A Department of Homeland Security audit report found Federal Emergency Management Agency (FEMA) did not properly regulate private carriers offering flood insurance.
The failure of the private insurers to sufficiently reimburse victims of Hurricane Sandy led to FEMA agreeing to reopen thousands of claims.
According to the report, FEMA lacked the “guidance, resources or internal controls needed to oversee the private insurers.”
The inspector general of the Department of Homeland Security did not audit FEMA’s process in reviewing claims. The agency, however, agreed to review the claims after receiving reports that insurers and their engineering firms adjusted their findings to reduce the amount of money policyholders were entitled to.
"The OIG report only reinforces why it was necessary for FEMA to adhere to my demands last year to reopen all Sandy claims, which is bringing millions of additional dollars back to Sandy survivors in New Jersey," U.S. Sen. Robert Menendez (D-N.J.) stated. "These families should never have had to wait so long or go through so much just to get what they're entitled to."
The report suggested that FEMA create formal policies for private companies participating in the flood insurance program and update the appeals process in order to give fairer treatment to policyholders with specific concerns.
In response to the audit, FEMA acting associate administrator David Bibo stated, “We are overhauling and realigning our entire organization to improve the customer experience.”
