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Government

FEMA Increases Oversight Over Flood Insurers

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AP Photo/Jason DeCrow

The Federal Emergency Management Agency (FEMA) said Monday it's boosting its oversight of the private insurance companies contracted by the National Flood Insurance Program.

FEMA manages the flood program, which allows people to buy flood insurance from the federal government. The agency hires private insurance companies to process claims and payouts in the flood program.  The insurance companies hire engineering firms to survey damage, and adjusting firms to calculate how much it will cost to repair the damage. 

Thousands of Sandy victims allege engineering reports were changed in order to lower insurance payouts. FEMA now wants to pre-screen engineering firms hired by private insurance companies. But recent allegations cast doubt on a much larger pool of documents.

Humphrey Uddoh, a resident of New Jersey, said his adjustment report was doctored.

"It affects many more people than just people affected by engineers," Mitchell Shpelfogel, Uddoh's lawyer, said.

"The engineers only affected about 14 percent of people who put in claims, but the adjusters would affect 100 percent of the people who put in claims."

FEMA has not yet indicated if they will increase oversight over adjusting firms as well, but Shpelfogel said that would be a much more difficult task.

Lawyers estimate that it cost as much as 3 to 4 billion dollars to reimburse homeowners for questionable engineering reports. They gave no estimate for questionable adjustments.   

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