There are a few things I would like to submit for the record, and one is an editorial, and I would just right now like to read one paragraph. I wonder whether the National Association of Insurance Agents have made a complete survey.

They say:

The National Association of Insurance Agents' executive committee has just issued a report which forecasts the failure of disaster insurance to win favorable legislation in the next Congress.

Senator LEHMAN. Will you let me see that?

Mr. ROGERS. What newspaper is that from?

Mr. FARRELL. The Wilmington Morning News.

Senator LEHMAN. We will place this editorial in the record. (The newspaper editorial above referred to follows:)

[From the Wilmington (N. C.) News, Friday, December 16, 1955]

TIME TO BE CONVINCING

The subject of catastrophe insurance is in the news these days which will have particular interest for local and southeastern North Carolina residents.

Firstly, the Senate Banking and Currency Committee will hold hearings in Raleight next Monday on the subject, and this area is fortunate in that it will be represented by several delegates who have accepted invitations to appear before the group. The delegates are well-qualified and can be expected to present their facts competently and with authority.

The need for convincing facts, rather than opinions, is of utmost importance. We could hardly expect a congressional committee to offer any encouragement, except on a solid foundation of facts and figures.

Secondly, the National Association of Insurance Agents' executive committee has just issued a report which forecasts the failure of disaster insurance to win favorable legislation in the next Congress.

Their view is based on findings from the field, which, it says reveals a countrywide lack of interest in a disaster insurance program. Even though this represents the insurance industry's view, it is still startling. Here is a portion of the report dealing with the prediction:

"One factor entering into the lack of optimism for final favorable congressional action is simply a lack of countrywide interest (amounting to almost apathy) for disaster insurance and more particularly to flood insurance outside the stricken areas."

How true this may be is debatable. While it is true that the Atlantic Coast States currently may have a stronger interest in catastrophe insurance, the years have shown that disaster respects no specific region in this country. Not many if any, of the 48 States have escaped the unwelcome visits of the forces of nature. It is entirely possible that the experiences and knowledge of the havoc wreaked by these forces will influence congressional thinking, no matter what section of the Nation Congressmen represent.

The NAIA's position on the forthcoming insurance problem appears evident by its reference to it as "a relief program called 'insurance'.

If there is a trend around the Nation toward apathy for such legislation, it should be discussed at the Raleigh hearing. The NAIA's report should be an added incentive for convincing arguments before the committee.

Mr. FARRELL. I listened to the testimony this morning, and there are 2 or 3 things, if I may, that I may be able to clear up.

These gentlemen from South Carolina brought it up again. That had to do with the Small Business Administration. I don't know what their rules and regulations were in South Carolina, but I definitely know what they were in making loans in North Carolina for this reason: When the regional office at Richmond came in to Wilmington, I assisted them to set up their offices in the customhouse. Again,

Long Beach, N. C., before the storm. The 15 miles of beach had over 300 homes and summer residences. Aerial photo above shows a small portion of the strand, the remainder of which was left in the same state of destruction.

The same portion of Long Beach after the storm. Only five buildings remained on their original foundations, the smaller ones being left back toward woodlands while the large buildings were completely destroyed. "X" in this picture marks where curve in highway had been.

immediately following Connie, I helped them again set up their offices in the Chamber of Commerce Building.

I have had the opportunity to assist a number of applicants make out their applications.

Only those people who were either in business or pier operators or owners and operators of cottages, apartments on a commercial basis were eligible for loans. The individual homeowner or cottage owner was not eligible.

Whether they have liberalized their ruling so far as New England, New Jersey, and Pennsylvania are concerned I don't know, but that is the way it happened in North Carolina.

There is a very serious economic factor involved in this present status of wave-wash or water-wave insurance.

I would like to also have put in the record a statement signed by me which is a copy of a letter addressed to a realtor-builder at one of our beach resorts. His name is here but I will omit mentioning it. I have purposely omitted the name of the signer of this letter, who happens to be president of one of the building and loan associations in Wilmington, N. C.

The copy of this letter which I have signed and put our seal on and certified to reads as follows, because I copied it word for word from the original. It says:

Due to the recent hurricanes and to the attitudes being taken by some insurance companies, we cannot, at the present time, make any commitments whatsoever on beach property.

We appreciate your application and you can rest assured that if and when we consider beach loans, we will certainly consider yours because we enjoyed doing business with you.

I have talked to a number of building contractors in southeastern North Carolina of late, and the construction of new homes and new buildings is stymied. I am sure that Mayor Middleton and the other gentlemen here who lived right through these hurricanes will tell you that it's almost impossible for new homes to be built anywhere near the beach area or anywhere within 6 miles of the ocean.

Further than that, I would like to read another letter from a former State representative of the General Assembly of North Carolina who was forced into bankruptcy because of the series of hurricanes since Hazel. I will read it fast.

This is addressed to Senator Scott. I do happen to know that Mr. Gold received a copy, and so did Senator Ervin.

DEAR SENATOR: Having appeared before a committee of Senators holding a hearing upon hurricane disaster in Raleigh, N. C., on September 28, 1955, and learning that a bill would probably be introduced at the coming session of Congress to create some insurance protection against disaster caused by water, as well as wind, I can speak for the people as one who has received a crushing blow by Hurricane Hazel and again by Connie and Diane.

To explain to you why I believe that this insurance should be offered either by the Federal Government or by the insurance companies, I offer the following explanations.

On October 14, 1955, I owned at Carolina Beach, N. C., property known as Kermon's Cottages, consisting of 10 individual 5-room cottages, completely furnished, operating at summer seasonal and winter rates, and being built on block 42A, in the town of Carolina Beach, on Route 421, facing Carolina Beach or Parmlee Lake, and within 200 to 400 feet of the Atlantic Ocean. These cottages and the land had a value of more than $50,000 upon which I owed $18,500. Then came the destructive Hurricane Hazel on October 15, 1954, causing damages to my cottages and furnishings at Carolina Beach, at an estimated cost

of $26,800, and damage to my home and pier at Harbor Island at Wrightsville Beach, of $3,000.

I began to replace my damages at Carolina Beach by employing workmen and contractors and by doing part of the work myself and giving constant supervision of the work, and completed same at a cost of $19,000. At which time, I had received from the insurance companies as settlement the sum of $7,200 for damages not caused by water, the balance I borrowed on notes endorsed by my wife and myself, giving a mortgage on my home at Harbor Island for $2,500, and by using my credit. I finished the work about June 15, 1955. My cottages had again a value of $50,000, and I was further in debt of approximately $12,000, but felt I could, with good business, take up this loss within 4 years.

On August 11, 1955, came the Hurricane Connie and repeated the devastating damage to my Carolina Beach property. Following within a week, Hurricane Diane came, both causing an estimated damage to the cottages and furnishings of approximately $23,000.

The savings and loan association has foreclosed and the property was bid in at $15,000. So my loss by reason of these disasters will amount to more than $40,000, which could have been avoided if there had been disaster insurance. I carried on my property at Carolina Beach insurance in the sum of $29,000. To solve the problem, the United States Government should offer a disaster insurance, and require every one to carry same if the property is insured, and this insurance to cover only the damages not covered by their insurance with the insurance companies.

Or the insurance companies should change their standard policies to cover water damages, and that the insurance companies should permit an increase in the extended coverage premiums to meet the cost over a period of years according to their experience and write all coverage under one policy. Realizing that the extended coverage premiums are too low by reason of the recent hurricane damages, however, in the past 40 years preceding the Hurricane Hazel, the damages have been small along the Carolina coast, but this coverage would have to be national in its effect so that people in all parts of the Nation would be covered, and the extended coverage receipts be earmarked by the companies for the purpose for which it is intended, after charging against same the cost of operation and the same be exempted from corporation profit taxes. Therefore, I believe that the people would welcome disaster insurance by our Government or private companies.

Senator LEHMAN. Sir, may I ask you one question?

Mr. FARRELL. Yes, sir.

Senator LEHMAN. In reading that letter or memorandum, you referred to a Senate hearing in Raleigh in September. I was away at that time so I can't speak authoritatively, but it comes as a great surprise to me to know that there was a Senate hearing in Raleigh in September. I didn't know about that.

Mr. FARRELL. Yes; there was a hearing here of the subcommittee of the House Public Works Committee.

Senator LEHMAN. Not the Senate?

Mr. FARRELL. Not the Senate. He made a mistake in that.

Senator LEHMAN. I thought that might be a State senate hearing. Mr. FARRELL. No. He has made a mistake in there. It was a House subcommittee.

Senator LEHMAN. That was on flood control, not on disaster insurance?

Mr. FARRELL. That's right. But many of these side issues came up in there, the same as are coming up today.

Senator LEHMAN, I was quite sure there was no hearing of a senatorial committee.

Mr. FARRELL. Senator, those who have lived through these hurricanes, although we're only talking about 4, have lived through 6 of them in 14 months. Carol and Edna didn't do too much damage, although they did some, but not enough to be declared disaster areas.