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Imagine what very different outcome would have occurred in the fairy tale of the Three Little Pigs had the dim-witted squealers followed building codes to the tee. They would have scrapped the straw and the sticks, gone straight to the bricks and built a structurally sound homestead. The Big Bad Wolf's "huffing and puffing" would have been no match for the pigs' attention to detail.

Fictitious talking animals aside, the same principle can be applied to hefty property losses, not from Category-5 winds, but 80-mph peak gusts. The losses are significant enough to classify average winds as a major overlooked risk, and experts are pointing fingers not at those who write or enforce building codes, but the hard-hat clad, nail-gun-armed men who cut corners.

"You think, 'My God, nothing could have withstood those winds.' But what you're really seeing is damage done by winds far less than the building codes require the buildings be designed for," he says.

FM Global's research after both those hurricane seasons concluded that 95 percent of all the buildings damaged by winds were damaged by winds below 100 mph, well below what the buildings were supposed to be designed to resist. Imagine the Superdome, which lost part of its roof in Katrina, resulting in more than $100 million in damages. Burke says the facility did not experience winds within 20 mph of what it was designed to handle. The roof should have easily withstood the 90-mph sustained winds that struck New Orleans.

"When you look at the whole area of the Gulf Coast that was damaged by wind--not by the storm surge, but by the wind--it should have been virtually undamaged," he says. "But they were creamed."

Burke says FM Global's contention, backed up by research and years of experience, is the oversight results from poor workmanship on the part of builders. While FM Global's standards are more stringent, the building codes are well written. And county inspectors can't be expected to do the builder's job. If roofing contractors simply followed the codes reasonably, losses could be prevented. "What makes it an overlooked risk is that it is so endemic that the sore thumb doesn't stick out," he says. "The workmanship is so uniformly poor that there's so much damage, and even a critical observer looking at it thinks that this was inevitable. They're assuming that if 100 buildings are damaged this way, then that wind must have been too severe. They don't look at it and think, 'My God, 95 out of 100 buildings had poorly installed roof coverings.' "

Burke has been developing that position since 1992, after Hurricane Andrew destroyed a swath of Florida. The wakeup call occurred while he was on a helicopter with Miami-Dade County police touring the storm-ravaged area.

"While we were flying over it, the helicopter pilot pointed out several homes in the middle of all this devastation that were fine," Burke says. "When we landed, I asked him, 'What's the story with the half-dozen homes that seemed to be near perfect?' He said, 'Remember Jimmy Carter? Those were built by his boys.' " The pilot, of course, was referring to houses constructed by Habitat for Humanity. As Burke says, "Amateurs building homes that they are going to live in themselves follow the code. They don't cheat. They don't take short cuts. They do the right thing, and their homes were fine."

From that point on, FM Global focused on ensuring every customer had the opportunity to get their roof coverings put on right. During a hurricane, an industrial building could lose its roof covering, while the structure is strong enough to remain intact. But with an exposed roof, the 12 to 18 inches of water that come with the hurricane could do tens of millions of dollars in damage, he says.

"All of that damage, all of it, could be prevented by a couple of hundred ordinary roofing screws put in the right place by the contractor when he was supposed to put them there," says Burke.

FM Global's customers in the Gulf Coast that experienced winds above 80 mph during Hurricane Katrina--$45 billion of insured property at 472 locations--fared well overall, Burke says. The 70 percent of customers that incorporated the company's guidelines into their building designs or fixed mistakes that contractors made collectively reduced their loss by $500 million. And those customers, with industrial facilities worth tens or hundreds of millions of dollars, spent on average $7,500 to adhere to the building standards.

"There was no magic involved," says Burke. "We're not talking about a huge truck backing onto the lot with I-beams and lift trucks and welders and all that stuff. We're talking about using a few more screws in the place that the code wants to see them used."

Screws or not, the key is paying attention to detail--making sure that, when an adhesive is applied, the roof isn't wet with morning dew or it isn't too cold so that the adhesive sets up and dries before the insulation goes onto it.

Or when they drive the screw through the insulation, they make sure it goes into the deck and not into the space between the corrugations in the deck.

"These are just common sense things that, if someone was building your home and you were standing there watching them do it, they are the very things that you'd pick up yourself," he says. "You don't have to have a master's degree in engineering."

Another factor that contributes to average winds being an overlooked risk is public perception. Hurricane losses are always viewed as inevitable, especially when the press or government officials stretch the numbers. Burke says authorities interviewed on TV tried to make the point that the Superdome saw Category-4 level winds and performed remarkably well under this unbelievable stress. But those Cat-4 winds were taking place 40 miles to the east.

People use a hurricane's peak gust recorded in a one-square-mile area--never mind its sustained wind--to describe damage done over a 1,000-square-mile area.

"That, I think, is what gives refuge to shoddy workmanship," he says. "That key wind speed at landfall is the thing that the press picks up, and that becomes the wind speed that the contractor hides behind 80 miles away when that hurricane finally gets to Orlando."

Burke puts it into perspective with a comparison to code requirements for the weight of snow that buildings can withstand in the Northeast. Regulators determine that requirement by looking at the heaviest amount of snow received within a 100-year period, similar to the process for windstorm codes. Burke says a blizzard will arrive, dumping that level of snow, and no roofs will collapse. There is enough safety factor built within the structure that it will withstand loads even above what builders design for.

"No one could imagine seeing an entire industrial park leveled or an entire residential community leveled by a severe snowstorm," he says. "Yet, we get a windstorm that's nowhere near that 100-year design level, everything gets beat up and we think it's normal."

ERIN FOGG is associate editor of Risk & Insurance®.

May 1, 2007

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