FEMA announces substantial changes to flood insurance

The federal group has caved to ongoing complaints from Sandy victims, and has agreed to several flood insurance reforms.

FEMA announces substantial changes to flood insurance

Insurance News


Insurance agents working with victims of 2012’s Superstorm Sandy may have reason to celebrate this week.
Faced with continued pressure from Sandy victims and their advocates, the Federal Emergency Management Agency announced a number of significant reforms to the National Flood Insurance Program intended to benefit flood victims Friday.
The reforms were proposed by several democrat lawmakers, including Sens. Robert Menendez and Cory Booker, and Reps. Frank Pallone and Bill Pascrell, Jr., and agreed to by FEMA leadership.
Specific flood insurance reforms include:
  • A copy of all engineering reports that were secretly modified will be provided to affected policyholders.
  • FEMA will penalize insurers just as much when they underpay a legitimate flood insurance claim as when they overpay.
  • The flood insurance appeals of 270 Superstorm Sandy victims will be reinstated.
  • The process of installing a flood insurance advocate’s office within FEMA, per revisions to Biggert-Waters, will be expedited.
The first reform, as it relates to a case of an engineer removing flood as the cause of damage to a Long Beach, N.Y. home, was particularly lauded.
“Why is it that when policyholders conceal or provide erroneous information it’s called insurance fraud, but when the insurance companies engage in the same practice they are given a free pass?” Sen. Menendez challenged.
In response, FEMA administrator Craig Fugate issued a letter to insurers that write policies through NFIP instructing them to provide copies of these draft engineering reports to policyholders all Sandy cases.
Menendez also announced he would be working with Congress, FEMA and relevant insurance companies to “strike the right balance” in penalties to insurers who overpay and underpay flood claims, “so that the only incentive created is to simply get the claim right.”
For realtor George Kasimos, who started the advocacy group Stop FEMA Now, the creation of a consumer advocate within the organization was especially welcome.
“This goes a long way in helping mediate our claims instead of litigating our claims,” Kasimos told the Asbury Park Press. “Mediating our claims will help us with quicker resolutions and more money for the homeowner because we won’t have to hire an attorney who will subtract his fees from the award.”
The announcement comes as the embattled NFIP struggles to remain profitable amid severe strains from Sandy and the initial financial blow of Hurricane Katrina.

You may also be interested in: "Engineering firm accused of faking Sandy reports, would cheat insurer's claimants"
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