FEMA asks insurers to get out of the way of Sandy settlement talks

Federal disaster relief officials asked insurers to get out of the way of settlement talks over more than 1,000 outstanding disputes involving Hurricane Sandy victims’ flood claims.

The Federal Emergency Management Agency said it would take charge of the discussions in an effort to speed up the resolution of claims, which have been mired in controversy including allegations engineering reports were rigged to avoid insurance payouts.

“We must move swiftly to restore confidence in the program and that action begins by expeditiously resolving the pending litigation involving thousands of disaster survivors,” Brad Kieserman, a FEMA official, said Thursday in a letter to the insurers.

Kieserman asked the companies that participate in its flood insurance program to “promptly” sign a standard agreement that will let the agency review claims and determine appropriate payments to homeowners. FEMA will then instruct the insurer to pay the policyholder, according to a copy of the letter the agency provided to Bloomberg News.

Kieserman earlier said the agency would work with the insurers to settle the remaining cases after some homeowners claimed they were underpaid, or not paid at all, because of fraudulently manipulated engineering inspection reports. The homeowners alleged that while their houses were damaged by floodwaters, the reports falsely attributed the damage mainly to age of the structures.

Dozens of private insurance companies participate in the program with FEMA by offering flood coverage to homeowners and handling claims in exchange for financial incentives. The damages are ultimately paid by government.

Insurers have denied allegations they used manipulated reports, saying they have no reason to cheat homeowners because FEMA pays the claims. Engineering firms say there’s nothing suspicious about peer-reviewed revisions to their first-draft damage reports.

Mar 06, 2015 | By Christie Smythe

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