This year's active hurricane season is making residents along the US east coast consider the need for better protection of their property.

It is a move that is welcomed by property catastrophe reinsurers and insurers here in Bermuda like Renaissance Reinsurance Ltd., and subsidiary Glencoe Insurance Ltd., a primary property writer.

The 1998 hurricane season has brought a slew of major storms, and, a fresh focus in the US toward building structures that better withstand gale-force winds and torrential rain storms.

But an insurance-industry initiative is giving communities incentives, and insurers a new tool, to hold down property losses.

A programme developed by New York based Insurance Services Office, Inc. (ISO), evaluates the effectiveness of local building codes to help identify how well homes and commercial structures in a given community will hold up to hurricanes, earthquakes and other natural disasters.

RenaissanceRe Holdings Ltd. chairman, president and CEO, James N. Stanard, said, "The quality of construction has an impact on loss potential. When we have an opportunity to do so, we use it as a factor in our reinsurance and primary underwriting.

"We look at age of construction and the different codes that were in force when such properties were built, which can be an important underwriting criteria.'' The latest forecast is that with 135 million US residents living near one of the nation's windstorm-prone coasts, and 95 percent of the US population dwelling in seismically active areas, natural disaster losses will only escalate.

That pessimistic outlook came from Patrick McLaughlin, senior vice president of ISO's Risk Decision Services unit, which evaluates municipal code enforcement for insurers.

"We can't control where people live. But we can encourage more effective enforcement of municipal building codes,'' said McLaughlin. "ISO's building code programme provides that encouragement.'' Insurers now use building-code evaluations in Building Code Effectiveness Grading as a key variable in risk assessment.

Since its launch in Florida and the Carolinas in 1995, ISO's building code effectiveness evaluation programme has been approved by insurance regulators in 42 states.

The programme is expected to be implemented in additional states during 1999, with the goal of having the programme in all states by year-end 2000. So far, ISO has reviewed more than 3,800 building departments countrywide.

Mr. Stanard also knows about building codes through the personal experience of a beach house he owned in North Carolina, which suffered damage during Hurricane Fran in September 1996.

He recalled: "I could see less well-constructed homes on either side that suffered a lot more damage. The standard of building makes a huge difference.'' A recent study by the US Federal Emergency Management Agency (FEMA) reveals striking evidence that structures built to code are much more likely to withstand hurricane-force wind damage.

ISO's building-code programme was developed in the aftermath of Hurricane Andrew in 1992, when it became clear that lack of adequate building-code enforcement contributed as much as one-fourth of the $16 billion in insured losses.

Besides widespread suffering and economic disruption, Hurricane Andrew left ten insurance companies insolvent and many others financially crippled.

It also created the environment that brought billions of dollars of new capital to Bermuda, forming the basis of the burgeoning insurance and reinsurance markets we know today as key players in the global industries.