I have been told-I don't know whether it's true or not-that for something over $3 a hundred you can get wave-wash insurance, but I don't think the average person can afford to pay that. Therefore, he's in the same position as if the insurance wasn't available.

I don't have any concrete suggestions on a plan, but I do think that it's necessary to consider the fact that the program probably isn't one to cost the Government any more than it is already spending on rehabilitation after the disasters.

Mr. Bell, would you like to make a few remarks?

Mr. BELL. Gentlemen, it appears to me that Senator Lehman's bill has a proviso where the first $15,000 of a private home would be possibly covered under your Government insurance and above that figure I mean in connection with businesses--that the figure would be maybe $100,000. That appears to me to be very practical.

The small-business man or the small homeowner cannot borrow money unless he can get insurance to support his mortgages. The average small homeowner wouldn't require more than maybe about $15,000 loans.

So that apparently if they had available to them through the Government or some other source an insurance plan whereby it would cover their wave-wash and floods and so forth and if the premium could be low enough that they could afford to pay it, that is really what we need, particularly in our section of the country.

Senator LEHMAN. So that there may be no misunderstanding, I want to point out that this matter which we have discussed, the $15,000 on the homes and $100,000 for industrial business concerns governmentally-insured, is not in my bill or in any of the other bills that have been drafted for distribution to the committee. This was simply a suggestion that was made by some of the witnesses which appears to us to have sufficient attractiveness to justify a further study by the committee. That is all that I wanted to say.

Mr. BELL. I would like to go along with that line of thinking.
Senator LEHMAN. That is not a proposal in any of the bills.
Mr. BELL. I would like to go along with that line of thinking.
Senator LEHMAN. Did you want to say anything?

Mr. TILGHMAN. I think that would be very fine. Of course, I think we all know now that some type of insurance program will have to be worked out to safeguard the many people who are subject to these disasters. Whether it works where the Government carries the basic insurance and the companies carry the overriding insurance or vice versa I don't believe would make too much difference as long as it was worked out on a practical plan.

Senator LEHMAN. Mr. Dawes, to my regret I do not believe that there are any responsible officials of the State of South Carolina here today.

Mr. BELL. I am here merely as an individual.

Mr. HUSSEY. He is from the State legislature, Senator.
Mr. BELL. But I am here as an individual.

Senator LEHMAN. Have you any information as to the losses in the State of South Carolina during, let's say, the last three hurricanes, the last year, year and a quarter? I mean it has been testified that the losses in North Carolina exceeded $300 million of direct losses. That did not include indirect, as I understand it. Have you

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any information with some degree of authority with regard to the losses in South Carolina?

Mr. BELL. No, sir, I do not have with me. The State does have that information, but I don't have it with me.

Senator LEHMAN. Mr. McKenna, will you get that information from the State officials?

Mr. MCKENNA. Yes, sir. I will request it.

Senator LEHMAN. So that we have it in the record.

(The information requested had not been received at the time of going to press.)

Mr. HUSSEY. Senator, may I state I was on the board of estimate of damages to our beaches. We have 9 miles of beaches which are 15 miles north of Myrtle Beach. Our estimate was $27 million in that 9 miles on the coastal area.

In that area we had 1,400 homes totally destroyed and approximately 2,000 homes from 40 percent to 80 percent destroyed. When they put those homes back, when the people saw that they could go in and salvage something of the investment where the cost of replacing the home wasn't as great as the loss probably they would have by leaving them there, they have gone back and done so.

But we have been unable to get these people to go back and build too many homes on the oceanfront due to the fact-and I'm not an insurance man-the insurance companies, as I understand it, are not too anxious to write the insurance.

I know of a hotel, for example, which has gone up, and it was practically completed before the poor darky found out he couldn't get insurance. It was Government money put it back.

I have talked to I'll say several hundred, because I think I know everybody in that area, and being in the lumber business and so forth I get to contact most of them. If those fellows could get insurance to rebuild, our beaches would go back.

Ten years ago our beaches were just a little community. In the summertime we have a population of about 45,000, in the winter about 3,500. Our entire area through there, of course, depends on the beach-the resorts and people coming in.

We have one community there, Cherry Grove Beach, which has about 600 permanent residents. When the storm was over, we had five houses standing that were not damaged; 5 houses. It just played the dickens.

Those people and I-had considerable property that was lost. I lost my home. I know what it is, Senator, to have a $22,000 loss and have insurance companies give you $4,800.

I do not say that the insurance companies did not pay me what I was supposed to get, because the water really took it off. We're all set up now, but the water got it, and it took my car and it took my boat.

But we really need something, sir, to protect us that way. I thought and I think 90 percent of the people on the beaches that had insurance thought-that this insurance that we were carrying, which is called extended coverage, protected them against everything. When I found out my home was gone I said, "Oh, well, I'm covered." But, to my sorrow, I wasn't.

I don't know how the Government would work it out, but if only it could be insured so we'd know we could put those houses up for rent, those apartments, those business buildings I know one man on Ocean Drive Beach who was worth $200,000 the day before the storm. After the storm we had to loan him $5 to get groceries. That's a fact, sir. I can show you more than one. It was terrible. They thought they were covered, and they weren't. If there is some way in the world that the little fellow like that could be protected it would be mighty fine.

Thank you, sir.

Senator LEHMAN. Commissioner Gold, I just want to ask you one question. Mr. Dawes made the statement, although he qualified it, that you could get what he called wave insurance at $3 a hundred. Is there much of that written, and if so, at what rate?

Mr. GOLD. There was some, sir, written through Lloyds of London and nonadmitted companies-that is, companies that are not licensed to do business within the State. We have a provision in North Carolina law whereby a nonadmitted company can place business on risks within the State when no company admitted to do business here will take the risk. There was some business on the North Carolina coast written mainly on piers, if I

Senator LEHMAN. On what?

Mr. GOLD. On piers. As to the rate, I understand it has gone up since the hurricanes.

Senator LEHMAN. I am told no American companies write it or have written it.

Mr. GOLD. They could. They don't choose to.

Senator LEHMAN. I know there were some policies written by Lloyds of London, because they will write on anything.

Mr. GOLD. Yes, sir.

Senator LEHMAN. I don't know what rate that was. But I am told that, whatever the rate was a year ago, it is considerably higher

now.

Mr. GOLD. That is true, sir. I think that some of the companies. have tried wave-wash insurance on an experimental basis. I believe it was in New York and Rhode Island or somewhere up there. They lost considerable and stopped writing it. That is the information that I have received.

Senator LEHMAN. I imagine the situation is very much the same on the coast of South Carolina and North Carolina as it is on the coast of New Jersey and the coast of Connecticut and Rhode Island and some parts of Massachusetts.

Mr. GOLD. I think the situation is parallel practically.
Senator LEHMAN. I think it is very much the same.

Mr. HUSSEY. Mr. Tilghman owns a pier down there and he writes. insurance. He can probably tell you about that pier insurance.

Mr. TILGHMAN. We have insured with Lloyds of London on our pier, and I have written it on almost all the other piers in South Carolina. The rate with Lloyds for fire, extended coverage, and wavewash runs I think it's $5 a hundred for a wooden pier and $4 a hundred for a steel pier. You get a slight reduction for a 3-year policy. That gives you fire, extended coverage, and wave-wash insurance.

Senator LEHMAN. Does that include wind damage too?

Mr. TILGHMAN. Yes, sir, that includes wind.

Senator LEHMAN. And waves?

Mr. TILGHMAN. Waves, riots, explosion, vandalism, anything just about you can think of. But, of course, that is a right high rate. Senator LEHMAN. It's $5 a hundred on wooden piers and 4 on steel piers?

Mr. TILGHMAN. Yes, and the latest rate I believe on the last 1 or 2 piers that we wrote went up to 6 percent, or almost 6 percent. Senator LEHMAN. Is that Lloyds?

Mr. TILGHMAN. Yes, sir. That is with Lloyds of London.

On homes Lloyds will not write a small dwelling. They don't like to take a risk of less than $25,000. I think that is because of all the rigmarole you have to go through to reach Lloyds from here. You have to go through about 10 different intermediaries.

On homes and dwellings the domestic companies are just canceling out on many locations now. They will write fire insurance, but they won't write any wind coverage or anything that has to do with the possibilities of a misunderstanding.

Senator LEHMAN. I want to point out something that I have pointed out at a great many of the hearings, something that has made me more eager or one of the reasons why I am eager to do something on this thing-one of the very urgent reasons.

It seems to me the present situation places an unreasonable penalty on the little fellow. The man who has a $50,000 or $100,000 home in all probability has a pretty good income, and if he loses that home or if the home is seriously damaged he can write it off against his income tax, and it costs him very little. The same is true when damage occurs to a large and profitable industrial concern. They usually can write off a good part in their corporation tax, which saves them 52 percent, whereas the little fellow can't do that.

Mr. TILGHMAN. That is true, sir.

Senator LEHMAN. So I think that is something that it is reasonable to bring to the attention of people all over the country and certain Members of Congress.

Mr. BELL. Senator, I know of several cases where individuals have applied for loans with which to build homes or rental property and those applications have been approved provided they could supply wave-wash insurance. Well, that immediately eliminates the small man from obtaining his money to build with.

Senator LEHMAN. Are these private loans you are talking about? Mr. BELL. No, sir; they are insurance company loans.

Senator LEHMAN. Have many of them taken out or applied for loans from the Small Business Administration?

Mr. HUSSEY. Senator, you couldn't get those loans unless you had a loss in the last storms, in one of the floods. You're not eligible unless you had a loss from either Hazel, Diane, or one of those others. Senator LEHMAN. I don't get that. Why should you be eligible unless you had a loss? I mean for a loan.

Mr. HUSSEY. Well, you shouldn't.

Mr. DAWES. Senator, I was appointed counsel to represent the Small Business Administration in the loans that they made in Horry County, or, rather, some part of them. There were 2 or 3 other attorneys who handled some of them. The SBA did a wonderful job down there. They made loans to any person who could show a loss as

a result of the storm. In general that is true. They wouldn't turn anybody down if his credit had ever been any good or it looked like it ever might be any good in the future.

But if we had had the right kind of insurance at that time, the Government wouldn't have had to get in the loan business. People would have gotten their money from the insurance companies.

I'd like to say this: As it stands now, we're being hurt by not having wave-wash insurance. But if we have another storm like Hazel before we get it, that whole coastal area down there is going to become a desert. We'll all have to leave-if we don't get drowned. Senator LEHMAN. Do you have any questions, Mr. Edelstein? Mr. EDELSTEIN. No.

Senator LEHMAN. Mr. Rogers?

Mr. ROGERS. No, I don't believe so.

Senator LEHMAN. Mr. McKenna?

Mr. MCKENNA. I have one, Mr. Chairman. I would appreciate the comment of any of these gentlemen on this statement. It has been said that even if we were to provide insurance, either through the private companies or through the Government, against natural disaster, mainly against floods, those who chose not to take out the insurance would still press claims against the Government for relief in the event they were caught in the disaster. I wonder what your impression is on that particular comment.

Mr. TILGHMAN. It seems to me they wouldn't have very much of a leg to stand on if the protection is offered them beforehand and then if they don't choose to take it I think it would take a mighty lot of brass to ask for it later.

Mr. MCKENNA. Those who put forward the argument state if the premium is not based actuarily and they get the benefit of a low premium that those not carrying the insurance will say, "Well, my neighbor didn't really pay for this insurance anyway. Therefore, I'm entitled to some benefit out of the program, too."

Mr. HUSSEY. I believe our people would be willing to pay on the coast down there a higher premium in order to get protection, but there is a certain point beyond which we can't go.

Mr. MCKENNA. Do you other gentlemen feel the same way about that argument?

Mr. DAWES. Yes.

Mr. BELL. I think the citizens in our area would pay a reasonable rate-in other words, up to the point where it becomes prohibitive. I don't think they expect the Government to

Mr. TILGHMAN. I think they will expect if there is any insurance provided they are going to have to pay for it.

Senator LEHMAN. I just want to have this thing clear. I don't see why these people would have any more ground on which to ask for reimbursement from the Government than they have now, and certainly the Government has never recognized any claims of that sort, so far as I know.

Mr. MCKENNA. That is true, Mr. Chairman, for private property. However, the argument has been made that they would come in and continue to press claims for relief on the theory that the Government if it embarked on a subsidized insurance program would then owe something to people who didn't choose to participate in the program