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Hurricane simulations may reduce home insurance rates

On a 90-acre field in South Carolina, Category 3 hurricane winds blow. Sometimes there's an apocalyptic flood or fire. It's an insurance company’s worst nightmare.

In this case, though, the insurance companies themselves are spawning these "natural" disasters. By blowing over houses and setting trees on fire, insurance companies hope to eventually save consumers a significant amount of money on their homeowner's insurance through improvement of building standards.

In October 2010, the nonprofit Institute for Business & Home Safety, funded by some of the world's biggest insurance companies, opened a $40 million research center in Richburg, S.C. The center can re-create a wildfire, a huge hail storm, a monsoon that dumps 8 inches of rain an hour and even winds up to 130 miles per hour. Within this weather laboratory, scientists equip houses with cameras and other electronic equipment, then let “nature” take its course -- all the while recording how the rain, wind and fire do their damage.

home insurance disasters

The only things the research center can’t do are produce simulations of earthquakes and snowstorms.

“It’s pretty clear we are in a pattern of pretty destructive weather, and with that weather there are a lot of claims,” says William Windsor, associate vice president of consumer safety at Nationwide and one of the developers of the South Carolina research center.

“At the end of the day, that comes back on the consumer, who has to pay an increase in his premiums. We think this research center will give us the opportunity to mitigate losses and, as a result, help consumers pay less for insurance.”

In 2010, natural catastrophes in the United States caused an estimated $13.6 billion in insured losses and 197 deaths, according to the Insurance Information Institute. More than half of the losses came from floods, tornadoes and severe storms.

On its website, the Institute for Business & Home Safety shows dramatic video of two 1,200-square-foot houses in its laboratory, one built to current Illinois codes and another fortified with a stronger foundation, sturdier shingles and tougher siding. With a flip of a switch, the center’s wind machine is turned on -- 105 fans that are 5½ feet in diameter -- to generate sustained Category 3 hurricane winds.

The result? The Illinois home is blown off its foundation. The fortified house remains standing.

“We are letting science tell us what is the best way to build a resilient community against Mother Nature,” says Joe King, a spokesman for the Institute for Business & Home Safety. “If a builder is building on the coast, we can recommend to them how to build because we’ve got the science behind it. Homes are safer; people are safer.”

New sound for State Farm?

In 1971, a little-known composer named Barry Manilow wrote the lyrics to State Farm’s new jingle, “Like a good neighbor… ." Today, the tune is a commercial classic.

Now, State Farm has hired rock band Weezer to do its own version of the song. Weezer's cool, but can the band sell insurance?

“When we were setting up the Memories Tour, the good people at State Farm asked the band, ‘Would you sing our jingle for us?’” the band wrote on its website Feb. 9.

No word yet on whether Manilow has heard Weezer’s rendition.

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