Assessing and Improving Flood Insurance Management and Accountability in the Wake of Superstorm Sandy

Majority Staff Report [of the] U.S. Senate Committee on Banking, Housing, and Urban Affairs, 22nd June 2015

[Reuters] The Senate Banking Committee will release a report that calls the appeals process for federal flood insurance claims after Super Storm Sandy badly flawed, but also that it found no signs of systematic underpayments to victims, Reuters reports.

“Despite widespread concerns, it does not appear that systematic incentives exist for any participant in the program to underpay on claims,” according to a draft of the report…

New York and New Jersey’s state attorneys general, along with the Department of Homeland Security’s inspector general, are conducting criminal investigations into the matter.

Tuesday’s report will be the first by a group of new investigators hired recently by Senate Banking Committee Chairman Richard Shelby, an Alabama Republican.

The probe did not examine specific allegations of fraud by victims. It focused on the structure and management of FEMA’s flood insurance program.

Using FEMA audit data, investigators did not detect any evidence that the system creates incentives for write-your-own insurance carriers or other vendors to reduce payouts to victims. In addition, data on Sandy flood claims that were re-inspected by a second adjuster showed “low overall error rates.”

Investigators believe underpayments that did occur can likely be attributed to the “scale of Sandy,” which overwhelmed the program and outstripped the number of engineers and adjusters available to handle claims, the overview says…

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