Thursday, January 12, 2017
GAO Report Confirms Need for Pallone’s Bill on Flood Insurance Transparency
FOR IMMEDIATE RELEASE
January 10, 2017
Washington, DC – Today, the U.S. Government Accountability Office (GAO) published a report on the compensation paid to Write-Your-Own (WYO) companies that administer the National Flood Insurance Program (NFIP). The report confirms the need for Congressman Pallone’s Flood Insurance Reimbursement Standards Transparency (FIRST) Cap Profits Act, which he introduced last year and will introduce in the new Congress. The bill would require increased oversight and transparency of the National Flood Insurance Program (NFIP) by the Federal Emergency Management Agency (FEMA) and cap the profits of private companies providing flood insurance at 10%.
The report states “FEMA continues to lack the information it needs to incorporate actual flood expense data into its compensation methodology as well as determine how much profit WYO companies make and whether its compensation payments are appropriate.” In July 2016, Pallone led a bipartisan letter asking FEMA to fulfill its legal obligation to provide oversight of the WYOs.
“It is shameful that private insurance companies have profited from Sandy while failing to meet their basic obligations under the NFIP. This reports confirms yet again that FEMA has failed to provide proper oversight of those entities - especially when Congress has already empowered and required the agency to do so,” said Pallone. “FEMA has a responsibility to ensure that policy holders are treated fairly and charged a fair market price for the service they purchase, and it better get to work.”
In May, Pallone led a bipartisan letter from members of the New Jersey Congressional delegation to Administrator Fugate of the Federal Emergency Management Agency (FEMA) requesting that it take swift action on behalf of those who have suffered from documented, widespread fraud perpetrated by private insurance companies in the aftermath of Superstorm Sandy. The lawmakers asked for an explanation of why it is taking FEMA so long to process the insurance claims of these victims and to detail the steps FEMA is taking to swiftly rectify the situation.
After that letter was sent, Pallone and Congressman Bill Pascrell (NJ-09) met with Roy Wright, Deputy Associate Administrator for Insurance and Mitigation at the Federal Emergency Management Agency (FEMA), to demand that FEMA take swift action to process claims for victims of Hurricane Sandy.