Pallone Introduces Legislation to Cap Flood Insurance Profits & Hold FEMA Accountable

FOR IMMEDIATE RELEASE
December 5, 2016



Long Branch, NJ – Today Congressman Frank Pallone, Jr. (NJ-06) introduced the Flood Insurance Reimbursement Standards Transparency (FIRST) Cap Profits Act, which 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%. Congressmen Bill Pascrell (NJ-09) and Donald M. Payne, Jr. (NJ-10) joined as original cosponsors of the legislation.

Congressman Pallone began drafting the legislation after hearing from New Jersey residents that were treated unfairly by FEMA, private insurance companies or both in the aftermath of Superstorm Sandy. After discussing the proposed legislation with constituents at an event in Highlands in October, the Congressman added a provision to require that private flood insurance companies cover the legal fees of plaintiffs if the company is found to have committed fraud.

A 2009 GAO report found that profits for flood insurers averaged 16.5%, while a more recent study found profits closer to 30%. In the wake of Superstorm Sandy and other recent disasters, FEMA and NFIP have faced accusations of incompetence and fraud, which has led to thousands of New Jersey families being overcharged or without the payments they rightly deserve.

“It is shameful that private insurance companies have profited from Sandy while failing to meet their basic obligations under the NFIP. 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,” said Pallone. “FEMA has a responsibility to ensure that policyholders are treated fairly and charged a fair market price for the service they purchase, and my bill will take an important step in that direction. I will also be using the reauthorization of the National Flood Insurance Program next year as an opportunity to push for more accountability from FEMA and insurance companies.”

Earlier this year, the Frontline documentary “The Business of Disaster,” examined issues with flood insurance after Superstorm Sandy. During the documentary, Roy Wright, Deputy Associate Administrator for Insurance and Mitigation, was asked if he knew how much profit private insurance companies servicing NFIP were making. He responded, “I’ve never looked at the book of business to understand their profits.”

Frontline did its own analysis and concluded that private insurers made more than $400 million in profits from FEMA in the year that Hurricane Sandy devastated the Atlantic coast – its highest profit in the 4-year period from 2011 to 2014. Between 2011 and 2014, industry-wide profits averaged $325 million a year –nearly 30% of the revenues the companies receive from FEMA. At the same time, many of those insurers were underpaying or outright denying legitimate flood insurance claims.

The FIRST Cap Profits Act would rectify this problem by forcing FEMA to review the finances of these companies, something it was required to do by the Biggert-Waters Flood Insurance Act of 2012. Additionally, by capping profits at 10%, the legislation would ensure that taxpayer dollars are going towards policyholders, while leaving room for these companies to make a profit for administering the program.

Congressman Pallone has been a leader in demanding transparency and swift action on behalf of those who have suffered from inefficiencies and documented, widespread fraud perpetrated by private insurance companies in the aftermath of Superstorm Sandy.

In May, Pallone led another bipartisan letter from members of the New Jersey Congressional delegation requesting that FEMA take swift action on behalf of those who have suffered from fraud and for an explanation of why it is taking FEMA so long to process insurance claims from Sandy. Later that month, Pallone met with FEMA officials and stressed that the slow pace of the claims review process was unacceptable, and that FEMA needs to act to ensure that New Jersey policy holders are treated fairly and receive just compensation. In July, Pallone led a bipartisan letter asking that FEMA fulfill its legal obligation to provide oversight of the private insurance companies that participate in the NFIP.

Pallone Demands FEMA take Swift Action to Address Unacceptable Delays for Sandy Victims

FOR IMMEDIATE RELEASE
May 25, 2016


WASHINGTON, DC - Today, Congressman Frank Pallone, Jr. (NJ-06) and Congressman Bill Pascrell (NJ-09) demanded that FEMA take swift action to process claims for victims of Hurricane Sandy in a meeting with Roy Wright, Deputy Associate Administrator for Insurance and Mitigation at the Federal Emergency Management Agency (FEMA), in Pallone’s Washington, DC office. At the meeting Wright stated that FEMA would have the unprocessed claims finished by the end of the summer.

The members stressed that the slow pace of the claims review process is unacceptable, and that FEMA needs to act to ensure that New Jersey policy holders are treated fairly and receive just compensation. They also discussed their concerns over alleged widespread fraud perpetrated by private insurance companies servicing National Flood Insurance Program (NFIP).

“My constituents and I continue to be outraged by the unacceptable delays in processing claims for Sandy victims.” said Pallone. “It’s been nearly four years since Hurricane Sandy devastated New Jersey and there needs to be a sense of urgency about processing the claims of these victims, who have already suffered enough. FEMA has a responsibility to implement processes to ensure that disaster victims get the resources they are rightfully owed and it is imperative that it take action immediately. Next week starts Hurricane season and we need to make sure that victims of Sandy are in their homes and prepared.”

“I met with Roy Wright of FEMA to discuss improving and expediting the Hurricane Sandy Claims review process for the thousands of New Jerseyans still waiting to receive the support they are owed,” said Pascrell. “While it is upsetting to know that FEMA has only fully processed roughly half of the claims that have been associated with fraud, they are doing it as swiftly and diligently as possible. I commend FEMAs willingness to work with members of Congress and the people of New Jersey in order to address any and all issues that have arisen from flood insurance payment issues. That is why I encourage anyone in my district to let me know if they have an issue so that I can keep FEMA to their word.”

Earlier this month, 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.

Last May, The Federal Emergency Management Agency’s (FEMA) National Flood Insurance Program (NFIP) announced that it would begin a process requested by Pallone and other New Jerseys members of Congress to review flood insurance claims filed by policyholders affected by Hurricane Sandy. FEMA did this after Pallone and other Members sent a letter to FEMA requesting that it establish a process allowing homeowners to easily file an appeal if they believe they have been a victim of an intentionally altered engineering report.

FEMA Begins Flood Insurance Review Process Stemming From Fraud Reports

Notification Process Follows Pallone Letter Calling for Notification to Flood Insurance Policyholders

WASHINGTON, DC – The Federal Emergency Management Agency’s (FEMA) National Flood Insurance Program (NFIP) today announced that it has begun a process requested by Congressman Frank Pallone, Jr. (NJ-06) to review flood insurance claims filed by policyholders affected by Hurricane Sandy. In March, Pallone sent a letter to FEMA requesting that it establish a process allowing homeowners to easily file an appeal if they believe they have been a victim of an intentionally altered engineering report.

Allegations surfaced earlier this year that private insurance companies denied the flood insurance claims of thousands of homeowners affected by Hurricane Sandy because of fraudulently altered engineering reports. In addition to the letter, Pallone recently met with Brad Kieserman, Deputy Associate Administrator for Insurance at FEMA, to discuss the allegations. In the meeting, Pallone stressed the importance of FEMA establishing a notification process in a timely fashion and the need for adequate staff to address corrective action.

“I am pleased that FEMA has moved forward to inform Sandy victims about the widespread fraud related to engineering reports connected to flood insurance claims and to ensure the victims get the resources they are rightfully owed,” said Congressman Pallone. “Sandy victims have already suffered enough, and I thank FEMA for responding to my letter with swift action.”

FEMA will send a letter to all NFIP policyholders who filed flood insurance claims pursuant to Hurricane Sandy. Policyholders who incurred losses from Hurricane Sandy from Oct. 27, 2012, through Nov. 6, 2012, and want their claim reviewed may contact FEMA. Letters will be sent on a rolling basis in the coming weeks.

As of May 15, 2015, 74,052 NFIP claims had been filed in New Jersey stemming from Sandy damage. Many Sandy victims are suing their insurance companies for perceived underpayments or denials, but the vast majority of those who have filed NFIP claims are likely unaware of the recently uncovered fraud in which engineering reports have been intentionally doctored.

The letter Pallone wrote to FEMA in March can be read HERE.

Pallone Meets With FEMA to Discuss Insurance Fraud Allegations

Highlights need for outreach from FEMA to policyholders who may have been defrauded

WASHINGTON, DC – Today, Congressman Frank Pallone, Jr. (NJ-06) and other members of the New Jersey Congressional delegation met with Brad Kieserman, Deputy Associate Administrator for Insurance at the Federal Emergency Management Agency (FEMA), to discuss the recent allegations that private insurance companies denied the flood insurance claims of thousands of Superstorm Sandy victims because of fraudulently altered engineering reports.

Pallone sent a letter to FEMA Administrator Craig Fugate on March 3rd requesting that the agency provide notification of the fraud allegations to flood insurance claimants and establish a process that allows homeowners to easily file an appeal if they believe that they have been a victim of an intentionally altered engineering report. FEMA has since agreed to notify all flood insurance claimants about the allegations of fraud.

In the meeting, Pallone stressed the importance of FEMA establishing a notification process in a timely fashion and the need for adequate staff to address corrective action. Deputy Associate Administrator Kieserman committed to setting up this process within 45 days, saying that he would place the initial focus on the 15,964 Sandy-related flood insurance claims that included engineering reports.

“FEMA has a responsibility to inform the public about this fraud and to implement a process to ensure that Sandy victims get the money they are rightfully owed,” said Congressman Pallone. “I am pleased that FEMA is taking these allegations of fraud seriously but I ensured Mr. Kieserman in today’s meeting that I will be staying engaged in this process to make certain Sandy victims are given the opportunity to have their flood claims reviewed.”

Deputy Associate Administrator Kieserman reiterated his commitment to get Sandy victims the money they are entitled to under their flood insurance policy. 74,052 National Flood Insurance Program (NFIP) claims have been filed in New Jersey stemming from Sandy damage, but the vast majority of those who have filed claims are likely unaware of the recently uncovered fraud in which engineering reports have been intentionally doctored.

Pallone Urges FEMA to Notify Sandy Victims of Insurance Fraud

WASHINGTON, DC — Congressman Frank Pallone, Jr. (NJ-06) sent a letter to Administrator Fugate requesting that the Federal Emergency Management Agency (FEMA) notify homeowners who have filed claims with the National Flood Insurance Program (NFIP) in the wake of Superstorm Sandy detailing the manipulation of engineering reports in order to underpay Sandy victims. Pallone requested that FEMA establish processes that allow homeowners to easily file an appeal if they believe that they have been a victim of an intentionally altered engineering report.

“Sandy victims have already suffered enough. To undercut or deny payments to these homeowners as they try to rebuild is absolutely unacceptable,” said Congressman Pallone. “FEMA has a responsibility to inform the public about this fraud that we are learning is widespread and to implement processes to ensure that disaster victims get the resources they are rightfully owed.”

As of the end of February 2015, 74,052 NFIP claims have been filed in New Jersey stemming from Sandy damage. Over 1,100 Sandy victims are suing their insurance companies for perceived underpayments or denials, but the vast majority of those who have filed NFIP claims are likely unaware of the recently uncovered fraud in which engineering reports have been intentionally doctored.

Read the full text of the letter ... Here

Pallone & Menendez to Discuss Benefits of Flood Insurance Reforms with Homeowners

MIDDLETOWN, NJ – On Friday, March 28th, 2014, at 1:30pm, Congressman Frank Pallone, Jr. (NJ-06) and Senator Robert Menendez (D-NJ) will meet with Middletown homeowners to discuss the benefits of the newly-enacted Homeowner Flood Insurance Affordability Act. The bipartisan bill, which Pallone co-sponsored in the House and Menendez led in the Senate, was signed into law by President Obama last week. Pallone and Menendez will arrive at the Tonya Keller Community Center at 1:30pm and then proceed to tour the neighborhood and speak with constituents.

The law, which passed both the House and Senate with overwhelming bipartisan support, will protect millions of homeowners, many of whom are still recovering from the devastation of Superstorm Sandy, from facing huge National Flood Insurance Program (NFIP) premium rate hikes. This law will ensure relief for homeowners living in flood prone regions thanks to key provisions, such as repealing certain rate increase “triggers,” lowering FEMA’s ability to increase rates, refunding excess premium charges to those who have paid significant rate increases and providing FEMA the funding necessary to complete an affordability study.


WHO:
Congressman Frank Pallone, Jr. (NJ-06)
Senator Robert Menendez (D-NJ)

WHAT:
Discuss benefits of newly-enacted Homeowner Flood Insurance Affordability Act with New Jersey homeowners

WHERE:
Tonya Keller Community Center
50 Bray Avenue
Middletown, NJ 07748

WHEN:
Friday, March 28, 2014
1:30pm-2:00pm

Planning for a Changing Climate

The following is from Congressman Rush Holt's newsletter:

New Jersey home and business owners are continuing to recover from the devastation caused by Superstorm Sandy more than a year ago.  Even for property owners not directly affected by Sandy, premium increases under the National Flood Insurance Program (NFIP) have proven unaffordable and unsustainable.

I have been working for many months on legislation to rein in these increases, including cosponsoring a proposal that would have capped the maximum increase to 10 percent annually.  This week brought good news:  the House passed a bipartisan compromise that limits increases to 15 percent annually – a higher cap than I would have preferred, but still a significant victory for homeowners.  The legislation also restores “grandfathered” rates for homes and businesses that were remapped into higher-risk areas.

I expect that the Senate will pass and the President will sign the bill shortly.  Yet we must not ignore the need to plan for a changing climate, sea level rise, and an increased risk of extreme weather and flooding. For those living in flood prone areas the risk of flood will only increase, stressing the limited resources available under the NFIP, and continuing to devastate communities and families.

Prepare Now for Severe Weather in New Jersey

New Jerseyans have faced more than our share of weather disasters in recent years, including hurricanes, floods, and major snowstorms.  This week is National Severe Weather Preparedness Week, a good time to prepare yourself for the next time that severe weather strikes.

If you haven’t already, take a few minutes this week to make a family emergency plan to ensure that you can get to a safe place and stay in touch with your family during a weather disaster.  Also, inform yourself about emergency alerts you may receive about severe weather.

Much more information about preparing for severe weather and other disasters is available at Ready.gov.

Sincerely,

Rush Holt
Member of Congress

Pallone Statement on Passage of Flood Insurance Affordability Act

Congressman Frank Pallone, Jr. (D-NJ) issued the following statement this evening after the House of Representatives passed the Homeowner Flood Insurance Affordability Act, which he co-sponsored.

“I am pleased that lawmakers were able to come together tonight to pass the Homeowner Flood Insurance Affordability Act. I am proud to have co-sponsored this bipartisan legislation that will protect millions of homeowners from facing huge National Flood Insurance Program (NFIP) premium rate hikes that they cannot afford. This bill contains key provisions that will ensure relief for homeowners living in flood prone regions, such as repealing certain rate increase “triggers,” lowering FEMA’s ability to increase rates, refunding excess premium charges to those who have paid significant rate increases and providing FEMA the funding necessary to complete an affordability study.”

“Thankfully, both sides have come together to fix this problem so that businesses can stay open, property values do not plummet, and middle class families can afford flood insurance and are able to stay in their homes. These hardworking individuals played by the rules, purchased flood insurance responsibly, and are now facing exorbitant rates that they could not have foreseen.”

Monmouth Disaster Recovery Centers to Remain Open Until April 1st.

LONG BRANCH, NJ—Congressman Frank Pallone, Jr. (NJ-06) announced today that the Disaster Recovery Centers (DRCs) located in Leonardo and Union Beach, which were scheduled to close February 28th and March 5th, respectively, will remain open until April 1st. Pallone sent a letter to Federal Emergency Management Agency Administrator (FEMA), Craig Fugate yesterday calling on him to halt the planned closure of the DRCs, citing the needs of many Monmouth County residents still requiring assistance registering with the agency and making claims with the National Flood Insurance Program (NFIP).

“I called on FEMA to keep the DRCs open because I have talked to too many families that still need help to justify shutting them down,” said Pallone. “I’m pleased to learn that FEMA has agreed to my request and will continue to provide vital services that will help residents get back on their feet from Sandy’s devastation.”

Pallone to FEMA: Don’t Close Disaster Recovery Centers and Extend Registration Deadlines, New Jersey Still Needs Your Help

FOR IMMEDIATE RELEASE:
Thursday, February 28, 2013

WASHINGTON, D.C.—Today, Congressman Frank Pallone, Jr. (NJ-06) sent a letter to Federal Emergency Management Agency Administrator (FEMA), Craig Fugate calling on him to halt the planned closure of the Disaster Recovery Centers (DRCs) located in Leonardo and Union Beach, which are scheduled to close February 28th and March 5th, respectively. DRCs have offered a variety of services for victims of Superstorm Sandy including serving as direct points of contact for residents to speak with FEMA representatives to register with the agency and make claims with the National Flood Insurance Program (NFIP).

Pallone’s letter also called on FEMA to extend the deadline for New Jersey residents to register with FEMA, citing the extension already approved in New York.

“Too many in New Jersey are still suffering and need as much help from FEMA as they can get,” said Pallone. “The DRCs have served an important role in helping residents move forward with recovery and their closure is simply premature.”

Noting a previous letter sent to Administrator Fugate, Pallone also called on FEMA to address the slow and cumbersome process of advancing flood insurance claims. In his February 6, 2013 letter, Pallone told Administrator Fugate that, “It is simply unacceptable for residents of New Jersey, who have faithfully paid flood insurance premiums for years, to be left in the lurch when they need this assistance the most…I respectfully request that you take necessary steps within your power to cut the red tape and expedite the NFIP claims process so that New Jersey homeowners and businesses can begin the path to recovery.”

The following is the text of Pallone’s February 28, 2013 letter:



February 28, 2013
W. Craig Fugate
Administrator
Federal Emergency Management Agency
U.S. Department of Homeland Security
500 C Street SW
Washington, DC 20472

Dear Administrator Fugate,

I write today regarding the planned closure of the two remaining Disaster Recovery Centers (DRCs) in Monmouth County, New Jersey. My office was notified today that the DRCs in Leonardo and Union Beach will be closing February 28th and March 5th, respectively. I respectfully request that you continue operation of a DRC in Monmouth County so that residents and businesses can continue to meet with FEMA staff as they move forward with the recovery process. I also request that the FEMA registration period for New Jersey be extended for one month, which has been done in New York.

Much work remains to be done to help homeowners and businesses recover from the historic damage caused by Hurricane Sandy. While I understand the registration deadline is approaching, many residents still have questions about their settlements and claims that require the assistance of FEMA representatives. These DRCs also serve as a local hub for all recovery activity in the area, with volunteer groups and local officials based nearby so residents can have their issues addressed all in one place.

Further, I am still seriously concerned about the slow pace at which National Flood Insurance Program (NFIP) claims are being paid out in New Jersey. I have yet to receive a response to the letter I sent to you on February 6th outlining several problems my constituents are facing with delays in processing NFIP claims. As of last Friday, according to FEMA data, over 24,000 claims remain open in New Jersey.

Homeowners and business owners in New Jersey are still struggling as they work to rebuild after this devastating storm. I believe it is the responsibly of FEMA to be present in the community to help them as this process moves forward.

Sincerely,



FRANK PALLONE, JR.
Member of Congress

Pallone Meets with Union Beach Sandy Victims; Calls on FEMA to Stop Delays of Flood Insurance Claims

WASHINGTON, D.C.—Congressman Frank Pallone, Jr. (NJ-06) met with Union Beach Sandy victims to hear their stories of delays and complications faced when filing insurance claims with the National Flood Insurance Program (NFIP).

Pallone, who represents Union Beach, one of the hardest hit areas on the Jersey Shore during Superstorm Sandy, listened to residents who have experienced bureaucratic holdups with NFIP and the claims process. He has been outspoken about the importance of rebuilding the Shore and has called on FEMA to step in and remedy the obstruction and delays faced by Sandy victims when filing flood insurance claims.

“I was moved and disturbed to hear the stories relayed today and the frustration people have experienced when they attempted to file flood insurance claims,” said Pallone. “Union Beach residents have suffered enough from Sandy. They certainly don’t deserve to have to contend with miles of red tape just to file claims for insurance they already paid for.”

Pallone issued a letter to Federal Emergency Management Agency (FEMA) Administrator Craig Fugate on February 6, 2013 drawing his attention to the difficulties and challenges faced by residents filing claims with NFIP.

“We need to get New Jersey up and running again and we cannot suffer needless delays when people are trying to rebuild their homes and put their lives back together,” said Pallone. “These delays and complications are unacceptable and the process must be fixed. I will continue to call on FEMA for an explanation and to resolve the problems that too many New Jerseyans are facing when they file claims with NFIP.”
The following is the body of the letter sent by Pallone to Administrator Fugate:



February 5, 2013

W. Craig Fugate
Administrator
Federal Emergency Management Agency
U.S. Department of Homeland Security
500 C Street SW
Washington, DC 20472



Dear Administrator Fugate,

I write today regarding the National Flood Insurance Program (NFIP) and to bring attention to issues residents of New Jersey are having with the prolonged timeframe by which these claims are being processed. As you know, Superstorm Sandy devastated my district and a large portion of New Jersey. Many homeowners and businesses in the damaged areas have flood insurance policies through NFIP and are relying on these claim payments as they prepare to rebuild and repair their homes and businesses.

That is why I am troubled to learn that residents of New Jersey are facing myriad problems that are delaying processing of their NFIP claims. Since NFIP has no time frame by which claims adjusters must complete the proof of loss required to process payments and these adjusters are facing a workload of up to 150 cases each, New Jersey homeowners and businesses have been left waiting for a resolution for an unacceptable period of time.

I have also been told that homeowners are being required to fill out lengthy forms to provide receipts, serial numbers and photographic evidence of losses, which is difficult for many homeowners who lost everything they own. NFIP-required audits are also slowing down this process and making it difficult for adjusters to process claims quickly. While I certainly support ensuring that overpayment and fraud is avoided, we must make certain the residents of New Jersey receive the payments they deserve without unnecessary bureaucratic delay.

According to Governor Chris Christie, the New Jersey Department of Banking and Insurance is receiving more than 3 NFIP complaints for every homeowner insurance complaint. They have also notified me that over 85 percent of homeowner insurance claims have been processed compared to only 30 percent of flood claims.

It is simply unacceptable for residents of New Jersey, who have faithfully paid flood insurance premiums for years, to be left in the lurch when they need this assistance the most. It has now been 101 days since the storm and recent reports in the press state that thousands of people in the area are still in hotels. It must be assumed that many of them are there because they are unable to repair their homes to date without this critical assistance. I respectfully request that you take necessary steps within your power to cut the red tape and expedite the NFIP claims process so that New Jersey homeowners and businesses can begin the path to recovery.

Sincerely,



FRANK PALLONE, JR.
Member of Congress