Convective Storm Vulnerability: Quantifying the Role of Effective and Well-Enforced Building Codes in Minimizing Missouri Hail Property Damage

Having strong building codes in place in a community is frequently touted as a critical component to reducing total property damage due to natural disaster occurrence. However, at the local level not all jurisdictions adopt equal codes nor properly enforce their codes once they have been adopted. In this study we empirically test whether zip code jurisdictions with effective and well-enforced building codes demonstrate better loss experience from the occurrence of a hail storm than those without. We model industry and exposure-based hail claim insurance data from 2008 to 2010 in the highly hail impacted state of Missouri. While the primary focus of the research is on building code effectiveness and enforcement ratings, the empirical model also controls for other relevant hazard, exposure, and vulnerability explanatory variables in the loss estimation. Results across a number of industry and exposure-based specifications consistently indicate that more favorable building codes do in fact matter in reducing hail damage on the order of 10 to 20 percent. Moreover, we generally find that it is better to have some minimally effective and enforced code in place as opposed to none at all.