FEMA To Review Hurricane Sandy Flood Insurance Claims

The Federal Emergency Management Agency announced that it would review the underpayment of flood insurance claims made to victims of Hurricane Sandy. The agency will examine the allegations made by hurricane victims of underpayment from the National Flood Insurance Program. A FEMA spokesman also promised to investigate the agency’s handling of the flood insurance claims, including finding out why they denied thousands of claims.

Flood Insurance Claims Lawsuits Cite Engineering Practices

A New Jersey newspaper reported that more than 1,000 residents have filed flood insurance claims lawsuits against insurers. The lawsuits allege that homeowners had their flood insurance claims either underpaid or denied outright due to suspect engineering practices. In reviewing one of the lawsuits, Judge Gary Brown of the Eastern District of New York cited “reprehensible gamesmanship by a professional engineering company” and the “widespread” use of “unprincipled practices” by both engineering companies and insurers.

Fraud Behind Low Flood Insurance Claims Payments?

Judge Brown ruled in November 2014 that, in at least one instance, the engineering reports used to evaluate flood insurance claims had been altered to favor the insurers. The judge stated that the alteration to the engineering reports “unjustly frustrated efforts by two homeowners” to recover the costs of damages to their homes. He also stated that data that would have helped the homeowners with their flood insurance claims was “concealed by design” as part of a pattern of deceptive behavior by the engineering firms and insurers.

Senators Call For Probe Into Flood Insurance Claims

The FEMA probe was prompted in part by calls from both U.S. Senators from New York and New Jersey. The two states saw an increase in flood insurance claims in the aftermath of the killer storm. Sen. Robert Menendez (D-NJ) announced that his office contacted FEMA deputy associate administrator for insurance Brad Kieserman to investigate the issue. Senator Menendez promised that he would “hold FEMA’s feet to the fire” to make sure that flood insurance claims victims received the funds they needed to rebuild their homes.

Flood Insurance Claims Could Spark FEMA Reforms

Sen. Menendez also stated that he discussed reforming the flood insurance claims process with Mr. Kieserman. The reforms would include collecting data from engineering reports and making them available to policy holders, expelling insurers and engineering firms shown to have committed fraud when evaluating flood insurance claims, and stopping any regulations that would prevent criminal prosecutions of firms found to have engaged in fraudulent behavior.

Source: Asbury Park Press

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