U.S. Senators Bob Menendez and Cory Booker (both D-N.J.), and Charles Schumer and Kirsten Gillibrand (both D-N.Y.) today convened the first meeting of the Sandy Task Force to examine problems within the Federal Emergency Management Agency’s (FEMA) National Flood Insurance Program (NFIP) arising in the wake of Superstorm Sandy and develop recommendations for short- and long-term fixes.
The Sandy Task Force will focus on a range of relevant issues, including FEMA’s commitment to reopen all underpaid flood insurance claims from Superstorm Sandy victims caused by widespread lowballing and manipulation of engineering and adjustment reports. It will also explore the viability of a complete overhaul of the NFIP, including whether the current model of relying on third-party, private, Write-Your-Own (WYO) insurance companies to process claims, is the best way to serve policyholders.
“Your government failed you, plain and simple, and you deserve much, much better,” said Sen. Menendez. “The purpose of this Task Force is very simple: 1) to bring justice to the Sandy survivors who were lowballed; and 2) to fix the claims process so this injustice never happens again. The Task Force’s goal is to make the flood insurance program more efficient and more responsive for the next storm victims, while restoring fairness and ending the nightmare for current storm victims.”
“Two and a half years ago Superstorm Sandy ravaged thousands of homes across New York,” said Sen. Schumer. “At the time, I am sure homeowners thought that their toughest fight would be getting back up after the storm knocked them down, however, over the past few months and years we have seen that private insurance companies, FEMA, and the agents who worked for them have caused thousands of homeowners to endure a second round of anguish as homeowners have had to fight tooth-and-nail to receive the flood insurance funds that they are rightfully entitled to. I look forward to working with FEMA, the Sandy Task Force, local advocates and others to ensure that there is real reform to the flood insurance program to make it a customer-friendly operation that promptly pays its hard-working ratepayers after a disaster, rather than running them through the ringer.”
“While I am encouraged by the progress that was finally made in federal court yesterday we have a long way to go,” said Sen. Gillibrand. “What happened to thousands of honest and hard-working families in New York and New Jersey after Superstorm Sandy was simply disgusting. I have real concerns about the road ahead, because I am not convinced that FEMA’s actions to date have matched its rhetoric, and I am committed to ensuring we provide ongoing oversight of this process.”
“New Jersey families and businesses affected by Superstorm Sandy deserve a fair shot when it comes to getting the help they were promised,” Sen. Booker said. “With the launch of the Sandy Task Force, we are continuing our efforts to hold FEMA accountable and seek justice for those who have been wrongfully victimized and denied the support they deserve. This task force won’t stop holding FEMA’s feet to the fire until we right this despicable wrong.”
The Sandy Task Force will provide a critical Congressional Oversight function as FEMA fulfills its promise to reopen more than 140,000 flood insurance claims filed by Sandy victims not currently in litigation. To ensure the non-litigant review process is simple, fair and efficient, the Task Force will examine the following issues:
- Non-Burdensome Review Process. FEMA should receive all of the relevant documentation from the WYO for each policy review, rather than require policyholders to provide it. It should also provide the policyholder with any documentation relevant to their case.
- Evidence required by FEMA. FEMA should be flexible and reasonable regarding any additional evidence it requires from policyholders to substantiate damages. It’s been more than 2 ½ years since the storm hit, it’s unreasonable to expect policyholders to still have all of their documentation or receipts.
- Timeline. FEMA should get the process up and running as quickly as possible and make conduct the reviews within a short and reasonable time. Policyholders should be given an adequate time to opt-in to the review but FEMA should decide the matter quickly after it’s submitted.
- Independent appeals. FEMA should have an independent, third-party “neutral” to consider appeals to its review determinations.
- Duplication of benefits. Additional costs incurred by the policyholder as a result of getting underpaid and not being able to rebuild, such as rent, moving expenses, etc. should be considered additional “unmet needs” and thus eligible for reimbursement, rather than being clawed back. This issue also applies to cases in ongoing litigation.
- Non-profits. Non-profits should be given the resources to help policyholders navigate the claims review process so they are not stuck paying attorney fees just to get a fair shake.
The Sandy Task Force will also explore long-term fixes to the NFIP to ensure what happened after Sandy is not repeated to future disaster victims. The issues to be examined include, but are not limited to, the following:
- Viability of WYO model. WYOs receive more than 30% of NFIP premiums (more than $1B per year) to service the program, and it’s clear that policyholders aren’t getting their money’s worth.
- Oversight of all NFIP contractors. Even if we determine that the WYO model is viable, there still needs to be robust reforms and additional oversight of the WYOs. This includes fixing the over/underpayment penalty structure that Sen. Menendez first raised at a Banking Subcommittee hearing he chaired last year, in which Sen. Schumer took part, ensuring all policyholders have access to all documentation, including permutations of engineer reports, etc.
- Earth movement exemption. This needs to be examined and determined whether the exemptions are too broad, confusing, or just poorly implemented.
- Data collection. FEMA needs to comprehensively track claims, appeal, and other data necessary for them to determine when a problem is occurring early on, rather than years later.
- Appeals Process. The appeals process needs to be fundamentally fixed with additional independence injected and accountability. Currently, it is an ineffective remedy that perversely leads to additional litigation as the default.
- WYO attorney fees. FEMA needs to change the way it reimburses WYOs for attorney fees, because the current structure gives WYOs no incentive to avoid long, drawn out and costly litigation.
Members of the task force include the four Senators from New Jersey and New York, their staff, FEMA Administrator Craig Fugate, FEMA officials, outside experts, Sandy victims, and other stakeholders. Participating in today’s meeting were: Sens. Menendez, Booker, Schumer and Gillibrand; FEMA Admin. Fugate; Assistant Professor Benjamin Rajotte, Touro Law School (N.Y.); Executive Dir. Sue Marticek, Ocean County (N.J.) Long-term Recovery Group; George Kasimos, founder of Sandy victims’ advocacy group “Stop FEMA Now”; and Assistant General Manager Denise Neibel, Breezy Point (N.Y.) Cooperative. Dozens of Sandy victims from New Jersey and New York traveled to the Capitol to attend the meeting.