Hurricane Among Costliest, Insurers Say

For the nation’s insurance companies, Hurricane Hugo is sure to be among the costliest storms ever to hit the United States, insurance officials said Sunday as they tried to assess the massive property damage in North and South Carolina.

“There will be hundreds of millions of dollars in insured property losses,” said William J. Davis, Southern regional manager in the Atlanta office of the Insurance Information Institute. “Charleston is really a mess.”

Some observers were holding out the possibility that insured losses could reach $1 billion, Davis said, topping the record $752.5 million in losses from Hurricane Frederic, which hit the Gulf Coast states of Mississippi and Alabama in September, 1979.

Not Seen Topping Frederic

However, Davis said a more generally held view is that the “losses won’t be as bad as Frederic” but will be higher than from either Hurricanes Betsy or Alicia, the second- and third-worst storms in terms of property damage. Betsy, which hit several Gulf Coast states in 1965, resulted in $715 million in insured losses, he said. Losses from Alicia, which struck Texas in 1983, cost insurers about $675.5 million.

In Columbus, Ohio, a spokesman for Nationwide Insurance Cos. said the insurer is expecting record claims from the storm, in part, because Nationwide is the largest insurer of automobiles and homes in North Carolina and the third largest insurer in South Carolina.

“The way it looks now, this one will be the biggest storm in the company’s history,” said spokesman Louis V. Fabro. Nationwide’s current record is $31 million in insured losses from Hurricane Elena, which swept through Florida, Alabama and Mississippi in 1985, he said. Overall, that storm cost insurance companies about $543.3 million, according to the insurance trade group.

Charlotte ‘Hard Hit’

Fabro said Nationwide sent 43 claims adjusters to South Carolina and 12 to Charlotte, N.C., “which was hard hit” by the storm. Working conditions are difficult, he said. Adjusters are having a hard time finding housing because motels and hotels are full, and they are having trouble reaching clients because the storm cut telephone lines.

Scarce telephone lines is one reason Nationwide and other insurers cannot give precise estimates of the losses, Fabro said. Davis said adjusters have not been able to get to some of the areas hit by the storm--particularly South Carolina’s barrier islands.

While surveying Charleston on Saturday, Davis said he saw that several of the nation’s big insurers had sent thousands of claims adjusters into the Carolinas, driving motor homes equipped with battery operated computers and telephones. Some residents have access to a working phone, but they are in shelters and cannot get home to see what damage they have because roads are blocked by fallen trees, furniture and other debris, he said.

Doesn’t See Firms in Peril

Paying claims will “deplete the reserves” of some insurance companies, Davis said, but the storm will not put any insurance concern in financial jeopardy, although 1989 thus far has not been a good year for the industry. However, another big storm this season would significantly hurt the industry, said Marc H. Rosenberg, the insurance institute’s spokesman in Washington.

Consumer rates in the areas hit by the storm should not rise, Davis said, because the industry generally bases rates on an expectation of a major storm every 20 years. “Charleston hasn’t been hard hit since Hazel in 1954,” he said.

Estimates of losses cited by the insurance companies are lower than overall property damage cited by governmental officials because those figures include damage to public property--much of which is self-insured or not insured at all--and flood damage, which will be paid by the National Flood Insurance Program.