THE insurance industry is bracing for huge losses as a result of hurricane Hugo's rampage through South and North Carolina. Although most insurance companies won't know the exact size of their losses for at least a week, industry executives believe the loss claims will be substantial. ``It's going to be high,'' says Harvey Seymour, a spokesman for the Insurance Industry Institute.
``We anticipate an awful lot of claims and the damage will be in the millions,'' says Greg Rossiter, a spokesman for Allstate Insurance Company, the second largest insurer in South Carolina. Lou Fabro, a spokesman for Nationwide Insurance Company, the third largest insurer in South Carolina, describes the potential loss as ``one of the biggest.''
However, executives are not certain the damage will exceed the havoc caused by hurricane Frederic, which left a swath from the Gulf states to New York in 1979. Frederic cost the insurers $752,510,000. ``It [South Carolina] is a relatively less populated area ... it is mainly residential and rural,'' says Karl Maser, of the Hartford Insurance Group.
The extent of the losses will become clearer to insurers once communications are restored and agents can respond to policyholders. Telephone service was knocked out in large parts of North and South Carolina.
Although the insurance companies were responding quickly, they acknowledged there would be delays. Some agents had been evacuated and were not sure of the state of their records.
Rossiter of Allstate says the company's regional processing center in Charlotte, N.C., sustained damage. And of course some areas, such as the barrier islands, were completely cut off. It could be days before the losses are evaluated.
In fact, the insurance companies have yet to figure out their losses in Puerto Rico, where Hugo left 10,000 homeless. Nationwide Insurance expects heavy losses on the island. But Mr. Fabro says, ``The losses were not as great as we thought they would be initially.'' The company, in fact, deferred plans to send six bilingual adjusters to Puerto Rico, because its staff on the island could handle the workload. Typical of many companies, the Home Insurance Company said it still did not have good communications with the island through the weekend.
Many of the large insurance companies sent special teams of agents, adjusters, and clerks to help expedite the settlement process. These teams, nicknamed ``cat'' teams (for catastrophe), operate out of mobile offices as well as already-established offices. ``They will be writing checks on the spot,'' says Mr. Maser of Hartford's own team.
The Aetna Insurance Company in Hartford says the company has established ``cat'' teams in Columbia, S.C., Savannah, Ga., and Charlotte, N.C. ``They will be in temporary offices armed with lap-top computers and check books and the authority to write checks on the spot,'' says Steve Wasdick, an Aetna spokesman.
Within hours after Hugo stormed ashore at Charleston, S.C., the companies began receiving calls from policyholders. Nationwide, for example, had placed newspaper ads directing those seeking settlements to call a toll-free phone number in Columbus, Ohio, its headquarters. Within eight hours of the storm crashing ashore, it received 70 phone calls.
Adjusters and insurance executives urged policyholders to make temporary repairs as quickly as possible. The plastic sheeting used to cover a hole in the roof is reimbursable, says Tim Dove, regional manager of the Insurance Institute in Washington. After making temporary repairs, Mr. Dove says, individuals should take their insurance policy with them to their agent or the company's ``cat'' team.
Although the bulk of the losses will be household damage from wind or wind-driven rain, there will also be a lot of auto claims. Highways leading from the coast were backed up with traffic prior to Hugo's arrival. ``There were a lot of fender benders and accidents,'' Rossiter says.
Claims for flood damage will have to be filed with the government, which is responsible for the flood insurance program. To get flood insurance, a homeowner would have had to apply before last week, because it takes five working days to process applications.
The government's potential liability for claims related to flood damage could be high. In the county that includes Charleston, it insured 19,000 policyholders with a potential liability of $1.9 billion. In the whole state it insured 45,000 policyholders with a potential liability of $5 billion.
``We don't know what the losses will be but it looks like a lot of wind damage,'' says Jim Taylor, a spokesman for FEMA.
The 10 Most Costly Hurricanes hurricane: estimated loss: Frederic $752.5 million Betsy $715.0 " Alicia $675.5 " Elena $543.3 " Gloria $418.8 " Celia $309.9 " Camille $225.0 " Iwa $137.0 " Carol $129.7 " David $122.1 " Source: Insurance Information Institute; JOHN VAN PELT - STAFF