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Our Hartford insurance companies are successful. Our Hartford insurance companies are well managed. I think one of the reasons why our insurance companies are so successful is that the people of the United States are definitely insurance minded. There are no responsible businessmen or responsible householders who will not carry insurance on their own automobile and household furniture for loss against fire and every other insurance coverage they can get. I think with the insurance-minded population such as we have in this country and with the many people we have here in disaster-struck Connecticut, who have seen a disaster such as we have not had in 300 years of history of our State, and when we know that disaster today with the shifting trends of nature can strike any section of the Nation, I am confident that this coverage is broad enough that all of the responsible elements of American life, our American householders and industry, would take out this extended coverage, and that you could market this extended coverage through our present insurance industry.

I do not think the Government would have to set up agencies, but they could do as they did with the war-risk damage program. You could get an endorsement on your policy which you took out for fire coverage or any other type of coverage through your own insurance company. The insurance companies and their agents could be the agencies for the Federal Government to handle this program.

I feel that the insurance companies cannot and will not undertake this disaster and catastrophe insurance program. I am confident if it is going to be formulated that it is going to have to be formulated by the Congress of the United States.

I know of no committee that has the intelligence, the know-how and interest of the Banking and Currency Committees of the Senate and House of Representatives. I am familiar with the membership of both of those committees, but again I must urge this upon you. When the Congress meets you must keep in mind that this is an election year and Congress would probably close its doors sometime around the end of June or the first of July. With all of the work that Congress has to do you, of course, are going to have to take it upon your shoulders to push and fight through this legislation, and make sure it does not die in committee.

You know, after the first flood came it was said that it could never happen again in Connecticut, because it did not happen for 300 years. Within a period of 2 months many of the same communities received a second blow. So we know it can happen again.

Our people in the State of Connecticut are worried and are concerned. I think it would be tragic if Congress let next summer go by with the prospect of hurricanes and floods without providing the opportunity for the people of this State to take out some form of protection.

Gentlemen, in my humble opinion the burden is upon your shoulders. I am confident that you are going to assume it, and I think in doing so you will be doing an everlasting favor to the people not only of Connecticut, but the people of the United States. Above all, you are doing something to make sure that the American economy stays strong and remains strong, because if the American economy is weak then this Government is weak. I certainly plead with you to get out a catastrophe fund, and do not worry about the necessity of having Federal appropriations in order to help carry the burden of this

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catastrophe fund, because in doing so you will really be protecting the funds of the United States in the form of taxes and our American economy.

Thank you very much.
Senator LEHMAN. Thank you very much. Senator Bush.

Senator Bush. Mr. Chairman. Governor, have you given any thought as to where this catastrophe fund program might be administered in the Federal Government?

Governor RIBICOFF. I would say this: I have developed a great respect for the civil-defense organization. As I watched the civildefense work in this last disaster, I have come to the conclusion that they have the basis of a good organization. One of the problems of civil defense is that it is set up to take care of atomic attack. It was set up originally for that. Every place you go when the 48 governors meet, or if you meet with Val Peterson, you find that to a great extent there is a great deal of indifference to civil defense all over the Nation. Now suddenly you find that civil defense can do an extra job.

I think you have a chance to put some flesh and flood onto the bones of the civil-defense organization in the disaster field. I think they understand the workings of disaster. I think they could administer this in the disaster field and you could enlarge their functions to cover it.

You have thrown this question at me. I have not thought of it. There are many things you could do with it in the Treasury Department. But I am thinking of tying up the fund with the entire problems of emergencies and disaster relief. As long as you have a going agency, I would hope and all of us who are familiar with governments want as few bureaus and as few agencies as we can have; I would like to see it worked into an agency such as that. If you do, you may not have to have another one.

However, that is something you will have to wrestle with.

Senator Bush. Does your thinking on this contemplate that we should use the facilities of the insurance companies?

Governor RIBICOFF. Yes.
Senator Bush. And their agents?
Governor RIBICOFF. Yes.
Senator Bush. And their appraisers?
Governor RIBICOFF. Yes.
Senator Bush. And their loss adjusters?
Governor RIBICOFF. Yes.
Senator Bush. And all that sort of machinery!

Governor RIBICOFF. I would say everything should be done so as not to set up a large group of extra employees.

Senator Bush. In other words, use all of the existing machinery?

Governor RIBICOFF. Use all existing facilities. And even though the insurance companies in my opinion cannot undertake the writing of this insurance and the assuming of the loss, I am sure there is not an insurance company in America that would not make its facilities and its agencies available to the writing and the adjusting and the distribution of this form of insurance.

I think you are very fortunate in having this around. I know, knowing many insurance agents personally, that all of them have å sense of responsibility, and when they would write a fire-insurance

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policy on the grounds, or business of an individual or a company, they would say, “Look for another X dollars now you can take out disaster insurance and I think you ought to have this coverage.

You will find instead of having only a very, very limited number of people undertaking this coverage, I cannot imagine any responsible agent not selling his clients this disaster insurance.

You will find that the insurance-minded people of the United States will be taking out this coverage, and then you will have a large fund which will be distributed all over the United States of America.

Therefore, since you spread this coverage over the entire population, the fund could then stand on its own and take care of disaster, whether it was in Connecticut, Pennsylvania, Missouri, Mississippi, or in any other place. I think it is a very feasible and practical plan and I think it could be worked out, Senator.

Senator Bush. Mr. Chairman, one of the problems the committee has, which has come up in these hearings, is the question of how large a policy one might have. Some of these bills which have been discussed have a limitation in them. One has $250,000 as a limitation and another has $300,000. I wonder if you have given any thought to that, Governor?

Governor RIBICOFF. Yes; I have. I have read that testimony and it would be my hope you would not limit the size of the policy. Basically let me tell you why.

Let us say that there are many towns in Connecticut and all over that may have one main industry. This main industry may have assets worth $15 million. Let us say we have a disaster which destroys that industry. In destroying that industry you are destroying that community and are taking out part of the heart of a State.

If you are going to write insurance, you should be able, or a person should be able to insure up to the full value or the full fair value of his assets, just as he can take out a fire-insurance policy. I think it would be a great mistake to limit it because it does not make sense to me to limit it to $250,000. What good is that to a company that has assets worth $10 million and which might have 3,000 employees? That $250,000 is a drop in the bucket. All they can use it for is to clean up the debris.

I look at the insurance as not only a question of being able to give a person back his assets translated into money. If you limit it to that basis that would be tragic. I am looking at this insurance as a fund to allow the person who is hurt to build himself back to where he was before the damage hit him. In this way, to limit the policy would be very, very bad.

Senator Bush. Down in the Naugatuck Valley we have the Hershey Co., which you are familiar with, where the loss in the first flood was $1,800,000, and in the second flood another $500,000. So they would not have gotten a great deal of help, relatively speaking, from the $250,000.

Governor RIBICOFF. No. That is true of many companies. Senator Bush. Of course, we have the New Haven Railroad also,

Governor RIBICOFF. The New Haven Railroad is an example. It suffered a loss of $10 million. It seems to me if the New Haven Rail. road or the Hershey Co. have assets of $1 million or $10 million and want to take out a policy for those amounts, that the Government

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should be willing to write it for them. I think this insurance should protect the small-home owner also, as well as the large-business man.

Senator Bush. The only other question I have is this: There will be some argument about the question of retroactive indemnity in connection with this year's disasters. I will not ask you to comment on that unless you would like to.

Governor RIBICOFF. I would say there could not be a greater boon to the Connecticut economy if you could have Congress do this. I estimate there has been subtracted from the overall economy of the State of Connecticut over $200 million. It is going to take the State of Connecticut a long time to build up that economy. If it can be done retroactively, I certainly would urge it upon the Federal Government

, to do it.

Senator Bush. Of course, if we consider retroactive payments for 1955, we also have to remember that we had some very heavy losses here in 1954, due to floods on our coastline, and of course prior to that we had a flood disaster in 1951, when you were in the Congress. So one wonders how far back we can go.

Governor RIBICOFF. I do not know. I know you are raising practical difficulties, but let me say I have talked, as you have, with representatives of every part of the economic, social, labor and industrial life in our State. I have talked to those who have taken it on the chin twice. I think it can be expressed best in the words of Mr. Franklin of the Farrel-Birmingham Co., when he said, “Hell, I'm no quitter. We're not talking about moving.”

I used this phrase because it exemplifies the spirit of our State. But these people, I do not think, can afford to take another blow. It has been and it is going to be a tough and a long struggle. They are cleaning up and rebuilding again. But how many more blows can these people take? I think that the knowledge on the part of our people that they can get insurance to protect them against any future disaster would be the stimulus they would need, and it would be the assurance they would need, and it would give them the confidence and the knowledge that they were not working and building for nothing. It would be assuring them that nature would not be able to destroy the results of decades of effort by their working force, their stockholders, and their management and capital investment.

Although I realize you have great difficulty with retroactivity, I urge upon you, even if you cannot put that across, that it is absolutely important that we face up to in this Congress some type of disaster insurance or catastrophe fund for the future. That can be done and it must be done.

What you could do, I think, even though you might not do it retroactively, is date it back to January 1, or the opening of Congress, so that a person would pay premiums for that time.

No one knows when these disasters strike. You might have a great and unusual blizzard, which might cause an unusual type of loss, or you might have sand storms in certain sections of the country.

I am not looking for a program just for Connecticut, but I look at it as a national thing. It is not a local problem, and should not be a local program, and I think a great mistake would be made if we were to localize the problem, because it is bigger than Connecticut. It is a problem nationwide in scope, Senator Lehman.

Senator Busu. Another issue which has developed is the question of personal property coverage. Most of the bills that have been put in before and which are in now speak of real estate and real property, but exclude personal property from coverage. Have you given any thought to that question?

Governor RIBICOFF. Yes, sir; I have. I think it would be a great mistake to exclude personal property. After all, our insurance companies write personal property damage. What you have to keep in mind, Senator, is that sometimes the least valuable asset in a concern is the building and the shell. You go through our Connecticut manufacturing companies that have been hurt the way you have and I have, and you see that there are items of machinery there that are very valuable. One item can be worth $100,000 to $150,000. I have seen

. things like that. You might have a factory with bare walls that is worth $1 million and it will have machinery in it worth $10 million. It is not a question of the walls. I think personal property is just as important.

Keep in mind that there are many people who have all of their belongings in personal property. I would exclude automobiles, because they can be covered by our insurance companies, and they were. I would exclude every type of coverage that our private insurance companies can handle. In other words, I would not have the Government competing with our private insurance companies, but would sit down and analyze the policy of our insurance companies throughout America, and where they cover a loss I would not have the Government go into that type of loss.

Senator Bush. Have you not seen, as I have, many instances of families who had lost nothing except personal property?

Governor RIBICOFF. That is right.
Senator Bush. Where they were renting.
Governor RIBICOFF. That is right.

Senator Bush. So if they cannot insure their personal property, they cannot insure against the flood.

Governor RIBICOFF. That is right. In other words, I can go into any insurance company, and if I have personal property worth $3,000 I can buy a fire policy on my belongings. There is no reason why I

. should not be able to obtain catastrophe insurance on the same $3,000 worth of belongings. I think it would be a great mistake to limit the amount of coverage and confine it to real property. I think it would really be a great mistake.

Senator Bush. May I ask this, Governor? I have read very carefully the hearings that were held back in 1951, after the President had recommended a flood-insurance program to the Congress. That thing dragged on for a great many months. I believe you were in the Congress at that time. It ended up by the bill never getting out of committee.

I wonder if you could give us any suggestions that would help us avoid that kind of a result in connection with this?

Governor RIBICOFF. Yes, sir. Senator Bush. Is there anything we should do with the Members of Congress from all over the country? How can we dramatize our case so as to catch the imagination of these Members of Congress and

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