|FEMA Agrees to Review
Thousands of Flood Claims from Hurricane Isabel|
By Hazel Feigenblatt
Capital News Service
Thursday, March 25, 2004
WASHINGTON - The Federal Emergency
Management Agency said Thursday it will conduct a broad review of the 25,000
flood-insurance claims from Hurricane Isabel in the face of complaints from
homeowners and lawmakers.
Federal Insurance Administrator Anthony S. Lowe made the statement to a
Senate subcommittee, conceding that some companies and agents gave bad
advice, customer service was poorly coordinated and some people did not
understand provisions of their policies.
"It's not supposed to work this way," said Lowe, who promised that
changes to the National Flood Insurance Program are on the way.
Lowe's comments came in response to questioning by Maryland Democratic
Sens. Barbara Mikulski and Paul Sarbanes, who said constituents were offered
"unfair" settlements that left them without enough money to rebuild their
homes to pre-flood levels.
"You should go back and review their claims and determine whether they
were based on inaccurate . . . price guidelines or software that does not
correspond with the real prices in terms of the costs of repairs," Sarbanes
said during the hearing by the Economic Policy Subcommittee of the Senate
Banking, Housing and Urban Affairs Committee.
The federal government has processed about 24,000 Isabel-related flood
insurance claims from Maryland, Delaware, Virginia, the Carolinas and
Washington, D.C., with another 1,000 claims pending. It has paid $385
million for flood losses in those jurisdictions, and the pending claims
total another $65 million.
A FEMA review of 80 claims in Maryland found some that showed
discrepancies between the estimates of insurance adjusters and rebuilding
contractors. In those cases, some corrections will be made, Lowe said.
But Mikulski and Sarbanes said the problems were much broader than those
Mikulski said people were not told they had the right to appeal the
settlements, were pressured to sign claims because there were deadlines
coming and were given ambiguous answers when they questioned insurance
"People are telling me they don't understand what their flood insurance
pays for. They didn't know, for example, that the contents of their homes
weren't covered without a separate policy," she said.
Miller's Island resident Harry Wujek, for example, lost everything in the
first floor of his home and got substantially less than the $80,000 he had
insured the contents for. He is currently living in a rented apartment --
with assistance from FEMA -- and plans to ask for a supplemental claim as
soon as his home is rebuilt.
"I lost $45,000 in contents," said Wujek, who was not at the hearing.
"They need to change some of their policies and laws too."
Bernice Myers, another Miller's Island resident hit by the hurricane,
said she had insured her house for $183,000 but was told she could only get
$57,000 "because of depreciation." Since Isabel destroyed her home and three
cars, she now lives in a house her husband used to rent out.
Under questioning by Sarbanes, Lowe said Thursday that all 25,000 claims
will now be reviewed.
Lowe said FEMA will look at groups of claims for patterns, and then
review claims one by one if it finds categories that are problematic. If
legitimate claims were denied, or not fully compensated, the program would
contact the clients -- but he warned that the process could take up to six
Maryland had the most Isabel-related complaints, Lowe said. The Maryland
Insurance Administration received informal complaints from 1,338 people, but
said only 312 of those people filed formal complaints. Eighty-eight are
The hearing came as the Senate is studying reauthorization of the
National Flood Insurance Program -- already passed in the House. But critics
said changes must be made before the program is reauthorized.
Mikulski said the program should plainly outline what the policies cover,
better train agents who sell flood insurance, offer a clear way for
homeowners to appeal awards or appraisals and make sure insurers pay the
real cost of repairing or replacing damaged properties.
Other speakers also suggested that the program should be reauthorized for
five years and that provisions should be added to deal with repetitive
losses -- properties affected by two or more floods in a 10-year period.
Myers, the Miller's Island homeowner, was pleased to hear of the review
-- but still a little skeptical.
"That (the review) gives me great hope. My only concern is if it's really
going to happen," she said.
2004 University of Maryland Philip Merrill College of
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