FEDERAL DISASTER INSURANCE TUESDAY, FEBRUARY 21, 1956 UNITED STATES SENATE, COMMITTEE ON BANKING AND CURRENCY, SUBCOMMITTEE ON SECURITIES, Washington, D. C. The subcommittee met, pursuant to recess, in room 301, Senate Office Building, at 10:10 a. m., Senator Herbert H. Lehman (chairman of the subcommittee) presiding. Present: Senators Lehman, Robertson, Ives, and Bush. Our first witness is Senator Kuchel of California. We are very glad you are here, Senator. STATEMENT OF THOMAS H. KUCHEL, A UNITED STATES SENATOR FROM THE STATE OF CALIFORNIA Senator KUCHEL. Thank you very much, Mr. Chairman. Senator LEHMAN. This is of great interest. Senator KUCHEL. Mr. Chairman, in the state of the Union message, the President of the United States said: A modern community is a complex combination of skills, specialized buildings, machines, communications, and homes. Most importantly, it involves human lives. Disaster in many forms-by flood, frost, high winds, for instance-can destroy on a massive scale in a few hours the labor of many years. Through the past 3 years, the administration has repeatedly moved into action wherever disaster struck. The extent of State participation in relief activities, however, has been far from uniform and in many cases has been either inadequate or nonexistent. Disaster assistance legislation requires overhauling, and an experimental program of flood-damage indemnity should be undertaken. The administration will make detailed recommendations on this subject. On January 5, Mr. Chairman, I was delighted to join with the senior Senator from Connecticut, Mr. Bush, and others in introducing a series of bills, one of which provided for disaster insurance legislation. That legislation confined disasters to be covered by indemnity legislation to floods. At that time I said in the Senate: The Senator from Connecticut is rightly concerned with floods. So am I. But I am also going to ask this Congress to include in disaster insurance legislation provision for the people in this country to buy, upon the same basis that they would purchase flood insurance, insurance against the tragedies which the people of my State have suffered from time to time when earthquakes have destroyed great communities and large areas in California and elsewhere in the West. After almost every widespread disaster caused by nature in this country, the problem of insuring the American people against serious economic losses through unpreventable and uncontrollable forces has caused study and discussion. Unfortunately, there never has been any follow through resulting in creation of a system which would enable our Nation to obtain coverage in advance of catastrophes. It is very heartening to know that this subcommittee and a companion group in the House are working seriously on legislation proposed to meet this desperate need. The urgency of affording financial protection against the ravages of floods now seems to be generally recognized. This has come about for several reasons, including the mushroom growth of communities in all sections of our country, the seeming change in the pattern of devastating hurricanes, and the realization that flood-prevention and stream-control works cannot be constructed to meet every possible eventuality. I am extremely desirous to participate in the enactment of a law that will fill the gap in our comprehensive system of insurance against accidents to persons and property. The people of the United States have devised through the years a most admirable and commendable insurance system which takes care of almost every conceivable variety of calculated risk. The glaring weakness, which this committee is trying to correct, is in protection against forces of nature. Recurrently, different parts of the United States have sustained tragic and great losses through floods. The devastation resulting from torrential downpours has not been confined to any area, as was so shockingly clear last year when hurricanes and tropical storms ravaged the Atlantic coast and unprecedented unseasonable storms smashed the Pacific coast. In coming here this morning, I have two purposes, Mr. Chairman. I want to urge this subcommittee to write and recommend to the Senate a comprehensive bill providing protection against future flood losses, and I wish to ask specifically that such legislation be broad enough to cover another and often more terrible type of natural catastrophe, earthquakes. While I have seen personally the devastation which can be wrought by rampaging rivers and streams, I desire to suggest that the extent of losses from floods often can be reduced through advance warnings. It is physically possible to track storms, measure rainfall, and predict heavy runoff, although it is not practicable to evacuate entirely areas where floods may strike. The threat of earthquake damage, Mr. Chairman, cannot, however, be anticipated in any degree. Instead of being a visible menace such as rain and snow, the shudders and thrusts and twists of the earth which often destroy substantial buildings and break highways, water and sewer systems, power and communications lines, and other works strike without the least or slightest warning. The science of seismology has not yet reached the point where any countermeasures can be taken except to adopt, to apply, and to enforce building codes calling for extraordinary techniques and generally increased expenditures in areas where history shows earthquakes are most likely to occur. The area of the United States from which I come is, of course, one of the most active earthquake zones on the face of the globe. My home State has suffered no less than 25 destructive quakes in the past 50 years. The records of the United States Coast and Geodetic Sur vey, which admittedly are neither complete nor up to date, show California suffered between 1810 and 1948 a total of 15 shocks officially classed as "great." There were between 1800 and 1948 another 36 termed "very strong." The official scientific classification is not, however, a true indication of the damaging effect. The Long Beach quake of 1933, which I saw, Mr. Chairman, is described as "not of major magnitude" but is officially cataloged, nevertheless, as "the second most destructive shock" in American history. Damage was officially estimated at $40 million and 115 lives were lost. Since records have been kept, hardly a part of the State of California has escaped the effect of contortions of the earth. The Coast and Geodetic Survey records show quakes have been felt from San Diego and the Mexican border to the Oregon line. I want to mention just a few of the more damaging tremors which are on record. Less than 4 years ago, in the summer of 1952, damage of at least $50 million was done in the area around Bakersfield in Kern County by what is termed the largest earthquake since the tragedy at San Francisco, the quake and fire of 1906. Damage estimated at $25 million was done by shakes in the Olympia-Tacoma area of neighboring Washington in 1949. Extensive damage, especially to irrigation and reclamation works, was sustained when a series of earthquakes in the summer of 1954 hit upward of 130,000 square miles of neighboring Nevada. During the past several months shudder after shudder has stirred the Imperial Valley. And just last week when I was in Los Angeles we experienced several minor quakes which, however, did trifling damage. My desire to obtain insurance protection against earthquake damage naturally stems from the fact that so much of my own State lies along one of the greatest and best known faults in the entire face of the earth. However, I wish to emphasize that the sleeping giant in the bowels of this planet can vent his wrath almost anywhere in our Nation. I am sure members of this subcommittee, Mr. Chairman, will be as impressed as I was to find that the Coast and Geodetic Survey has recorded earthquakes in 44 separate States of the Union. At least one measurable quake has occurred in every State represented by members of your subcommittee. The greatest number shook the State of the chairman. New York has had 16 recorded quakes between 1900 and 1946, and 1 in 1944 was felt over 175,000 square miles. Fortunately for our Nation, the bulk of earth shudders are not severe and the overwhelming number of heavy quakes has been observed in relatively unpopulated sections. Cases of minor damage are common, generally limited to broken glass, cracked walls, tumbled dishes and groceries. Furthermore, scientists and engineers have increased their knowledge of the nature of shocks and quivers of the earth and observed the resistance of various building materials and different construction methods, so that the danger is constantly being reduced. California, for example, as a result of the several earthquakes surrounding the Long Beach disaster, by law provided for building restrictions with respect particularly to public buildings and especially to the new construction of schoolhouses in California, to cope with that problem. However, just as New England and New York went untouched by » hurricane for over a century and now seem to be in the direct path of recurrent major disturbances from the tropics, damage from earthquakes is entirely possible-on the basis of official records-at almost any point in the entire country. There is no way of estimating what damage would have been done, how much loss would have been sustained, if some city on the Atlantic seaboard had been hit by the contortions of the earth in 1925 instead of Santa Barbara and Ventura 3,000 miles across the continent. In view of the recorded seismological history-a total of 390 tabulated by the Coast and Geodetic Survey in the first 4612 years of this century-I submit there is every reason to include earthquakes in the list of natural disasters covered in the insurance legislation your subcommittee is endeavoring to perfect. I am quite aware, Mr. Chairman, that you have included in the legislation which bears your name before this committee the subject of earthquakes as one to be covered in disaster legislation. I make this statement particularly because at the time that I joined my friend from Connecticut, who was primarily interested in the continuing tragedy of hurricanes and floods, no mention was made of earthquakes in his legislation. I appear here, I repeat, for two purposes-to pledge to this committee that any type of sound legislation permitting disaster insurance for all kinds of hazards from the elements will receive my unstinting support, and secondly and particularly with respect to that legislation I do want the subject of earthquakes considered and I hope included in any legislation which this committee will recommend to the Senate floor. Thank you. Senator LEHMAN. Thank you very much, Senator. I am sure you are aware of the fact that in the original draft of a bill which I submitted to the committee I included a coverage on many natural disasters. As a matter of fact, I went considerably further, and in that first draft I included manmade disasters. As far as I know, there is nothing now in any of the bills that covers natural disasters beyond flood and the effect of tidal waters on property, things of that sort, except that in my bill-and I am not sure whether that is contained in Senator Bush's bill or not-I do provide for coverage against flood damage and then direct the Administrator to make a study and report back to Congress within a reasonable time with regard to the practicability and the desirability of coverage on other natural disasters. We recognize that other natural disasters do impose a very great obligation on the Congress to study this situation carefully with the expectation that at some time the number of natural disasters which are covered by the bill would be increased. But the reason we have limited it so far, the actual language, to flood insurance is because we felt that was the most urgent, the most current matter. We did not want to complicate it by consideration of further coverage on further natural disasters. I do not know whether Senator Bush's bill goes further than my bill. I do not believe it does, however. Senator BUSH. No. Senator IVES. Mr. Chairman? Senator LEHMAN. May I just finish one further question? Is earthquake insurance available now? Senator KUCHEL. No; it is not. Senator LEHMAN. Commercially? Senator KUCHEL. No. Senator LEHMAN. No insurance companies as far as you know write it, at any rate? Senator KUCHEL. That is correct. Senator IVES. Well, my impression, Mr. Chairman, is that you can can get earthquake insurance at a price. That is the one thing I was going to bring out. However, I want to point this out, Mr. Chairman: I am very glad that the legislation we have so far has pinpointed on floods. I strongly favor legislation of that type now. It is not available, we all know, from a commercial source. I think if we keep it pinpointed on one thing, we may get some legislation. But if we spread out and include every type of disaster known to man, we will not get anywhere or anything. That is the comment I had to make. Senator LEHMAN. That is my feeling too. Senator Bush. Senator BUSH. Mr. Chairman, if I could have the Senator's attention on this, of course the Senator is one of the sponsors of our bill S. 2862, and I am awfully glad he is. He certainly has good reason to be with the disasters they have had out there due to the floods in the last few months particularly. But on the question of earthquakes, I would like to quote from the hearings which our committee held. On page 516 it speaks of insurance customarily written by insurance companies covering natural disasters, and it says: Protection from the peril of earthquake may be insured by specific earthquake 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. Then in our staff study on page 247, on the question of Federal disaster insurance, we find this statement at the top of page 247: During 1954 the company had one earthquake claim resulting in a loss of $1,532. It is estimated by the United States Coast and Geodetic Survey that about $1 billion of earthquake insurance is presently in force in California. I mention those things to show why we did not put earthquake insurance into the bill, because it does appear as though there is private coverage available for earthquakes. Senator IVES. Mr. Chairman, may I interrupt the Senator from Connecticut at this point? Senator BUSH. I yield. Senator IVES. Thank you. On page 518 of the hearings-I think that is the same volume you are using the rates are quoted. For earthquake insurance in California on frame dwellings it is 20 cents in one part of California and 15 cents in another part. That is per hundred. That is on frame dwellings. On brick mercantile buildings it is 40 cents in one portion of California-the counties are listed-and in another part, in the rest of California, it is 30 cents. So I think you will find, Senator Kuchel, that there is available at the present time this type of coverage. 69096-56-pt. 2-10 |