A bipartisan group of 23 US House members is urging the Federal Emergency Management Agency to increase its oversight of private insurers involved in the National Flood Insurance Program.
Spurred by complaints over the claims handling process during Superstorm Sandy, the group – led by New Jersey Representative Frank Pallone, Jr. – wants FEMA to issue a rule allowing it to find out how much money companies are making through their participation in NFIP.
Such a rule is at least four years overdue, Pallone said.
“It is inexcusable that FEMA has failed to provide proper oversight of those entities – especially when Congress has already empowered and required the agency to do so,” the legislator told
NJ.com.
Senators Robert Menendez and Cory Booker also urged FEMA to act, asking Director Craig Fugate to evaluate whether the government should continue to rely on private insurers or require the companies to make public information used during claims handling and claims appeals.
“While we acknowledge the Federal Emergency Management Agency has recently taken steps to address these issues we raised over two years ago, these actions are far too little and have come far too late,” the senators wrote in a letter.
Accusations that insurers and engineering firms colluded to falsify claims reports and thus drive up handling fees has plagued government efforts following Sandy. In response, FEMA reopened claims among Sandy homeowners and have paid out more than $58 million in revisited cases.
A Department of Homeland Security report released in March suggests FEMA failed to exercise proper control over private insurance companies, saying the agency lacks basic control to avoid fraud, waste and other systemic problems with insurers.
FEMA responded to the calls from lawmakers by saying the agency has already taken steps to address any problems caused by the presence of private insurers in the government program.
“We expect the private insurance companies we partner with to share our values of putting survivors first,” said spokesman Rafael Lemaitre. “That’s why, over the past year, we’ve added multiple layers of oversight over these insurance companies and have completely overhauled the program.”
Separately, FEMA Deputy Associate Administrator for Insurance and Mitigation Roy Wright told lawmakers that the agency was developing a new method for determining how much insurers should be compensated for servicing government flood policies.
“We simply cannot afford to have another dollar misspent or misused at the expense of disaster victims and American taxpayers,” Smith said.
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