FEMA’s Fugate Calls for Transparency, Good Faith Treatment to Policyholders and Investigation of Excessive Litigation Costs Regarding Sandy Flood Claims

I wonder if FEMA’s Craig Fugate was forwarded yesterday’s post, Flood Insurance Defense Costs to Exceed $100 Million Dollars and the Amount of Indemnity. He wrote a letter today telling all the WYO’s to do exactly what we (and this "we" includes everybody except the WYO insurance defense attorneys) have been asking for months.

He noted in part:

As you are well aware, although the vast majority of Sandy-related claims have been successfully resolved, there are approximately 1,500 claims in litigation, mostly in New York and New Jersey. The courts, Members of Congress, the media, and the public we serve have expressed outrage over allegations of underpayments; excessive litigation expenses and inadequate oversight of litigation; disreputable engineering practices by contractors; and lack of transparency on peer reviews conducted by those contractors. In particular, Judge Gary Brown concluded in one case in the Eastern District of New York that there had been "reprehensible gamesmanship" and that "unprincipled practices may be widespread." We must do better and we must provide the transparency necessary to address these serious concerns head on.

You represent FEMA, and like FEMA you are stewards of taxpayer funds. Unnecessary litigation tactics or failure to resolve litigation in a timely manner could result in excessive legal fees and costs which arc ultimately reimbursed from the National flood Insurance Fund. Policyholders deserve to be paid for every dollar of their covered flood losses, and taxpayers deserve to expect good stewardship of tax dollars. FEMA has requested recommendations from the Department of Homeland Security Office of Inspector General on FEMA’s oversight of flood litigation. We will also take other necessary and prudent actions to ensure WYO companies and their attorneys are acting responsibly with the Program’s funds and are acting in good faith with respect to their duty to the courts and policyholders.

Fugate is to be congratulated. The Senators and their staff also deserve praise for pressing for honesty and fair treatment. Hopefully, reform will come and these disputed flood claims will start to get resolved.

The sad part is that I know there are hundreds of policyholders who simply gave up and others who have been duped without knowing it.