Booker calls for insurance investigation for Sandy victims
Glenn Townes | 3/9/2015, 7:50 a.m.
New Jersey Sens., Cory Booker and Robert Menendez recently announced plans to call for hearings and a formal investigation into how the National Flood Insurance Program has been negligent, lethargic and perhaps, complicit in how it has processed and paid thousands of insurance claims to victims of Super storm Sandy—many of which were homeowners across the Garden State.
More than 1,500 victims of the hurricane that slammed into New Jersey in late October 2012, have filed lawsuits against the National Flood Insurance Program claiming, among other things, the agency encouraged insurance carriers to limit Sandy victim payouts and substantially underpay homeowners since all claims are directly by the Federal Emergency Management Agency(FEMA). The brouhaha and calls to investigate storm victim payouts grew louder last week after the popular news program, 60 Minutes, aired an investigative report that highlighted Sandy storm victims—many in south and central New Jersey, who are still reeling from the storm aftereffects—including homeowners still without a home and waiting for full and complete insurance payouts—nearly 3 years after the storm. “Many people lost everything,” Booker said. “When it comes to collecting from their insurance companies, (these victims) find out their insurance companies are playing games.”
Despite the complaints, officials from various insurance agencies contend the industry has no financial incentive to underpay and low ball flood claims since funds come directly from FEMA. In a statement to the media, an official from the Insurance Information Institute, an insurance industry trade group said, “The insurer does not earn any money by reducing the value of the claim to the policyholder.” However in testimony before the Senate Banking Subcommittee last year, a FEMA official said insurance companies found to have overpaid on flood insurance claims were required to reimburse FEMA for the full amount of each over payment—thus tapping into and reducing insurance revenues. In sharp contrast, insurers faced no consequences when subsequent audits discovered underpayments on claims---a contention made by thousands of Sandy victims. “We will continue to push for a complete and full investigation into how federal agencies are reimbursing victims of Super Storm Sandy,” Menendez concluded.