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Volume 27, Issue 3

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Hugo Bulldozes Insured Losses To The Billions

Nearly three weeks have passed since that ‘tempestuous rage’ Hurricane Hugo slammed through Charleston, S.C. At the stroke of midnight on September 21, Hugo unleashed 135 m.p.h. winds, pushing a 12 to 17 foot wall of water that threatened to destroy everything in its path. Hurricane Hugo caused $3,984 million in insured losses, making it the costliest hurricane on record, according to estimates provided by C.E. Hermanson, vice president of Property Claim Services Division of the New York City-based American Insurance Service Group.

The PCS estimates includes destruction inflicted in North Carolina, South Carolina, Virginia, and Georgia, as well as the prior havoc it caused in the Caribbean Islands of Antigua, Barbados, Guadalupe, Monteserrat and portions of the U.S. Virgin Islands and Puerto Rico.

Losses

The figure includes losses from personal property damage, damage to building and commerce, and damage to motor vehicles, boats, and various other insured expenses. It excludes damage covered by the National Flood Insurance Program of the Federal Insurance Administration. According to spokesperson, Samuel Schiff of PCS, flood losses covered by NFIP are estimated at an additional $500 million. Not included in the PCS estimate are losses involving marine and harbor facilities, aircraft, utility equipment, or public property, including roads and bridges, according to PCS manager, William Gilluly.

When a catastrophe strikes with such magnitude as Hugo did, and the insured losses are expected to exceed $5 million—PCS assigned Catastrophe Serial Number 18 to insured losses from Hurricane Hugo. That includes damage inflicted on the Virgin Islands and Puerto Rico, as well as in the Carolinas, Georgia and Virginia.

Insurance Claims

According to Hermanson, insurance industry claims adjusters and specially trained catastrophe teams arrived in the affected areas as quickly as possible to respond immediately in handling the huge number of claims arising from Hugo. “The insurance adjusters began to settle claims immediately, making advance payments and providing assistance to storm victims in the recovery process,” said Hermanson. “Our best information is that the industry has an adequate number of adjusters in the area to cope with the situation as it now stands. As the need arises, additional experienced adjusters will be brought into the area.”

Fema

PCS is working in conjunction with the Federal Emergency Management Agency, the state insurance commissioner’s office, and the governor’s office to coordinate insurance company activities with the general recovery effort.

Estimated Damages

The heaviest insured damage, estimated at $2,553 million, occurred in South Carolina. According to PCS, hardest hit were the four coastal counties of Charleston, Horry, Georgetown and Berkely, where damage was estimated at $1.52 billion. Damage in North Carolina was estimated at $275 million, while insured losses in Georgia and Virginia were estimated at $1 million and $5 million respectively. In Puerto Rico, insured property losses were estimated at $700 million, and in the Virgin Islands losses were estimated at $450 million.

As a result of Hurricane Hugo, catastrophe losses through the first nine months of 1989 are estimated at $5,636 million. This makes 1989 the worst year on record for catastrophe losses, topping the old record of $2.82 billion set in 1985.

“The majority of people in the affected area have never experienced anything like this before,” said Gilluly, at a news conference in Columbia. “The insurance industry is moving as quickly as possible to speed the processing of all claims.”


Written by Diane Jones, a freelance writer

This article adapted from Vol. 2, No. 4, p. 6.

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