Insurers’ Report

In the Insurers’ Report column, we’ll be discussing some common questions we get from insurers. If you have a question you’d like answered, e-mail us. Keep your eye on future issues for your question (and our answer).

Does the cost of mitigation efforts offset the loss in the event of a natural disaster?

fema mo

Communities that rigorously enforce conservative building codes mandate construction practices that mitigate damages daily and when natural disasters strike. ISO’s Building Code Effectiveness Grading Schedule (BCEGS®) evaluates the adopted building code, any amendments to that code, and the community’s commitment to code enforcement.

Is the cost of mitigation worth it? Is there a decrease in insured loss for every dollar spent on mitigation? The answer to both questions is a resounding “Yes.”

The major takeaway: Every dollar spent on mitigation saves society four dollars.

The Multihazard Mitigation Council of the National Institute of Building Sciences — tasked with reducing the total losses associated with natural and other hazards — conducted an independent study to quantify the future savings (in terms of losses avoided) from hazard mitigation activities. Funded by the Federal Emergency Management Agency (FEMA), the study looked at mitigation activities for earthquake, wind, and flood. It addressed two types of mitigation activity: project mitigations and process mitigations. Project mitigations include physical measures to avoid or reduce damage from disasters, such as elevating structures in flood plains and strengthening structures to resist wind forces. Process mitigations include activities that lead to policies and practices that reduce risk and loss, such as educating decision makers and fostering adoption of strong building codes.

The study findings indicated that the natural hazard mitigation activities funded by several FEMA grant programs between 1993 and 2003 were cost-effective and reduced future losses from earthquake, wind, and flood, resulting in significant net benefits to society.

The study conclusions reinforce that mitigation is most effective when carried out on a comprehensive, communitywide, long-term basis. They also highlight the need for continuing analysis of the effectiveness of mitigation activities — an essential component for building resilient communities.

ISO Fire Suppression Rating Schedule

Our Fire Suppression Rating Schedule (FSRS) is free to chiefs and other fire officials. It's a manual containing the criteria Verisk uses in reviewing the fire prevention and fire suppression capabilities of individual communities or fire protection areas. To recieve a copy of the FSRS, contact our National Processing Center at 1-800-444-4554 and select Option 2.

H2O and Verisk

Water supply and distribution systems are important factors in determining a community’s ISO Public Protection Classification (PPC®). We provide complimentary educational training and seminars to water providers and associations throughout the country. Contact Hugh Gibson, national water resources manager, at for more information.

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