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Reforms prove value of flood policies

Damage caused by superstorm Sandy in Long Beach

Damage caused by superstorm Sandy in Long Beach in October 2012. Credit: Newsday / Alejandra Villa

More than two years ago, Newsday’s reporting on the long-term impacts of superstorm Sandy finally gained the national attention it deserved.

After years of investigations regarding allegations of contractor fraud and underpayments of flood claims after the storm, producers from “60 Minutes” took notice and aired a segment highlighting what many on Long Island had known for years. The recovery from Sandy was far from over, and for many, FEMA’s National Flood Insurance Program had failed.

The scrutiny and political backlash spun the program into chaos. It also kicked off a series of long-needed reforms at FEMA. As a former Obama administration official who worked with agency leaders, I can say today that the insurance program is stronger, and policyholders across America should feel confident that the program is working to put their interests first.

The significance of the reforms at FEMA should not be understated. In addition to taking the unprecedented step of reopening and reviewing thousands of claims to make sure policyholders got every dollar they were owed, the program has added multiple layers of oversight. Last year, FEMA made it easier to renegotiate its arrangement with private insurers to put people before profits. The agency overhauled its appeals process, mandating transparency and adding staff so policyholders who disagree with their claims get a fair shake.

The agency also launched an 800-number to give flood survivors a way to reach FEMA directly to report suspicious activity or help with the process of filing a claim. Doing so has made the agency more responsive and provided an early warning system so new problems can be addressed quickly. FEMA also fired the insurance program’s leaders, replaced them with experienced managers, and reined in out-of-control legal costs, making sure that litigation associated with flood claims would be done at reasonable expense and pursued ethically. Simply put, there has been a culture change at the insurance program, one that values service over red tape.

We don’t have to wait for another major disaster to see whether these reforms will pay off for policyholders. Over the past several years, the insurance program has been tested with major floods hitting Texas, West Virginia, Louisiana, and across the East Coast after Hurricane Matthew. Despite the severity and frequency of these historic floods, insurance claims have been paid out fairly and quickly. In Louisiana, more than 92 percent of claims filed after their summer storm are closed, and by the end of 2016, FEMA had delivered $4 billion to 83,000 policyholders throughout affected states. How did this happen? The program moved quickly to deploy staff, issue advanced flood payments, and communicate to companies and survivors the importance of holding up FEMA’s end of the bargain when it comes to flood insurance.

Now, it’s time for elected officials to support FEMA’s work to financially protect Americans against floods. If no action is taken, congressional authorization for the program will expire in September. As part of this process, Congress should consider the major improvements already made to the insurance program and respond to FEMA’s request for additional support. This includes expanding reinsurance, which will help the program shift the financial risk of floods away from taxpayers to the private sector.

Thankfully, the painful experiences of Sandy survivors have led to positive change. Congress must now build on that progress to make sure what happened after Sandy never happens again.

Rafael Lemaitre was the director of public affairs at FEMA from 2014 to 2017.


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