services later for a reduced fee or on a pro bono basis. 23:41 I- I'm interested in that because one of the critiques of the IBHS is that you are an insurance industry funded organization, even though, of course, you are doing these, these partnerships with multiple entities to address homeowner concerns and engaging with state entities, Federal Home Loan Banks, et cetera. 23:56 And I think the question of whether there could be a two-tier system is something that's on the minds of a few of the commentators I've been reading, right? 24:02 Yes, we want to increase insurability, but if the insurability is beyond the access of the average homeowner, that's a problem Yeah, I think you're seizing on a really important point, which is not everybody can afford a new roof. 24:15 Not everybody can afford a retrofit to reduce the risk of wildfire. That's a public policy challenge. That's a market challenge. That's almost separate and apart from the insurability question. 24:28 Yes, there are ramifications on insurance and insurability, but it's not an insurance issue that a homeowner can't afford a new roof. That's a market problem. That's a public policy problem. 24:43 And so let me take those in separate pieces. 24:45 On the public policy side, we deeply engage with state insurance regulators, with lawmakers, with policymakers at the federal, state, and local level to find ways to incentivize more resilient construction and risk reduction, and there's been great success in that space. 25:03 We've seen grant programs tied to Fortified proliferating around the country in blue states and red states. We also see incentives like tax credits that Louisiana recently enacted. 25:16 So if you get a Fortified roof, you can then get a tax benefit afterward. Other states have something called catastrophe savings accounts. 25:25 That's a tax incentive way to save to pay for either your deductible, your uninsured expenses following a claim, or to pay for pre-disaster Fortified retrofits. 25:38 And so we're seeing all of these public policies come together to try to provide economic nudges for those who may have the funding but aren't educated enough yet or haven't realized they need to take action, 25:53 and then more significant financial support through grants and the like for those who perhaps can't afford to take action without help. So that's the public policy side. 26:03 But there's also a market gap, and that is the lack of options for affordable financing for resilient retrofits. Most people can go out and find hundreds of thousands of dollars in a mortgage. 26:19 They can borrow $100,000 for a HELOC, a home equity line of credit. But if you need to borrow 15 to $20,000 for some... a retrofit your roof or to conduct wildfire retrofits, it's actually hard to find a lender. 26:35 There aren't a lot of options out there. 26:37 So something that we're working on at IBHS is how do we work with the financial services sector to make more financing available, affordable financing available, not a credit card, but a loan product that is in the single digits to help people borrow and then affordably pay for that new roof or that wildfire retrofit. 27:01 Okay. We've talked about Fortified. Can we talk a little bit about how the Wildfire Prepared Homes program differs and where you're seeing take up of that standard really picking up? Yeah. 27:11 So Wildfire Prepared, like Fortified, is a designation program that's grounded in science and rigorously verified so that the homeowner, the insurer, and anyone else who has a stake in that property's resilience knows that the risk reduction action was undertaken. 27:28 And it's grounded in years of research that we've done here at IBHS to better understand how wildfires attack homes. What we've learned is that wildfires attack homes in three ways. 27:39 There's embers, there's flames, and there's radiant heat, and so our program reflects that. There are two levels. 27:45 We have Wildfire Prepared Home Essential, which is looking at those essential items to protect homes from embers. 27:52 These are things like having the right ember-resistant vents or mesh over your vents so embers can't fly into your home. 27:59 It's having six inches of non-combustible siding at the base of your wall, a place where embers like to collect. It's having the right set of defensible space, particularly in the five-foot area around your home. 28:14 What we've learned is that's an area where, again, embers will collect when the wind blows them, and if there's anything that can burn in that area, it can... 28:23 they can turn into a spot fire that then in turn ignites the home. So by creating this zone of safety, a moat if you will, around your home, you're really doing a lot of work to prevent embers from igniting your home. 28:37 Also, a Class A roof and several other actions that collectively reduce the risk of ignition from embers. Then there's Wildfire Prepared Home Enhanced. 28:47 That's looking at additional building material choices that help protect a home against flames and radiant heat, things like dual-pane tempered glass windows, non-combustible siding, and the like. 29:00 So collectively, they offer both on retrofit and new construction a pathway for homeowners to take action, for builders to take action, so that we can reduce the risk of those initial ignitions in a neighborhood that then turn into the conflagrations that we saw in Los Angeles and in Lahaina and in Boulder, Colorado during the Marshall Fire. 29:25 Now, that's Wildfire Prepared Home. 29:27 We also have Wildfire Prepared Multifamily, which is the same set of mitigation actions in the multifamily context, as well as Wildfire Prepared Neighborhood, where we're looking at collections of homes. 29:40 And for Wildfire Prepared Neighborhood, we're really looking for what's the structure separation. Is it at least 10 feet from home to home? 29:48 Is there a removal of connective fuels that would lead the fire from house to house? And what are the building material and parcel-level mitigation actions that the individual homes have chosen to undertake? Yes. 30:02 I want to get into individual homeowner resilience versus kind of community resilience, but I want to stay on this LA angle you mentioned because the Wildfire Prepared Home standard came to my attention through the Resiliency Company. 30:15 Which is, I think, one of your partners or an organization that you're engaged with because they are looking to find ways to actually help finance the rebuilding of many homes in Altadena and other parts of LA to this higher standard. 30:28 According to a study by Headwater Economics, the WildfirePlus costs around 3% more than the, uh, regular rebuilding, and the Resiliency Company is working with investors, public and private, to try to create a fund to help pay for that delta, that 3% difference. 30:44 And the idea is that, okay, then we'll, we'll rebuild LA to be stronger. 30:47 The people who live there can afford insurance, can get a hold of insurance, and also there'll be less burden potentially on the state who will have to... 30:54 usually have to sweep in and provide financing when disaster strikes and there's no safety net. 30:58 That's one of those interesting financing mechanisms that we were touching on earlier, and I was wondering what you thought about that program and what sort of blended finance arrangements could be used elsewhere around the country to help take up of these standards. 31:11 So the Resiliency Company is a great partner. We've been working really closely with them in the LA rebuild, but also beyond. 31:17 And what they're trying to do is operationalize a consistent approach to financing risk reduction. And it's such a great partnership because IBHS brings the verified science-based standard. 31:34 That is the risk reduction infrastructure, if you will. And the Resiliency Company is developing the loan administration kind of standardized forms and the like, which creates the financial services infrastructure. 31:48 When you put those together, you can have a consistent way of financing risk reduction, which will help us to scale. And scale, to me, is the question of the day. We've got 100,000 FORTIFIED designations. 32:04 Wildfire Prepared is a more recent program, so it's not at that level yet. But how do we get to a place where FORTIFIED and Wildfire Prepared are not niche products, rather they're just the way things are? 32:17 And I think the way we do that is by embedding a common standard of risk reduction in the financial services sector, and that's what our friends at the Resiliency Company are trying to do. 32:29 By embedding a common standard for builders and for roofers, and we're seeing this play out all over the country, where roofers who get into FORTIFIED because they want to access a grant program set of funding are then turning around and selling FORTIFIED roofs as part of their regular business. 32:49 To go back over to the Alabama grant program, it is the first grant program. It is everyone's favorite example of a grant program that works. But here's the great part. 33:00 The public investment in those grants only accounts for less than 20% of all FORTIFIED designations in the state. 33:08 It sparked, it catalyzed for roofers to not just do FORTIFIED roofs for the grant program, but to offer those services to all of their other customers as well. That's interesting. 33:20 And it created a market of homeowners who said, "I want that." And so we hope that can play out in states all over the country in the wildfire context as well as the FORTIFIED context. 33:37 That's how we're going to scale. 33:39 When we have builders who are out in California, and large builders like KB Home that are building whole neighborhoods to our Wildfire Prepared neighborhood standard, who are selling and marketing those homes because they are safer, because they are better able to withstand wildfires, because they're more insurable. 34:00 That's when we start seeing success. 34:02 It's when this common set of standards, FORTIFIED and Wildfire Prepared chief among them, start being embedded in other industries, and I think that's going to be our blueprint for scale across the next three, five, 10 years. 34:17 That's excellent to hear about these kind of market-seeding programs actually catalyzing growth and, and I understand that there's been a real increase in take-up and increase in the interest of partners in supporting these initiatives. 34:29 Now, I'm wondering if you could talk a little bit about some of the barriers. Obviously, finance is a barrier. We can have help from state legislatures as well to incentivize FORTIFIED. 34:38 But I'm wondering about actors on the other side who might not be so keen on IBHS's programs. 34:42 I'm thinking in certain states you mentioned home builders who are on board, but other home builders in certain states, their priority is building houses that are affordable for that neighborhood or for that region in beautiful areas of the country that might be subject to climate risk. 34:56 But they don't want the added burden of having to build to a higher standard. 35:01 So that's one lobby I'm aware of in certain states, uh, can push back against efforts to change building codes or change incentives for builders. 35:08 Can you talk a little bit about barriers you're seeing to really rolling this out? Yeah. I think what we need to develop, Louis, is a common valuation of risk reduction. 35:17 And one of the challenges of that is that different actors have different ownership stakes at different stages in any home. You've got the developer. You've got the builder. You've got the first homeowner. 35:31 You've got the lender who loans money, a mortgage to the homeowner. You've got the insurer who's insuring the home. You've got the real estate agent who is interested in selling that home and then later selling it again. 35:43 You've got the second homeowner. So you've got a whole bunch of different actors with different motivations. But I'm convinced that for all of them, if a home has reduced its risk, it is more valuable. 35:56 And if we can unlock a common understanding of value across a common standard of risk reduction, then we have the opportunity to really, again, scale the level of adopt- market adoption of these solutions. 36:14 The good news is we know what those common standards can be. Ones that are already based in science, that are verified, that are trusted by the insurance industry. So we have really good building blocks there. 36:26 What we need to do next is get better incorporation of these standards outside of the insurance industry to these other sectors that are part of the broader financial and housing industries. 36:38 And as the old saying goes, it takes a village, right? Risk reduction is not just a, a responsibility of one part of the economy, one part of society. 36:45 You need a combination of factors to build community resilience, right? And this comes back to what you were talking about a little earlier about the Wildfire Prepared standards. 36:53 And yes, having one house that's got a, a zero vegetation near its walls, and it's got these kind of reducing vents and all, that can be a fortress. 37:02 But actually, the buildings around it also make a difference to its own insurability and survivability. So finally, I wanted to ask, like, your focus when it comes to partnerships over the next year. 37:12 What are you hoping to achieve in terms of bringing in partners to really promote community-wide resilience, not just individual homeowner resilience, but community-wide resilience? Yeah. Partnerships are so key. 37:21 IBHS has the benefit of remarkably smart science. It has the benefit of a terrific communications team. I have wonderful colleagues I work with, and we have less than 100 people on our team overall. 37:34 And if we wanna have the effect that I believe this moment in time demands, that the type of transformation of our housing to make it better able to withstand severe weather 37:47 all over the country, we need to have partnerships. We need... As I like to tell my team, we need other people talking about us when we're not in the room. 37:56 We need other sectors choosing Fortified and Wildfire Prepared and other verified risk reduction programs or techniques as they develop to be utilizing it as a part of their business models. That includes builders. 38:12 It includes roofers and contractors. 38:14 It includes the manufacturers of housing products and the distribution channels for those housing products, so the right materials are getting to the right communities at the right time. 38:26 It involves the financial services sector. 38:28 It involves a deep growing deployment of private and public and philanthropic capital in an integrated way to help more people afford to do these proven risk reduction practices. 38:44 And sometimes that's free money. Everyone loves free money. Grants are wonderful. 38:49 But to what we were talking about before, it's probably even more important that we find ways for affordable financing to reach more families. 38:59 And sometimes that might involve some public incentives like public loan loss reserves. There's one that's being considered by the California legislature right now that would support- Interesting... 39:09 wildfire risk reduction to the Wildfire Prepared home essential level. There... 39:14 These types of public-private partnerships, again, around this same common standard that IBHS helps to develop, but it's not necessarily only IBHS standards. 39:26 When we can have a common vernacular and a common set of standards that disparate sectors are all utilizing together, 39:35 that's the type of partnerships that can help us scale risk reduction in a way that will help individuals, that will help communities, that will help the overall health of the insurance market, and will make our nation simply a safer and more resilient place. 39:51 Yes, it can be daunting thinking about all the, the moving parts, all the different entities that need to come together and coordinate, collaborate, whatever you wanna call it, to create a more resilient world for us. 40:02 But I do find it interesting that IBHS is being talked about in a lot of venues that I hadn't heard before. So I do feel you are making those connections. 40:09 And I could really tell speaking to you, Michael, not just today, but over the last few times we've got to talk for my articles, how driven you are by this sense of mission. 40:16 So I'm glad to have had this chance to chat properly, and I'm very pleased to see the progress IBHS is making, and good luck to you. Hey. Thank you, Louis. Until next time, it was good to see you. 40:27 [upbeat music] Climate Proofers is a Climate Proof Media production. It is produced and presented by me, Louis Woodall. Subscribe to the Climate Proof newsletter by going to climateproof.news/subscribe. 40:37 And to learn more about the publication, feel free to reach out directly using our LinkedIn page. Goodbye for now. [upbeat music]
