Increasingly severe weather on the East Coast has prompted one property insurer to underscore the importance of roof integrity by offering grants to help cover the costs of better roofs, highlighting the role of mitigation in reducing storm-related losses.

Collaborating with state regulators in the Carolinas and known as the “Beach Plan,” the association was announced in late 2024 and mirrors efforts in states like Louisiana and Alabama by offering grants of up to $10,000 for homes on the Outer Banks to install new roofs that meet the ‘FORTIFIED’ standard.

Gina Hardy, CEO of the North Carolina Insurance Underwriting Association, which provides residual coverage for vulnerable coastal areas, hopes the effort will attract the same popularity as those in place among states along the Gulf Coast. 

“The goal is to make the risk a better risk,” she told Insurance Journal magazine, adding that the effort is an attempt to preserve the integrity of North Carolina’s insurance marketplace and avoid the chaos gripping homeowners in states like Florida and California.

Previously, the association offered grants providing premium discounts for policyholders, but most were only applicable to properties already damaged by storms. The new preemptive funding plan takes the initiative a step further.

“It helps build a more stable insurance market here,” Hardy said.

The Insurance Institute for Business & Home Safety’s FORTIFIED standard permits shingle roofs but requires stronger edges, sealing of the underlying decking and fastening with better-holding ring-shank nails.

A Proactive Approach to Mitigation

Providing subsidies is now a proven strategy. Lawmakers in Louisiana and Alabama, among other states, have demonstrated that homeowners are keen to enhance their roofs to reduce rising property insurance premiums and safeguard their residences by seeking assistance offsetting the more expensive yet superior Fortified roof system.  

Last year, the Florida Legislature created the My Safe Florida Home program, which provides matching grants of up to $10,000 for retrofitting stronger roofs, windows, doors and roof-to-wall connections. 

However, North Carolina is the first state where an insurer provides the bulk of the funding instead of using state tax dollars. 

According to Hardy, the Outer Banks program of North Carolina’s association primarily receives funding from its surplus accounts, a strategy no other residual property insurer has yet adopted.

Of course, those extra dollars could evaporate quickly in the event of another storm season like last year, Hardy acknowledged, when Hurricane Helene caused an estimated $53 billion in damage to the central region of North Carolina. 

But even with Helene’s staggering bill, money hasn’t been an issue: In 2024, the association added $245 million to its surplus. And this year, she said, allowing for two average-size storms, officials expect to add another $330 million.

The surplus and roof grant program has been possible partly due to more favorable reinsurance prices for the association. Hardy said association officials made a business case to reinsurers, showing how stronger roofs mean lower loss costs for insurers, citing IBHS research that shows FORTIFIED roofs can reduce claims by as much as 35%, translating into a 22% net reduction in claims for loss.

Private-Public Partnership for the Long-Term

The association recognizes the magnitude of the task is herculean. While lawmakers in Raleigh have provided at least $9 million for strengthening such programs, Hardy’s group is pressing the North Carolina legislature to ensure funding is insulated from Mother Nature by allowing the NCIUA to retain the receipts it usually sends to the state for funding the roof mitigation program for years to come. 

The idea has received a cautiously receptive audience from a handful of Democrats and Republicans in the General Assembly, she said.

Another tactic the association hopes to leverage involves Washington, D.C. In October 2023, a bipartisan group of House lawmakers introduced the "Federal Disaster Tax Relief Act of 2023," signed into law at the end of the 118th Congress last December.

That bill’s key provisions allow deductions for losses from federally declared disasters without itemizing or an adjusted gross income reduction. Hardy said she hopes the new Congress will be amenable to waiving federal income taxes on the mitigation grants.

“We think this is right thing to do because of the proven nature of reducing claims and future insurance costs,” Hardy said.

South Carolina, too, has taken up the mitigation effort. The South Carolina Department of Insurance began accepting applications for its wind-mitigation program, “The SC Safe Home Grant Program,” on Jan. 6. The program provides non-matching grants up to $7,500 and matching grants of $6,000 for FORTIFIED roof improvements, the South Carolina DOI said in a bulletin.

While lawmakers in Columbia have been less generous, given the cost of a FORTIFIED roof can add upward of $15,000 — to as much as $25,000 — to the price of a new roof, the smaller grants can help fund hurricane shutters, protective barriers and window replacements.

Florida Shakes It Up

As for The Sunshine State, following remarks made by Florida’s insurance commissioner, Michael Yaworsky, who called for a phaseout of asphalt shingles on roofs in comments made last December, he noted that Florida law requires insurers to offer discounts for wind mitigation work. 

Yaworsky said his office will also place a new emphasis on making sure carriers provide premium credits for homes that utilize roof materials that are tougher than shingles this year.

Lawmakers in Tallahassee may also be asked to help provide funds for mitigation, which, given the number of insurers that have abandoned the state in recent years, could be the start of a slow climb out of financial disaster. 

The state legislature reconvenes in March and is expected to discuss renewing millions in funding for the My Safe Florida Home wind mitigation program and the My Safe Florida Condominium pilot program. 

Given the crisis of affordable — or even increasingly available — property insurance, it’s unsurprising that each program has been immensely popular among property owners. The clamor for funding quickly led to the depletion of state funds.

In years past, the matching grants covered only up to $10,000, likely having less of an impact on encouraging more expensive, non-shingle roofs.

North Carolina’s private sector move could be a clarion call for other insurers to recognize the benefit of frontloading costs through grants since, in the long run, the approach could save insurance carriers millions, which may be the most effective way to remain solvent.