Menendez Urges FEMA to Reform NFIP’s Claims Process

U.S. Sen. Robert Menendez (D-N.J.) last month sent a letter to Federal Emergency Management Agency’s (FEMA) Administrator Craig Fugate, urging him to implement a number of changes to the National Flood Insurance Program’s (NFIP) claims process.

The letter follows up on issues that were raised at the July 30 hearing before the U.S. Senate Banking Subcommittee. The hearing, titled “The Flood Insurance Claims Process in Communities After Sandy: Lessons Learned and Potential Improvements,” discussed the claims process administered by the NFIP and Write Your Own (WYO) companies after Superstorm Sandy struck the East Coast in 2012. At the hearing, lawmakers had a chance to listen to the insurance industry’s lessons learned and potential areas of reform.

“We have, in my view, a process and a standard that is stacked against policyholders,” Menendez told Fugate at the July hearing.

“I don’t want anybody getting a dime they shouldn’t get; at the same token, I don’t want a policyholder who’s done the right thing for 10, 20, 30 years, in some cases, getting low-balled because the process is stacked against them,” Menendez said.

In his letter, Menendez urged Fugate to implement reforms to address what the senator described as “serious shortcomings” in the NFIP claims process revealed during the hearing. Menendez laid out three specific changes that he said FEMA should implement immediately:

• Raise penalties for insurance companies that “lowball homeowners” to level the playing field and bring fairness to the system;
• Reopen the 270 Sandy claims that FEMA dismissed solely because the policyholder missed a FEMA deadline; and
• Create an independent and robust flood insurance advocate to help homeowners navigate the claims and appeals process.

“Taken together, these three reforms will go a long way towards making the claims process and the NFIP in general stronger, fairer and more effective,” Menendez said.