How can states help homeowners, affordable housing providers, insurers, and communities invest in stronger buildings without relying entirely on individual property owners to bear the cost?

We reviewed how six states are developing innovative approaches to finance property-level resilience investments that reduce future losses from natural hazards. While the programs examined are centered primarily around Insurance Institute for Business and Home Safety (IBHS) FORTIFIED Roofs™ and related wind-resilience measures, the approaches states use can extend beyond roofing systems. We identified a range of mechanisms, including legislative appropriations, insurance-supported funding streams, tax incentives, insurance discounts, catastrophe-bond innovations, and blended-capital financing structures across Alabama, Florida, Louisiana, North Carolina, Oklahoma, and one Midwest state (whose program has yet to be launched). Together, these approaches demonstrate how states are beginning to shift from reactive disaster spending toward proactive investments that reduce future losses, strengthen insurance markets, and protect public finances.

This policy brief is part of Scaling FORTIFIED Roof Adoption, a project showing how innovative financing approaches help homeowners and affordable housing providers invest in resilience measures before disasters strike.

Background: How States are Shifting Toward Investment in Proactive Hazard Mitigation

Traditional disaster funding flows after a catastrophe, through insurance claims, federal assistance, or emergency appropriations. Resilience financing reverses this sequence. It brings capital forward, investing before a disaster occurs, and focuses those dollars on measures that reduce future losses and stabilize insurance markets. Numerous studies found significant cost savings—from $4 to $17 per $1 invested in hazard mitigation (Appendix A). A central question underlying building resilient communities is how to fund property-level risk reduction in a way that does not depend entirely on individual homeowners.

This is increasingly important as states face pressure to simultaneously expand housing supply, improve affordability, and reduce disaster risk. Across the country, policymakers are pursuing strategies to build more housing and accelerate development. Yet housing built in locations with unmanaged risk or constructed without appropriate resilience measures can become a future liability for homeowners, insurers, and taxpayers alike. Repeated losses generate insurance claims, public recovery costs, infrastructure damage, and pressure on state and local budgets. By contrast, resilient homes built to durable standards are more likely to remain insurable, retain value, support the local tax base, and reduce future demands on public resources. The challenge goes beyond simply building more housing, but building more assets and fewer liabilities, and retrofitting existing structures to increased resiliency standards.

For these reasons, there is growing interest in embedding property-level resilience standards into state policy and programs. For wind- and storm-related hazards, the IBHS FORTIFIED™ Roof (IBHS n.d.b) is widely accepted as the gold standard for reducing storm-related losses associated with roof damage. It combines a clearly defined construction standard, third-party verification, and measurable insurance outcomes. It is the primary example described in this paper because it is the hazard mitigation strategy integrated into an ever-increasing number of state financing programs.

Recent empirical analyses have begun to quantify the scale of resilience benefits from FORTIFIED Roofs. A study by the Alabama Department of Insurance and Center for Risk and Insurance Research at the University of Alabama found that during Hurricane Sally in 2020, FORTIFIED Roof construction reduced loss frequency by 55% to 74%, loss severity by 14% to 40%, and loss ratio by 51% to 72% (ALDOI and CRIR 2025). In their sample, the authors estimate that if conventional homes had been at FORTIFIED standard, they would have saved policyholders more than 61% in deductibles paid and insurers more than 65% in total claims paid. In North Carolina, an analysis of hurricane claims by the Institute for Advanced Analytics found that homes with FORTIFIED Roofs had roughly 35% fewer claims and 23% lower damage severity following major storms than comparable homes with standard roofs, directly reducing expected insured losses in the North Carolina Insurance Underwriting Association portfolio (Causey 2025).

FORTIFIED-like roofs are not the same as FORTIFIED Roofs. In Alabama and Florida, where building codes mimic but are not identical to the FORTIFIED standard (Building Envelope Association n.d.). This distinction is consequential. The Hurricane Sally study found that FORTIFIED-designated homes performed 50% better than homes built to FORTIFIED-like code (ALDOI and CRIR 2025).Given these compelling results, it is not surprising that state governments are trying to find ways to increase use of FORTIFIED Roofs in regions where wind, hail, and hurricane damage are significant concerns. These programs now span high-risk regions in the Gulf states, Southeast, Mid-Atlantic, and Northeast. As many as 10 states now have insurance discounts, grants, or tax credits specifically for FORTIFIED-certified roofs, and others have similar support and incentives for upgrades that meet the standard but are not officially certified (IBHS n.d.a).

The case studies included in our review cover models for increasing property-level resilience for six states. Each employs different combinations of financing and incentive structures to increase adoption of FORTIFIED Roofs and related resilience upgrades. While each program reflects unique legal, insurance, and political circumstances, the financing mechanisms generally fall into five categories:

1. Direct public appropriations
2. Insurance sector funding mechanisms
3. Tax code incentives
4. Capital market structures
5. Blended capital resilience finance

Together, these approaches demonstrate how states are attempting to reduce future losses without relying exclusively on homeowner resources or traditional public appropriations.

Each of these mechanisms (described briefly in the sections that follow) represents a different way of moving capital into resilience investments (hazard mitigation). They are not mutually exclusive—in fact, most effective state programs use several mechanisms together to balance the needs of different parts of the housing sector. In many cases, these mechanisms have been used in other states and for other hazards, indicating that there are many ways states can replicate and scale these approaches. Expanding programs to finance FORTIFIED or similarly advanced roof requirements or other property-level resilience investments is feasible across a range of different institutional, legal and financial structures.

Financing Mechanisms

Direct Public Appropriations

The most straightforward approach to financing property-level resilience is through direct public appropriations. Under this model, state governments allocate public funds for grant programs that support resilience improvements such as roof retrofits, wind-mitigation upgrades, or other measures designed to reduce future losses. Grants typically offset all or a portion of the cost of construction upgrades that exceed minimum code requirements.

Florida's My Safe Florida Home program, Florida’s My Safe Florida Condominium program, and Louisiana's Fortify Homes Program are examples of this approach (DFS n.d.a, b; LDI n.d.). These programs use public funds to reduce the upfront cost barrier facing homeowners and housing providers, allowing resilience measures to be installed before future disasters occur. While appropriations-based programs can be effective at accelerating adoption, their long-term scale is often dependent upon continued legislative support and budget availability.

Legislative appropriations can be justified for FORTIFIED Roof investments because the costs of roof failure do not stay private. When roofs fail at scale, states end up paying for them through disaster aid, temporary housing, and public facility repair, and the costs can put pressure on insurance affordability for the region. Thus, property-level prevention investments—which have been shown to save public resources and protect consumers—can be justified as a public good.

Insurance-Sector Funding Mechanisms

A second approach uses revenues generated within the insurance system itself to support resilience investments. These programs recognize that insurers, policyholders, and state governments all benefit when future losses are reduced. States can use various forms of insurance-sector revenue, including premium taxes, regulatory fees, underwriting surplus, and assessments, to fund property-level mitigation programs.

The specific mechanisms differ across states, but the underlying logic remains consistent: a portion of resources generated by the insurance market is reinvested into risk-reduction activities that work to lower future claims and improve market stability. Alabama, North Carolina, and Oklahoma each provide examples of this approach through different statutory and regulatory structures.

This method aligns the source of funding with entities that stand to benefit from risk reduction. When fewer roofs fail, insurers and reinsurers experience fewer claims and lower loss ratios. Allocating a portion of underwriting surplus from residual market insurers, or fees and assessments collected by state insurance departments and public insurance pools, to hazard mitigation is therefore a defensible investment in loss prevention.

Insurance-sector funding programs can be stable and self-contained. They do not depend on legislative appropriations and are thus more insulated from political cycles. The challenge lies in governance and transparency, ensuring that spending for hazard mitigation remains accountable to policyholders and regulators, and that transfers of surplus and fee revenue do not compromise the affordability, pricing stability, or long-term solvency of the insurers, residual markets, and public insurance funds that generate them. Fair Access to Insurance Requirements (FAIR) Plans or wind pools could do this through authorizing language and program rules aligned with guidance from the National Association of Insurance Commissioners (NAIC 2024).

Tax Code Incentives

A third category uses the tax code to encourage resilience investments. Rather than providing direct grants, these programs make stronger construction standards financially attractive by reducing tax burdens or improving access to valuable development-related tax incentives.

Tax-code incentives operate through several pathways. Some provide direct tax benefits to homeowners undertaking resilience improvements, while others incorporate resilience standards into affordable housing finance programs such as the Low-Income Housing Tax Credit. By rewarding stronger construction through existing tax structures, states can encourage adoption without creating entirely new funding programs.

Louisiana’s homeowner tax incentives and the resilience-oriented Qualified Allocation Plan initiatives emerging in Florida and Louisiana illustrate how tax policy can support property-level resilience objectives (Florida Housing Coalition 2025, LDR 2026, LHC 2023).

Capital-Market Structures

A fourth category seeks to engage capital markets, such as bond issuances, in resilience financing directly. Historically, catastrophe bonds and other insurance-linked securities have been used solely to transfer risk from insurers to investors. Recent innovations suggest that these structures may also be used to support resilience investments that reduce future losses.

North Carolina’s Cape Lookout Re 2025-1 catastrophe bond introduced a resilience feature that directs a small portion of investor yield into a dedicated resilience reserve when catastrophe losses remain below specified thresholds (UNC School of Law 2025, Evans 2025). Those funds can then be recycled into additional FORTIFIED Roof investments. While the annual dollars generated remain modest, the significance of the structure lies in demonstrating that property-level risk reduction can be incorporated into capital-market transactions and that institutional investors recognize the value of these efforts with their own capital.

The broader importance of this approach is not the immediate volume of funding generated, but the market signal it creates. As investors increasingly recognize resilience improvements as financially material, future securities, insurance products, and risk-transfer structures may begin incorporating resilience performance into pricing and transaction design.

Blended-Capital Resilience Finance

A fifth category combines philanthropic capital, insurance sector participation, and resilience investments into structures that seek to create recoverable forms of resilience finance—essentially capturing the avoided losses that occur from structures that better withstand physical risks. Unlike traditional grant programs, these approaches attempt to establish a direct relationship between resilience investments and the future economic value created by avoided losses.

The Midwest state that we reviewed offers an early example. We are not naming the state as the project has yet to publicly launch, but it has significant upside potential and merits a discussion here.

In that state, philanthropic capital is supporting stronger roof installations across affordable housing properties insured through a quasi-public insurance pool. The central hypothesis is that reductions in future claims can be measured and ultimately serve as a repayment mechanism for the initial investment. Rather than relying solely on grants or public appropriations, the model attempts to demonstrate that resilience investments can generate quantifiable financial benefits that support future capital deployment.

Although these structures remain experimental, they represent an important conceptual shift. If avoided losses can be reliably measured and monetized, resilience investments may increasingly be viewed as financeable assets capable of attracting patient capital and supporting long-term investment strategies.

Complementary Insurance-Market Incentives

In addition to the financing mechanisms described previously, several states use insurance-market incentives to encourage adoption of resilience measures. While these incentives do not directly finance upgrades, they improve the economics of resilience investments by allowing homeowners to capture a portion of the value created through reduced risk.

Many states use insurance premium discounts or credits to encourage roof replacements that meet FORTIFIED or similar wind- and hail-resilient standards. Alabama law requires private insurers to offer mandatory actuarially justified discounts on coastal homeowners’ insurance for FORTIFIED Home designations. Reported premium reductions commonly range from 15% to 35% depending on FORTIFIED level (Roof, Silver, Gold) (IBHS n.d.a; Alabama Commissioner of Insurance 2025). North Carolina requires insurers to file and offer wind-mitigation credits for IBHS-recognized construction features (including FORTIFIED Roof elements) in coastal areas, typically yielding 5% to 20% discounts on the wind portion of premiums (NCDOI n.d.). Louisiana mandates insurer discounts for FORTIFIED standards statewide that range from 10% to 30%. Florida does not mandate FORTIFIED discounts specifically, but requires insurers to offer wind-mitigation credits for features aligned with the FORTIFIED standard (roof deck attachment, secondary water resistance, roof covering), often resulting in 10% to 25% savings on wind premiums.¹ Oklahoma relies more on voluntary insurer programs and rating credits for IBHS-recognized hail-resistant or FORTIFIED Roofs. Discounts commonly range from 5% to 15%, and some carriers offer premium credits or deductible reductions rather than explicit percentage cuts.²

These are not the only states with such programs. These mechanisms work because state laws or insurance regulations require insurers to account for reduced risk in their portfolios to make resilience investments financially attractive for homeowners.

Funding and Finance Mechanisms Summary

Among the financing mechanisms reviewed in this series, public appropriations and tax incentives rely most directly on taxpayer support and state budgets. The remaining approaches draw on insurance-sector revenues, private capital, philanthropy, or investor participation in catastrophe-risk markets. Collectively, these mechanisms reflect a growing recognition that public resources alone are unlikely to meet future resilience needs.

As states confront increasing disaster losses, housing demand, insurance-market stress, and fiscal constraints, they are increasingly experimenting with ways to align resilience outcomes with insurance systems, capital markets, and private investment. The examples in these case studies suggest that resilience investments can be supported through a variety of institutional arrangements, reducing dependence on traditional disaster-recovery funding and creating pathways for long-term risk reduction.

Six State Case Studies

Across the six states reviewed, different combinations of the underlying financial mechanisms are used to pay for FORTIFIED or FORTIFIED-like roof upgrades, adapted to local governance and funding contexts. More detail about each state program can be found in the case studies:

• Alabama
• Florida
• Louisiana
• North Carolina
• Oklahoma
• Midwest state

Design Features Common Across State Programs

1. Payment based on verification: All state programs tie disbursement to verified outcomes. Funds are released only after IBHS FORTIFIED or similar roof upgrades are certified, and payments often flow directly to contractors rather than homeowners. This ensures that financial assistance is actually used to install FORTIFIED Roofs, reduces the risk of misuse, and increases the likelihood of loss reduction when future storms occur.
2. Incentivize with insurance discounts: In Alabama, Louisiana, and Oklahoma, state insurance regulators require private insurers to offer premium discounts on the wind portion of homeowners’ policies for homes with a FORTIFIED designation. This practice has recently spread to additional states like Georgia, Mississippi, and South Carolina. Some other states also offer discounts for similar roof mitigation investments (IBHS n.d.a.).
3. Risk-based targeting: Many state programs incorporate some form of risk-based prioritization, such as focusing eligibility in high-risk geographies, repetitive-loss areas, or hail-prone ZIP codes. This helps direct limited funds to properties where upgrades are expected to avoid the greatest losses. Oklahoma started with a pilot targeted to high-risk zip codes, but recently expanded statewide to address convective storms and hail (OID 2025).
4. Need-based access: Different programs are designed to meet differing needs across states. Of the six states in this series, five have programs targeting homeowners with a range of grants, tax credits, and insurance-linked incentives. With support from the Robert Wood Johnson Foundation, three states are building programs targeting lower-income housing. Two programs —in Florida and the Midwest—target affordable housing through state programs. One—North Carolina—focuses on low-income homeowners aiming to upgrade homes so they can access federal weatherization and home-energy programs. Only Florida has a program addressing multifamily condominium housing.
5. Justification and reinvestment: Tracking and quantifying avoided losses and savings has helped justify further state investment (e.g., renewed appropriations) or private investment (e.g., lower rates for reinsurance and capital for catastrophe bonds). For many of these state programs, savings from avoided losses are recycled into their roofing programs, allowing them to expand the programs, their benefits, and their savings. Together, these design features build a long-term financial framework for enhancing property resilience. By connecting verification, insurance incentives, risk-based and need-based targeting, and outcome tracking, states can improve the likelihood that investments in FORTIFIED construction translate into genuine and durable risk reduction. (Kousky et al. 2025)

For most states, grant-based funding flows through residual market insurers or regulator-controlled fee structures, while incentives come from both state-level tax incentives and required private insurer discounts. States see the value in these investments and regulations because they reduce risks, costs, and stabilize insurance markets. In contrast, private insurers generally do not fund resilience unless required to do so, because they cannot easily capture long-term savings given that policyholders are able to switch insurance providers year to year.

The broader lesson from these state programs is that resilience investments are increasingly evaluated not simply as construction upgrades, but as financial interventions that reduce future liabilities. States are experimenting with ways to connect verified risk reduction to insurance pricing, capital allocation, and public investment decisions. As pressure grows to build more housing and maintain affordability, these programs demonstrate that resilience and housing production need not be competing priorities. The objective is not merely to build more homes, but to build homes that remain durable, insurable, and economically valuable over time.

Sources

ALDOI and CRIR. 2025. Performance of IBHS FORTIFIED Home Construction in Hurricane Sally. Alabama Department of Insurance and Center for Risk and Insurance Research, University of Alabama. https://www.aldoi.gov/PDF/News/ PerformanceIBHSFortifiedHomeConstructionHurricaneSally.pdf.

Building Envelope Associates. n.d. “Florida Building Codes.” https://flbea.com/blog/ florida-building-codes/.

Causey, M. 2025. “Here’s an Opportunity to Get a Grant for a New, Stronger Roof.” North Carolina Department of Insurance, July 30. https://www.ncdoi.gov/ blog/2025/07/30/heres-opportunity-get-grant-new-stronger-roof.

DFS. n.d.a. “My Safe FL Condo.” Florida Department of Financial Services. https:// myfloridacfo.com/mysafeflhome/mysafefloridacondo.

DFS. n.d.b. “My Safe FL Home.” Florida Department of Financial Services. https:// mysafeflhome.com/.

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. 2023. The Economic Case for Coastal Resilience. Federal Emergency Management Agency. https://nantucket-ma.gov/DocumentCenter/View/47234.

Florida Housing Coalition. 2025. Advancing Resilience Through FORTIFIED™ Standards. Florida Housing Coalition. https://flhousing.org/wp-content/ uploads/2025/12/new-FHC-Fortified-Multifamily-2025-5.pdf.

IBHS. n.d.a. “Financial Incentives.” Insurance Institute for Business & Home Safety. https://fortifiedhome.org/incentives/.

IBHS. n.d.b. “FORTIFIED Roof™.” Insurance Institute for Business & Home Safety. https://fortifiedhome.org/roof/.

IBHS. n.d.c. “Incentives for Residents of Alabama.” Insurance Institute for Business & Home Safety. https://fortifiedhome.org/incentives-alabama/.

Kousky, C, J. A. Zinda, H. K. Friedrich, T. Burley, and K. Kang. 2025. Driving Loss Reduction Through State-Created Residual Insurance Markets. Environmental Defense Fund. https://www.edf.org/media/last-resort-state-insurance-cansupport-increased-resilience-policyholders.

LDI. 2026. “FORTIFIED Benchmarks - Effective January 1, 2027.” Baton Rouge, LA. https://www.ldi.la.gov/fortifiedbenchmarks.

LDI. n.d. “Louisiana Fortify Homes Program – Homeowners.” Louisiana Department of Insurance. https://ldi.la.gov/fortifyhomes.

LDR. 2026. “Fortified Roof Tax Credit Deadline Is June 30.” Louisiana Department of Insurance, June 8. https://revenue.louisiana.gov/news-andannouncements/2026/fortified-roof-tax-credit-deadline-is-june-30/.

LHC. 2023. “LHC Board Adopts 2024 Qualified Allocation Plan.” Louisiana Housing Corporation, January 27. https://www.ncsha.org/hfa-news/lhc-board-adopts2024-qualified-allocation-plan/.

Matz, S. 2024. “Building Stronger Communities: The Business Case for Climate Resilience Investments.” US Chamber of Commerce Foundation, August 22. https://www.uschamberfoundation.org/disasters/building-strongercommunities-the-business-case-for-climate-resilience-investments.

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

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

NIBS. 2020. Mitigation Saves: Mitigation Saves up to $13 per $1 Invested. National Institute of Building Sciences. https://www.nibs.org/wp-content/ uploads/2025/04/ms_v4_overview.pdf.

OID. 2025. “OKReady Announces Zip Codes for Strengthen Oklahoma Homes Grant Program.” Oklahoma Insurance Department., February 19. https://www.oid.ok.gov/release_021925/.

OKReady. n.d. “What Is the Strengthen Oklahoma Homes (SOH) Program?” Oklahoma Insurance Department. https://www.oid.ok.gov/okready/.

UNC School of Law. 2025. “Historic $600 Million Insurance Innovation Links StormResilient Construction with Financial Markets.” October 23. https://law.unc.edu/ news/2025/10/historic-600-million-insurance-innovation-links-storm-resilientconstruction-with-financial-markets/.

1. Notice of Premium Discounts for Hurricane Loss Mitigation, Florida Statutes § 627.711 (2025). https://www.leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0600-0699/0627/ Sections/0627.711.html.↩︎
2. Premium Discount or Rate Reduction for Resistance to Tornado or Other Wind Events, 36 Oklahoma Statutes § 961 (2018). https://govt.westlaw.com/okjc/Document/ND7A80C60979711E79CE4BD3335EDAE29↩︎

Appendix

Table A1. Cost-Benefit Ratios of Resilience Implementation

Authors and Affiliations

• Lydia Olander, Nicholas Institute for Energy, Environment & Sustainability
• Matt Posner, The Resiliency Company
• Sujay Dhanagare, Duke University

Citation

Olander, L., M. Posner, and S. Dhanagare. 2026. How States are Financing Property-Level Resilience: Lessons from Six States Scaling FORTIFIED Roof Adoption. NI 26-17. Durham, NC: Nicholas Institute for Energy, Environment & Sustainability, Duke University. https:// nicholasinstitute.duke.edu/publications/how-states-are-financing-property-level-resilience.