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The homeowners, policy O mentioned as item 2 is a new contract introduced in the past few years. It is now available in most States but is so new that relatively little coverage has been written to date. This form is also written by most property insurance companies.
With respect to business insurance you will note 11 of the forms made available by most insurance companies in the field of inland marine insurance. These contracts are customarily multiperil contracts with minor exclusions designed to cover property in transit or without a fixed location.
The above examples of windstorm, tornado, hurricane, earthquake, and floodinsurance coverages are intended to demonstrate that the insurance industry is offering widespread coverage for certain types of natural disaster. Windstorm, tornado, and hurricane coverages are rather freely written in all parts of the country. Earthquake insurance, while available in all States, is purchased largely in the Western States. Coverage to personal property for flood damage is available under the forms shown which, while purchased by an increasing number of buyers, is probably a relatively small part of the total market. As stated at the hearings, I know of no current insurance being offered with respect to flood damage to real property.
If upon further consideration your committee would like any further explana. tion of the figures attached or if our organization can be of assistance in any way do not hesitate to call upon us. Very truly yours,
HUBERT W. Yount, Vice President, Liberty Mutual Insurance Co.
for the American Mutual Alliance. (Headquarters of American Mutual Alliance located at 20 North Wacker Drive Chicago, Ill.) INSURANCE CUSTOMARILY WRITTEN BY INSURANCE COMPANIES COVERING NATURAL
American Mutual Alliance, November 19, 1955
WINDSTORM, TORNADO, HURRICANE Insurance for this peril is usually written by attachment of the extended coverage endorsement to the fire-insurance policy in all States. It also may be covered by a specific windstorm policy. All standard inland marine policies cover the perils of windstorm, tornado, and hurricanes.
EARTHQUAKE Protection from the peril of earthquake may be insured by a specific earth. quake policy or by endorsement attached to a standard fire-insurance policy. All inland marine policies may be extended to cover damage caused by earthquake. Some policies include earthquake as one of the perils of the standard contract.
FLOOD Insurance for flood damage is not available except under certain inland marine contracts, usually involved with the transportation of merchandise and personal property of individuals. Among the policies that include flood damage for individuals are:
1. Personal property floater
3. Personal articles floater Among the policies covering business pursuits that include insurance for the peril of flood are:
1. Transportation floater
EXTENDED COVERAGE RATES—AMERICAN MUTUAL ALLIANCE, Nov. 19. 1955
Frame dwelling extended coverage endorsement rates per $100
Brick mercantile extended coverage endorsement rates, 80 percent coinsurance
Montana.. Nebraska.. Nevada New Hampshire. New Jersey New Mexico. New York North Carolina. North Dakota. Ohio Oklahoma.. Oregon. Pennsylvania Rhode Island South Carolina South Dakota Tennessee. Texas Utah... Vermont Virginia Washington "Vest Virginia Wisconsin Wyoming
.06 . 10 .11
.062 .084 .096 .096 .182
084 .12 .07 .05 . 10
. 16 1.05 2.035 .06
. 23 .11
Same as California.
Rates for earthquake and volcanic eruption insurance
DeKalb, Etowah, Fayette, Franklin, Jackson, Jefferson, Lamar, Lauder-
Balance of State.
Independence, Izard, Jackson, Lawrence, Mississippi, Poinsett, Ran
dolph, and Sharp.
Balance of State.. California:
Counties of Alameda, Contra Costa, Del Norte, Humboldt, Inyo, Kern,
Lake, Lassen, Los Angeles, Marin, Mendocino, Modoc, Mono, Monterey,
Santa Cruz, Sierra, Solano, Sonoma, Trinity, and Ventura
Glenn, Kings, Madera, Mariposa, Merced, Nevada, Placer, Sacramento,
Tuolumne, Yola, and Yuba
Imrerial County Colorado (entire State) Connecticut (entire State) Delaware (entire State) Distrirt of Columbia Florida (entire State) Georgia (entire State) Illinois:
Counties of Alexander, Edwards, Franklin, Gallatin, Hamilton, Hardin,
Jackson, Jefferson, Johnson, Massac, Monroe, Perry, Pope, Pulaski,
Balance of State.
Countirs f Gibson, Pike, Posey, Vanderburg, and Warrick.
Balanan of State. Iowa (entirn S'ato) Kansas ( ntire State) Kenturky
Courtins of Ballard, Caldwell, Calloway, Carlisle, Christian, Crittenden,
Fulton, Graves, Henderson. Firkman, Hopkins, Livingston, Lyon,
Marshall, McCracken, Trio, Union, and Webster. Counting of Boone, Campbell, Kenton
Balance of State. Louisiana (entire State). Maine (entire State) Marylan!:
Allowany and Garrett..
Balance of State. Mass
ts: Counties Birnstable, Bristol, "ukes, Esses, Middlesex, Nantucket,
No f lk, Plymouth, Suffolk, and Worcester
Bala ce of State
Choctaw, Clay, Coahoma, DeSoto, Grenada, Holmes, Humphreys,
Was' ington, Webster, Winston, and Yalobusha.
B lance of State...
Douglas, Junklin, Howell, Iron, Jefferson, Madison, Mississipi, New
Wayne, and Wright..
Rates for earthquake and volcanic eruption insurance-Continued
Montana (entire State).
Counties of Bucks, Chester, Delaware, Montgomery, and Philadelphia
Balance of State..
Counties of Benton, Carroll, Chester, Crocket, Decatur, Dyer, Fayette,
Gibson, Hardeman, Hardin, Haywood, Henderson, Henry, Lake, Lauder
dale, Madison, McNairy, Obion, Shelby, Tipton, and Weakley
Balance of State.
. 10 07 14 13 .13 .06
15 percent deductible for frame dwelling; 10 percent deductible for brick mercantile building,
Senator LEHMAN. Congressman Thomas P. O'Neill.
Mr. O'NEILL. Senator, I received a statement from Congressman Edward P. Boland of the Second Congressional District of Massachusetts. That is the Springfield area that was badly hurt in the flood. Mr. Boland is presently traveling with a committee, and he has asked me to file his statement with the committee for the record.
Senator LEHMAN. There being no objection, it will be so ordered. (The prepared statement of Congressman Boland follows:)
STATEMENT OF EDWARD P. BOLAND, A REPRESENTATIVE IN CONGRESS FROM THE
STATE OF MASSACHUSETTS It is high time that we stop merely discussing the need of flood insurance and adopt an equitable insurance program that cushions our economy and the home and business owner against the disastrous effects of floods.
After every major flood there is a great hue and cry for some kind of protection against the ravages of floods. It has been evident for years that flood protection through public works is not enough. I am convinced that it is the responsibility of the Federal Government to backstop the backbreaking losses that are periodically heaped upon great segments of our economy. Floods are almost the only natural hazard not now insurable by the home or factory owner. This is so because the experience that private industry has had with flood insurance has not been at all successful. Companies that, in the distant past, have en leaored to write this kind of insurance have been ruined because major flood disasters have wiped out their reserves. Yet, it conceivable and I believe practical that the haphazard relief of physical distress and bankruptcy that follows a flood can be avoided by a system of insurance. However, the program must be financed to a considerable degree by the National Government. It is crystal clear that private initiative will not and cannot underwrite the great risk involved. Floods contain very special problems not encountered in the more familiar forms of insurance and thus the reluctance of established insurance companies to engage in this field.
69036-56pt. 1 34
One of the fundamentals of the great insurance business is that the small contributions of the many take care of the great losses of the few. The experience with floods and the places where they occur make it highly improbable that coverage would be wide enough to attract private insurance business. Great losses would be sustained by comparatively few premium payers and one of the sound principles of the insurance business would be violated. It is apparent that the only entity that can develop a good form of food insurance is the Federal Government itself. And if disaster insurance is to do any good at all, it must be available at rates which the people in the affected areas can afford to pay.
It is incredible that the Federal Government has not moved with more rapidity to establish some form of flood insurance. Although recommendations to this end have been made to past Congresses, nothing concrete has been done. Despite the success of crop insurance, war-damage insurance and maritime war-risk insurance, there has been no real drive to establish the Government's responsi. bility in flood disasters.
The number of resolutions and bills calling for action that will be filed with the Congress in January will, I know, result in constructive action. Like many other members from affected areas, I intend to file a bill placing the major burden on the Federal Government to protect people from such disasters. I am confident that the recommendations of this committee will play an important part in what we all want to accomplish. I am grateful to the committee for coming here today to get the reaction of the public of the New England area to the proposals that will be submitted to the next session of the Congress.
STATEMENT OF THOMAS P. O'NEILL, JR., A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF MASSACHUSETTS
Mr. O'NEILL. Mr. Chairman, I unfortunately will be unable to come back here this afternoon. I am a member of the National Monuments Committee meeting in the same building today. They are meeting in the 11th Congressional District here, which happens to be my district.
I am more than happy to welcome you and the committee. I know you are aware of the terrific flood damage that has occurred in Massachusetts. Fortunately, the people of my district were not affected at all. I have a small, compact district which is here in Greater Boston and the metropolitan area.
But I want to subscribe to the remarks that have been made here this morning by Congressman Philbin. I read his prepared statement. I believe also that we must give disaster relief to those people who need it, and we must give it within their reach. We must set up some type of a revolving fund. Not only should we be prepared for insurance for flood damage but we should have it for tidal waves, for tornadoes, for hurricanes, for forest fires, and things of that nature.
I know your committee is going to make a complete study of this, and I want to go on record as being in favor of it.
Senator LEHMAN. Thank you very much. May I say to you, Congressman, that we are going to hold the record open for a couple of weeks, and if you want to submit any additional memorandum, do not hesitate to do it.
We will stand in recess until 2:15 p. m.
(Whereupon, at 12:50 p. m., the hearing was recessed, to be reconvened at 2:15 p. m., this date.)
Senator LEHMAN. The hearing will resume.
Before we call the first witness, there are several things I want to put into the record if there are no objections.