Believe it or Not, Climate Change is Impacting Contractors

Though disaster repair spending is skyrocketing, it’s not necessarily good for the industry.

From Superstorm Sandy to snowpocalypse, climate change-fueled severe weather has become a commonplace occurrence for contractors who often find themselves on the frontlines after a natural disaster, contending with frightened customers and frustrating red tape.

In fact, over the last three decades, the number of weather-related loss events in North America grew by a factor of five, according to a report from the American Academy of Actuaries, which concluded that many Americans can expect insurance costs to rise as a result. The report blames climate change for the sudden increase in severe weather and offered up convincing evidence to that end, along with some clear consequences:

• Since 1990, seven of the 10 warmest years on record have occurred in the contiguous 48 states.
• Due to its geography, North America is particularly vulnerable to a wide variety of severe weather — hurricanes tornadoes, drought, flood, wildfire and storms.
• The number of weather related events with losses exceeding $1 billion nearly doubled, rising to 80 between 2004 and 2013 compared with only 46 events in the previous decade, according to the National Oceanic and Atmospheric Administration.
• NOAA data also shows that water damage has surged in the past 10 years, largely due to hurricanes. NOAA reported 23 flood and hurricane events with losses exceeding $1 billion between 2004 and 2013, compared with 16 from 1994-2003.
• Severe storms in the last decade resulted in the biggest increase from weather related events with 40 tornadoes, hail storms, severe thunderstorms, derechos (a line of intense, widespread, and fast-moving windstorms and sometimes thunderstorms that moves across a great distance with damaging winds) and flash floods from 2004 to 2013 with losses exceeding $1 billion compared with only 13 between 1994 and 2003.

Another measure of how much severe weather has impacted homeowners and contractors is Harvard’s Joint Center for Housing Studies. Its data shows that between 1995 to 2013 (the latest data available) damage restoration spending nearly doubled, rising from about $6.8 billion to $13.5 billion.

That’s big money, and severe weather events typically make contractors’ phones ring off the hook. But if you think they’re good for business, think again.

“Natural disasters do have a serious impact on contractors and despite popular belief, it’s not necessarily a positive one,” said Mark Graham, vice president, technical services for the National Roofing Contractors Association. “It’s additional work with no additional resources to get the job completed in the same period of time. It really upsets the business cycle.”

Graham said part of the problem is that severe weather and natural disasters typically occur in the spring and summer — when contractors are already busy and booked up. “If you’re any type of good contractor at all, you’re already filled up with all the work you need. The last thing you need is additional work on top of it,” he said.

The damage storms typically cause only compounds the problem, because storm-ravaged homes often need immediate attention, leaving homeowners desperate for help and vulnerable to being shilled. “It just opens the door to unscrupulous contractors,” Graham said, adding that includes unlicensed contractors and those unfamiliar with local codes.

Additionally, material availability can become an issue, especially if there’s a sudden need for roofing that wasn’t expected. “The industry is just not able to flip a switch and add 15% or 20% capacity,” he said.