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As Puerto Rico continues to recover from Hurricane Maria, insurance experts are likely to turn their attention to the state of the U.S. territory’s building codes.
Hurricane Maria, a Category 4 storm with 155-mph winds, struck Puerto Rico on Sept. 20, killing at least 64 people, destroying thousands of homes and leaving thousands of people without electricity or water for months.
In 2011, Puerto Rico adopted a uniform building code that required structures to be built to withstand winds of up to 140 mph. Many buildings were built under a prior code requiring protection against 125-mph winds.
Duncan Ellis, U.S. property practice leader for Marsh L.L.C. in New York, said while Puerto Rico is still in a recovery phrase, he expects there to be changes in the territory’s building code.
“I would be surprised if the building codes were not changed in some way, shape or form,” he said. “Where we probably saw the biggest change in building codes was in Florida post-Hurricane Andrew. There was a significant change in Florida’s building codes, which I think has paid off in spades.”
Mr. Ellis said that policies will typically have increased cost of construction coverage where a policy will cover the costs to rebuild property or real property pursuant to the new building codes.
“But if the building codes are changed, you’re not allowed to do what you had before, then the policy will cover what one calls upgrades,” he said.
The costliest year for natural disasters on record is placing new attention on the importance of mitigating future disaster risks, with compelling data highlighting how investments in predisaster mitigation can save money in the long term.