FEMA Sends Out Letters Offering to Review Sandy Claims

The Federal Emergency Management Agency on May 18 mailed out its first round of letters to the National Flood Insurance Program policyholders who filed Superstorm Sandy-related claims, asking whether they want their claims reviewed.

FEMA is mailing its letters by ZIP code in batches over several weeks to nearly 142,000 policyholders who filed Sandy-related claims. The policyholders will have 90 days from the date of the notice to contact FEMA if they decide to initiate the review process.

The NFIP has paid out more than $3.5 billion in flood insurance claims to policyholders whose homes were damaged or destroyed by Sandy. However, the program has drawn scrutiny in recent months after allegations of fraud involving how some insurance companies assessed damage after the October 2012 storm. Insurers have denied wrongdoing.

“The Federal Emergency Management Agency’s (FEMA) National Flood Insurance Program (NFIP) is offering you the opportunity to have your Hurricane Sandy flood insurance file reviewed if you believe that we underpaid your claim,” the letter begins. FEMA provided a copy of the letter to Insurance Journal.

“After we receive your request, a case worker who is a highly skilled NFIP-certified insurance adjuster will work with you to review your file, examine any additional information you submit, coordinate inspections by an adjuster or engineer (if required), and determine if the NFIP should make any additional payments to you for losses covered under your Standard Flood Insurance Policy,” the letter states.

FEMA says once the policyholder submits a request, it should take the case worker less than 90 days to complete the review.

The letter also notes that if the policyholder doesn’t agree with the outcome of the case worker review, there will be an opportunity to request that a neutral third-party expert talk with the policyholder and review the file to help resolve the claim.

“This neutral party will then make a recommendation to FEMA about your claim. FEMA will give substantial weight to the neutral party’s recommendation,” the letter states.

FEMA explains a few points that the federal agency wants the policyholders to know before choosing to participate in the Sandy claims review. They include the following:

• Policyholders who have received the maximum amount under the policy or are in litigation related to the claim do not qualify for this review. (According to media reports, as of March, there were some 2,200 claims in litigation.)
• The review does not alter or affect the policyholder’s rights or the rights of the policyholder’s insurer.
• The review may result in a determination that the policyholder previously received an overpayment or a duplicated benefit. Federal law may require the policyholder to repay an overpayment to the U.S. Treasury. To help assess that risk, FEMA notes in the letter that its auditors have told FEMA that improper payments are made in less than 2 percent of the time.
• If the policyholder receives additional proceeds as a result of the review and has also received Sandy-related disaster assistance from another source like the U.S. Small Business Administration or the Department of Housing and Urban Development, then the policyholder may have to repay the other assistance if the original sources determine the additional insurance proceeds duplicate a benefit they’ve previously provided.

Topics Claims Flood