Insurers, eager to grasp at any straw that might pull them out of the harsh glare of regulatory, legislative and media scrutiny over their handling of Hurricane Katrina claims, were relieved that a Department of Homeland Security report uncovered no evidence private carriers had improperly shifted wind-damage claims to the federal flood insurance program. Unfortunately–for both the industry and Congress–the report is virtually worthless.
The report by DHS Inspector General Richard Skinner–marked “interim”–makes painfully clear that the Feds have no clue whether claims with both wind- and water-related elements were settled fairly, or whether anyone will ever know for sure.
That means Congress will be flying blind when they attempt to reform the National Flood Insurance Program this fall. A final DHS report will be issued early next year, but by then it might be too late to make a difference.
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