There in the aftermath

John G. Richards, chief insurance commissioner of SC 1985-1995

July 31, 2009 

Hurricane Hugo was the defining moment in my tenure as the Chief Insurance Commissioner of South Carolina. I had once read that “insurance is to the economy what oxygen is to air” and after Hurricane Hugo, I became a true believer.

During the late night of Sept. 21 and the early morning of Sept. 22, 1989, Hurricane Hugo swept through our state causing death and destruction on a scale unparalleled in modern times. In ways I could never have imagined, we learned in the days and weeks and months that followed just how very important insurance was to the welfare of our state and its citizens.

Ultimately, insurance proceeds would prove to be the fuel that drove South Carolina’s recovery from this terrible natural catastrophe. Insurance payments enabled our citizens to rebuild their homes and repair their cars; it enabled businesses to reopen their doors; and it enabled our children to go back to school.

On the morning of Sept. 21, I had declared an “Insurance Emergency” that waived certain insurance regulations and permitted the insurance industry to marshal its resources in preparation for the storm without unnecessary bureaucratic interference. This was the first time in South Carolina’s history that such a declaration had been made before a catastrophe had occurred and I hoped that I had not “jumped the gun.” Later that night, I remember watching Dan Rather on national television as he asked his audience to say a prayer for us in South Carolina. Like most of us, I said my own prayers, too.

During the next six hours, Hurricane Hugo caused $3 billion worth of insured damage (almost 6 billion in today’s dollars) and occasioned 494,043 insurance claims in South Carolina alone (See The State, April 7, 1990, “Insurance industry issues figures on Hugo claims.”) The numbers were staggering, the damage unimaginable, and the loss of life heartbreaking. I immediately challenged the insurance industry to make its response to Hurricane Hugo its “finest hour.” I was not disappointed.

Twenty-four of our forty-six counties were declared disaster areas and thirty-two Disaster Assistance Centers (DAC’s) were established. (I was extremely grateful to the employees of the South Carolina Department of Insurance who volunteered to staff these DAC’s for weeks upon end, twelve hours a day. Most of these folks were away from their homes to help their fellow South Carolinians with their problems, while many of them had sustained hurricane damage themselves.)

The insurance industry sent 3,600 insurance adjusters from out of state to join our 2,000 resident adjusters already here and they began adjusting claims and issuing checks the morning of Sept. 22. There were, of course some problems. Early on, I was informed that some adjusters were not being allowed down I-26 towards Charleston because the Interstate had been closed to nonessential traffic. I made a personal call to Governor Campbell and very shortly thereafter, they were allowed to proceed. A couple of days later, I learned that some adjusters were being threatened with arrest for not having local business licenses for a certain municipality. I called the governor again, and the problem was resolved within minutes. Governor Campbell showed great leadership during this catastrophe. It was truly the defining moment of his administration, too.

There were also rumors that had to be dealt with on an immediate basis. One was that I had ordered all insurers to pay for flood damage under the provisions of the standard homeowners policy. That was not true because the peril of flood was only provided under the provisions of a separate flood policy purchased from Federal Flood Insurance Program. Another held that I had declared that all the damage along the coast had been caused by wind, not flood, and that those with flood damage would therefore be covered. That, too, was untrue and had to be quickly dispelled. Such rumors could only provide false hope and lead to greater heartbreak and uncertainty. The South Carolina Department of Insurance was vigilant in monitoring the payment of insurance claims and by Dec. 31, 1989, ninety per cent of all legitimate claims had been paid. Unfortunately, I had to declare two domestic insurance companies insolvent because they had been overwhelmed with claims, but fortunately, because of the existence of the South Carolina Property and Guaranty Insurance Fund, no insured of those two companies were left with their Hugo claims unpaid.

Hurricane Hugo, at the time, was the largest natural catastrophe that the insurance industry had ever responded to and a year later, I did not hesitate to say that it was indeed, the industry’s “finest hour.”

As the years have gone by, I am proud that the response to Hurricane Hugo was nowhere near to the debacle we saw following Hurricane Katrina. I am proud of the insurance industry’s (companies, agents, and adjusters) quick, fair, and compassionate response. I am proud of our legal community for forestalling mass and specious law suits like those we saw in Louisiana and Mississippi following Katrina. I am proud of the staff of the South Carolina Department of Insurance for all of the long hours spent assisting the insurance consuming public of our state. I am proud of the response of Governor Campbell, Adjutant General Eston Marchant, Attorney General Travis Medlock, Mayor Joseph Riley of Charleston, and all the members of our National Guard, Highway Patrol, and other law enforcement elements.

Along with that wonderful spirit that grew up around Hurricane Hugo, neighbors helping neighbors, all of these South Carolinians are among those that we remember today as “the heroes of Hurricane Hugo.” They all deserve our heartfelt thanks.

-- John G. Richards, chief insurance commissioner of South Carolina 1985-1995

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