Pallone Calls inability of FEMA to Resolve Sandy Claims “Unacceptable”

FOR IMMEDIATE RELEASE
January 11, 2017



Washington, DC - Congressman Frank Pallone, Jr. (NJ-06) sent a letter to the Federal Emergency Management Agency (FEMA) Administrator W. Craig Fugate to express disappointment with the continued delays for claim reviews from victims of Superstorm Sandy. Although Superstorm Sandy occurred over four years ago, 36% of Sandy claims still remain open.

"These policyholders have been waiting for years to get their claims resolved, and are eager to move on with their lives,” said Pallone. “I have heard from constituents who began the process with a FEMA contact, only to have that person leave their position, causing the victim to spend weeks or months trying to connect with their new contact. FEMA should be focused on resolving claims, not blaming victims for delays.”

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. At the meeting, Wright stated that FEMA would have the unprocessed claims finished by the end of the summer.

Last year Congressman Pallone introduced the Flood Insurance Reimbursement Standards Transparency (FIRST) Cap Profits Act and he 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%. Pallone’s bill also includes a provision to require that private flood insurance companies cover the legal fees of plaintiffs if the company is found to have committed fraud.

The text of the letter can be found below:


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

Dear Administrator Fugate:

I write to express my disappointment with FEMA’s continued delays for Superstorm Sandy victims, specifically those who had requested third-party claim reviews. It is unacceptable that these victims have to continue to wait because of errors on the part of FEMA. As of December 16, 2016, more than four years after the homes and businesses of victims were destroyed, 36% of Sandy claims remain open. FEMA’s continued slowness in resolving these claims is not acceptable. I respectfully request that you prioritize expediting the Sandy claims review process in your final weeks at FEMA, and that you strongly encourage your successor to work to complete this process as quickly as possible.

Last month, FEMA announced more delays for Sandy Claims policyholders for those opting to request a third-party claim review. According to FEMA, the process is experiencing delays due to policyholders submitting “lengthy and/or unrelated supplemental documentation,” which must then be reviewed by the Adjuster.

The issue of too much documentation could be avoided with clear direction from FEMA as to what documentation is needed to ensure that the claims review process can move forward smoothly. These policyholders have been waiting for years to get their claims resolved, and are eager to move on with their lives. I have heard from constituents who began the process with a FEMA contact, only to have that person leave their position, causing the victim to spend weeks or months trying to get in connect with their new contact. FEMA should be focused on resolving claims, not blaming victims for delays.

When I spoke with Roy Wright, Deputy Associate Administrator for Insurance and Mitigation, in May 2016, he assured me that the agency was making substantive progress and would have fully processed all claims by the end of the summer. As of FEMA’s status report in mid-December, that target still has not been reached. This is frustratingly slow progress, especially since a claim being “processed” means it has only gone through a desk review. FEMA has to pick up the pace.

The halting progress of the Sandy Review process has become a source of exasperation for many Sandy victims, and I remain committed to pushing for my constituents to receive their due benefits without further unnecessary delay. While I recognize that your time at FEMA is coming to a close, victims of Superstorm Sandy cannot move on while their claims hang in limbo. I call on you to work with your successor to ensure a smooth transmission at FEMA that prioritizes the completion of the Sandy claims review process.

Sincerely,



FRANK PALLONE, JR.
Member of Congress

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.