Uses multiple mechanisms to support coastal resilience investments and developed the first-ever catastrophe bond with a resiliency feature.

Introduction

North Carolina is among the most hurricane-exposed states in the United States, with extensive coastal development and a large stock of aging housing vulnerable to wind-driven rain and roof failure (Heil n.d.; FEMA 2022). Roof damage is one of the primary drivers of insured losses in major storms, often leading to widespread displacement and prolonged recovery. Current building codes for the state do not require Insurance Institute for Business and Home Safety (IBHS) FORTIFIED Roofs™ or similar. In fact, despite the proven benefits of FORTIFIED Roofs, many homeowners are not aware of the benefits, are not willing to pay the difference in cost or cannot afford to.

This case study illustrates how North Carolina has funded property-level risk reduction without relying on homeowners to fully shoulder the increased costs.

North Carolina has built a suite of property-level risk-reduction tools that combine residual-market grant programs, selected state appropriations for mainland coastal grants, insurance credits, philanthropic assistance, and risk-financing resiliency payments. The North Carolina Insurance Underwriting Association (NCIUA) and The North Carolina Joint Underwriting Association (NCJUA), nonprofit associations created by state law rather than state agencies, have made these programs available to help coastal policyholders reduce the costs of installing FORTIFIED Roofs. A new pilot with the Clean Energy Fund of the Carolinas (CEFC) adds loan financing for eligible remaining project costs after a grant is applied. Since 2025, CEFC also runs a separate supplemental income-qualified grant program with NCIUA and NCJUA.

This case study is part of Scaling FORTIFIED Roof Adoption, a project showing how states are shifting from reactive disaster spending toward proactive investments in resilient infrastructure.

Programs

The North Carolina Insurance Underwriting Association (NCIUA) is a tax-exempt association of insurance companies created by state law to act as a market of last resort for property insurance in beach and coastal areas, with all licensed property insurers required to participate. NCIUA, also known as the Coastal Property Insurance Pool, provides wind and hail coverage in high-risk counties, and also offers full peril policies in these coastal counties (NCIUA 2023). NCIUA retains its surplus; if a deficit occurs, it may assess member insurers up to $1 billion annually, but has not made an assessment since Hurricane Floyd in 1999 (NCIUA 2026, 2023).

The North Carolina Joint Underwriting Association (NCJUA) is a tax-exempt association of insurance companies created by state law. NCJUA, also known as the FAIR (Fair Access to Insurance Requirements) Plan, provides adequate basic property insurance to property owners having insurable property across the entire state of North Carolina. Unlike NCIUA, NCJUA member companies share in gains and losses.

Strengthen Your Roof—Outer Banks and Barrier Islands

Program Overview: Strengthen Your Roof (SYR) is a residential mitigation grant program administered by NCIUA to reduce hurricane and wind losses among policyholders in North Carolina's highest-risk beach communities. The program provides grants to offset the cost of replacing existing roofs with FORTIFIED Roof systems, focusing on homes located in the Outer Banks and Barrier Islands insured through the Coastal Property Insurance Pool.

Funding Source: The SYR program is funded through the NCIUA underwriting surplus. Since 2019, the NCIUA Board of Directors has allocated $130 million to the program based on expected claims and reinsurance savings.¹ In 2026, NCIUA also received a $2.1 million resiliency payment from the resiliency feature in the $600 million Cape Lookout Re Ltd. (Series 2025-1) transaction (see the financing innovation section for more detail). Those funds were allocated to homes in the SYR territory.

Roof Financing: Homeowners can receive grants of up to $10,000 to replace their roofs to meet the FORTIFIED Roof standard (NCIUA n.d.). A policyholder first submits a grant application through the grant website for a preliminary eligibility determination. If approved, the policyholder selects a contractor and a FORTIFIED Evaluator. The evaluator inspects the property and collects details during the project to verify that materials and construction meet FORTIFIED standards. After construction, the evaluator confirms completion to the required standards and submits documentation to IBHS. NCIUA releases grant funds to the policyholder only after receiving the IBHS FORTIFIED Roof designation certificate and the contractor’s final invoice.

Scale: The program serves NCIUA policyholders in the Outer Banks and other North Carolina barrier islands—areas facing the state’s highest amount of hurricane and wind exposure (NCIUA n.d.). As of July 2026, SYR had 10,327 completed roofs. Since inception, the SYR program allocated more than $130 million and paid out more than $81 million.² These early results were supported by NCIUA’s investment in contractor training and certification in partnership with IBHS, which expanded installation capacity and built industry participation.

Rationale: A 2024 analysis by the Institute for Advanced Analytics at NC State University found that FORTIFIED Roofs had roughly 34% fewer claims and 22% lower damage severity following major hurricanes compared with standard roofs (Kozak 2024). The Institute’s 2025 study examined 251,609 non-named storm claims and found a 62.8% reduction in reported claims.³ These reductions directly strengthen NCIUA’s financial position: fewer and less severe losses increase underwriting surplus and lower reinsurance costs. By design, surplus savings can then be reinvested into the SYR mitigation grant programs, making the model self-reinforcing.

Access to Financing: Grants are available to eligible NCIUA policyholders in the covered beach territories. Awards are made strictly on a first-come, first-served basis with no income-based eligibility requirements.

Strengthen Your Coastal Roof—Mainland Coastal Counties

Program Overview: Strengthen Your Coastal Roof (SYCR) expands North Carolina's residential roof-hardening initiative beyond the Outer Banks and Barrier Islands to eligible properties located in the mainland portions of the state’s 18 coastal counties. Administered by NCIUA, the program provides grants to eligible policyholders to install FORTIFIED Roof systems, extending the state's insurer-led mitigation strategy to a broader coastal housing market while maintaining the same emphasis on verified wind-loss reduction.

Funding Source: SYCR began with North Carolina General Assembly appropriations totaling $7 million in 2021 and $2 million in 2023. NCIUA matched these amounts and covered administration and technology costs. In 2022, NCIUA launched a $14 million program in the 18 coastal counties it serves; in 2024, it launched a $4 million program, both with state matching funds. NCIUA has received no appropriations since 2023. Its board allocated $20 million in 2025 and another $20 million in 2026 to continue SYCR (NCDOI 2025, Rabb 2025).⁴

Roof Financing: SYCR provides grants of up to $6,000 per roof on a first-come, first-served basis. SYCR uses the same FORTIFIED evaluation and certification steps as SYR (NCDOI 2025).

Scale: SYCR serves its policyholders in 18 mainland coastal counties (NCDOI 2025, Rabb 2025).

Rationale: SYCR is intended to extend the risk-reduction benefits of FORTIFIED construction in mainland coastal communities while helping reduce losses and associated claims and reinsurance costs (NCDOI 2025).

Access to Financing: The same as for the SYR program.

Stronger Roof Grant (NCJUA)

Funding Source: In 2026, the NCJUA Board allocated $10 million to launch the Stronger Roof Grant (SRG) in the 18 coastal counties, currently described as a pilot program. This grant is funded by the NCJUA (FAIR Plan), whose surplus is owned by member companies who chose to invest in FORTIFIED Roof grants (NCJUA n.d.).

Roof Financing: SRG provides grants of up to $6,000 per roof on a first-come, first-served basis and uses the same FORTIFIED evaluation and certification steps as SYR.

Scale: Serves its policyholders in the same 18 coastal counties as the NCIUA program does.

Rationale: Same as for the NCIUA programs.

Access to Financing: Grants are available to NCJUA policyholders on a first-come, first-served basis.

Stronger Roof Endorsement

Additional Tool: NCJUA and NCIUA also offer a Stronger Roof endorsement on all policies in the state’s 18 coastal counties and its barrier islands. When a covered claim requires roof replacement, the endorsement provides additional funds to install a FORTIFIED Roof. The endorsement has supported installation of 7,700 FORTIFIED Roofs.

CEFC FORTIFIED Roof Grant

Program Overview: The Clean Energy Fund of the Carolinas (CEFC) provides supplemental grants to income-qualified households that have already been approved for the SYR, SYCR, and SRG programs. The supplemental grant helps cover the remaining homeowner cost of installing a FORTIFIED Roof, expanding access to resilient roofing for lower-income households (CEFC n.d.b).

Funding Source: The CEFC FORTIFIED Roof Grant is supported by the Robert Wood Johnson Foundation. It provides supplemental philanthropic assistance for up to 40 income-qualified homeowners pursuing a FORTIFIED Roof to complement the NCIUA and NCJUA programs (Velasquez 2025). The program is funded by an expendable grant, so it will not continue without additional support.

Roof Financing: The CEFC FORTIFIED Roof Grant provides up to $5,000 in supplemental funding to replace an existing roof with a FORTIFIED Roof for income-qualified households that have already been approved for a SYR, SYCR, or SRG grant. Payments are released after the IBHS certificate is issued and are either made directly to the contractor or reimbursed to the homeowner (Velasquez 2025).

Rationale: The grant is intended to help close the affordability gap that can prevent lower-income households from completing a FORTIFIED Roof project. A sound, code-compliant roof can also enable homeowners to pursue other weatherization and energy-efficiency improvements that may otherwise be infeasible.

Access to Financing: The grant is available to income-qualified North Carolina residents at or below 200% of the federal poverty level, including both NCIUA/NCJUA policyholders and non-policyholders. Policyholders can use it to supplement SYR, SYCR, or Stronger Roof grants; non-policyholders can use it only for the additional cost of the FORTIFIED upgrade, not the base cost of a standard roof replacement.

Carolina SURE FORTIFIED Roof Loan

Funding Source: The Carolina SURE FORTIFIED Roof Loan is offered through CEFC’s Carolina SURE consumer-lending program. It is a financing product rather than a grant (CEFC n.d.a).

Roof Financing: The loan can finance a FORTIFIED Roof upgrade of up to $50,000. For NCIUA and NCJUA policyholders, it is designed to help finance qualifying costs that remain after a Strengthen Your Roof, Strengthen Your Coastal Roof, or Stronger Roof grant is applied. Applicants submit their grant approval letter as part of the loan application.

Rationale: The loan addresses a persistent barrier in grant-based roof programs: households may be approved for a grant but still be unable to proceed because the award does not cover the full cost of roof replacement. Pairing grants with responsible financing may allow more homeowners to complete FORTIFIED Roof projects.

Access to Financing: Carolina SURE is available to homeowners in North and South Carolina and to non-NCIUA and NCJUA policyholders. Applicants are evaluated through CEFC’s loan process; program materials indicate that there is no minimum credit score, although loan terms and approval remain dependent on the application and project circumstances.

Insurance Incentives

Program Overview: In North Carolina, homeowners with a FORTIFIED Roof designation can receive wind and hail insurance premium discounts or mitigation credits. Rather than prescribing a uniform statewide discount, the state promotes a competitive insurance market in which insurers determine the value of verified risk reduction (NCDOI 2025).

Funding Source: North Carolina’s Rate Bureau’s wind-mitigation credits for qualifying FORTIFIED construction are established in the Rate Bureau’s filed and commissioner-approved manuals and apply to participating member insurers (NCDOI n.d.).

Roof Financing: Premium discounts vary by policy, location, and property characteristics and are adjusted annually in approved rate filings. Credits range from 5% to 20%, with savings reaching as much as $700 or more annually.

Rationale: Premium credits provide an ongoing financial incentive that complements the upfront grant and loan programs. They help homeowners recognize a recurring financial benefit of reducing the risk of wind and water damage.

Access to Financing: Incentives are available to insured homeowners who complete qualifying mitigation measures and obtain the required third-party verification.

Financing Innovation

North Carolina Catastrophe Bond and Traditional Reinsurance with a Resiliency Feature

NCIUA developed an innovative financing mechanism to reinforce its model of reinvesting resilience savings into resilience investments. In 2025, NCIUA issued the Cape Lookout Re 2025-1 catastrophe bond, a financial instrument that transfers hurricane and wind risk to institutional investors (Evans 2025). The catastrophe bond specifically reinforces the SYR and SYCR grant programs by rebating a portion of investor yield to NCIUA in quiet hurricane years.

The bond includes a unique resilience spread feature. Investors receive regular coupon payments (periodic interest-like payments that compensate them for taking on catastrophe risk—as long as no qualifying catastrophe occurs). If a defined catastrophe occurs, such as a hurricane exceeding specified loss thresholds, investors lose part or all of their principal. Those funds are then used to pay insurance claims rather than investor returns (Evans 2025). However, if losses remain below the trigger, a 0.35 percentage-point slice of that coupon, the resilience spread, is pre-designated as money that will be given back to NCIUA (rather than kept by investors) in years without a trigger. Further, that money is restricted to funding additional FORTIFIED Roof grants and upgrades across the state (Evans 2025).

This dual-purpose design both protects NCIUA against extreme losses and channels investor yield into preventive resilience measures during calm periods. It builds upon North Carolina’s history of catastrophe bond innovation, beginning with the 2009 Parkton Re Ltd. issuance, but adds an explicit resilience dividend that turns financial stability into a community benefit (Evans 2025).

More recently, NCIUA has built on this experience to extend the catastrophe bond model to their traditional reinsurance, which now also provides a resiliency payment if the loss ratio is below the established threshold. All proceeds from these resilience returns get funneled back into the NCIUA FORTIFIED grant programs.

Summary Tables

The insurance-surplus programs—SYR, SYCR, and SRG—establish the foundational grant model. The CEFC programs extend the opportunity for stronger roofs to lower-income households by reducing remaining cost barriers. The catastrophe bond and reinsurance with resiliency feature introduces a capital-market mechanism that rewards loss prevention and replenishes grant resources in quiet years.

Table 1. Financing Mechanisms

Table 2. Beneficiaries

Partners in the North Carolina system are insurance, philanthropy, capital markets, and research organizations.

Table 3. Partners

Insights

North Carolina demonstrates a statewide strategy in which the residual insurance market serves as the primary platform for delivering mitigation capital and becoming long-term investors in loss prevention (NCDOI 2025).

North Carolina's approach illustrates how multiple financing mechanisms can be layered to support resilience investments across different homeowner needs and funding sources. Rather than relying on a single program, NCIUA and NCJUA’s insurance-sector surplus, capital market financing, insurance discounts, philanthropic support, and loans combine to create complementary pathways to enable property owners to replace their traditional roof with a FORTIFIED one. These programs demonstrate how public, private, and nonprofit partners can each play a distinct role in expanding resilience while reducing reliance on any single funding source. The following observations highlight key lessons that may inform adaptation finance strategies in other states.

Financial Sustainability: In North Carolina, combining insurance surplus and capital-market resilience bonds has enabled continuous investment in roof upgrades for loss prevention in high-risk areas without imposing significant costs on homeowners. There are no requirements for FORTIFIED Roofs on new buildings, so the demand for this program will likely continue.

Accessibility: The NCIUA and NCJUA programs are only available to policyholders in the beach and coastal areas of North Carolina who can acquire the grant and afford the upgrade. The new CEFC grant and loan programs are an important experiment in expanding access to lower-income households that cannot afford the additional cost for a FORTIFIED Roof.

Government Role: Enabling policy in North Carolina provides statutory authority for NCIUA to fund hazard-mitigation grants under North Carolina General Statutes 58-45-15(6) (NCIUA 2026). The Department of Insurance provides oversight of insurance discounts. In addition to statutory authority for NCIUA to fund mitigation grants, the state has occasionally provided targeted funding to expand the roof-grant program’s reach, including a $7 million appropriation in 2021 and $2 million in 2023 (Kozak 2024).

Potential for Replicability: Recycling resilience savings through a residual insurance market or a FAIR Plan structure (NAIC 2024), as well as resilience bond financing, could be replicable in any state with a residual insurance market. North Carolina’s model leverages the NCIUA and NCJUA as both a risk-bearing residual market insurer for coastal wind risk and a conduit for reinvesting savings into mitigation grants.

Many other states operate residual market insurers or FAIR plans. In hurricane-prone states, such as Florida, Louisiana, and Texas, these entities can potentially serve as funding conduits to generate and reinvest surplus or other dedicated revenues into mitigation programs, including for financing FORTIFIED Roofs. Western states facing wildfire risk might explore a similar approach for related IBHS standards targeting Wildfire Prepared Homes and Communities (Wildfire Prepared 2026).

Sources

CEFC. n.d.a. “Carolina SURE.” Clean Energy Fund of the Carolinas. https://cefcarolinas.org/carolina-sure/.

CEFC. n.d.b. “FORTIFIED™ Roof Grants for Income-Qualified Households.” Clean Energy Fund of the Carolinas. https://cefcarolinas.org/fortified-roof-grants/.

Evans, S. 2025. “NCIUA’s Recent Catastrophe Bond Included Integrated Disaster-Resilience Feature.” Artemis, May 16. https://www.artemis.bm/news/nciuas-recent-catastrophe-bond-included-integrated-disaster-resilience-feature/.

Evans, S. 2026. “Cape Lookout Re. Ltd. (Series 2026-1).” Artemis, March. https://www.artemis.bm/deal-directory/cape-lookout-re-ltd-series-2026-1/.

FEMA. 2022. “Hurricane Wind Retrofit Technical Review.” Federal Emergency Management Agency. https://www.fema.gov/sites/default/files/documents/fema_technical-job-aid-hurricane-wind-retrofit.pdf.

Heil, J. n.d. “10 U.S. States Where Hurricanes Hit Most Often.” Universal Property & Casualty Insurance Company. https://universalproperty.com/united-states-where-hurricanes-hit-most/.

Kozak, C. 2024. “Coastal Property Owners yet to Embrace Roof-Girding Grants.” CoastalReview.Org (Newport, NC), April 15. https://coastalreview.org/2024/04/roof-grant-program-fights-to-build-effort-stalled-code-updates/.

NAIC. 2024. “Fair Access to Insurance Requirements Plans.” National Association of Insurance Commissioners, December 13. https://content.naic.org/insurance-topics/fair-access-to-insurance-requirements-plans.

NCDOI. 2025. “Commissioner Causey, State, Local Leaders Announce $20 Million Grant Program to Strengthen Coastal Roofs.” NCDOI News (Sunset Beach, NC), July 17. https://www.ncdoi.gov/news/press-releases/2025/07/17/commissioner-causey-state-local-leaders-announce-20-million-grant-program-strengthen-coastal-roofs.

NCDOI. n.d. “Fortified Homes & Mitigation Credits.” North Carolina Department of Insurance. https://www.ncdoi.gov/consumers/homeowners-insurance/fortified-homes-mitigation-credits.

NCIUA. 2023. Plan of Operation of the North Carolina Insurance Underwriting Association. North Carolina Insurance Underwriting Association. https://portal.ncjua-nciua.com/ResourceLibrary/Download/593.

NCIUA. 2026. Coastal Property Insurance Pool Manual of Rules and Procedures. North Carolina Insurance Underwriting Association. https://portal.ncjua-nciua.org/ResourceLibrary/Download/993.

NCIUA. n.d. “Strengthen Your Roof.” North Carolina Insurance Underwriting Association. https://www.strengthenyourroof.com/Home/Policyholders.

NCJUA. n.d. “Stronger Roof Grant.” https://strongerroofgrant.com/.

Rabb, W. 2025. “NC Expands FORTIFIED Roof Grant Program With Another $20 Million.” Insurance Journal, July 22. https://www.insurancejournal.com/news/southeast/2025/07/22/832742.htm.

Velasquez, E. 2025. “Building Stronger Communities: How FORTIFIED Roofs Can Protect the Most Vulnerable Homes.” Clean Energy Fund of the Carolinas. https://cefcarolinas.org/2025/07/building-stronger/.

Wildfire Prepared. 2026. “Wildfire Prepared.” Insurance Institute for Business and Home Safety. https://wildfireprepared.org/.

1. G. Hardy, personal communication with the author, August 31, 2026.↩︎
2. Ibid.↩︎
3. Ibid.↩︎
4. Ibid.↩︎

Acknowledgments

We would like to thank Don Hornstein, professor at the University of North Carolina–Chapel Hill and advisor to NCIUA; Gina Hardy, CEO of NCIUA; and Jennifer Weiss of the Clean Energy Fund of the Carolinas for their valuable contributions, insights, and support in the development of this work.

Authors and Affiliations

• Lydia Olander, Nicholas Institute for Energy, Environment & Sustainability, Duke University
• Sujay Dhanagare, Duke University

The authors welcome corrections and clarifications. Please contact lydia.olander@duke.edu.

Citation

Olander, L., and S. Dhanagare. 2026. FORTIFIED Roof Case Study: North Carolina. NI 26-21. Durham, NC: Nicholas Institute for Energy, Environment & Sustainability, Duke University. https://nicholasinstitute.duke.edu/publications/fortified-roof-case-study-north-carolina.