New York State Attorney General Eric T. Schneiderman has released a report in the wake of Superstorm Sandy that identifies what he characterized as “several fundamental flaws” in the National Flood Insurance Program (“NFIP”) and that suggests recommendations that, he said, would increase transparency and accountability.
The Attorney General called on federal regulators and industry participants “to enact reforms to ensure that the insurance claims process is more transparent.” He added that, “[w]hen the next major storm hits, it's crucial that families know exactly what kind of damage is covered by insurance, and that their claims are being handled professionally and reliably.”
The Attorney General's report, entitled “Murky Waters: Increasing Transparency and Accountability in the National Flood Insurance Program, Findings and Recommendations in the Wake of Superstorm Sandy,” identified what the Attorney General characterized as “several fundamental flaws related to both the scope of coverage and the structural damage assessment process under the NFIP.” The report also called for the immediate implementation of specific reforms.
Flaws in the NFIP identified in the report included:
- A lack of clarity in the scope of coverage under the standard flood insurance policy;
- Inadequate training and lack of certification requirements for structural engineers retained in connection with flood claims; and
- Poor administration and supervision of the flood claims process, including the failure to provide important documentation to policyholders.
Reforms to the NFIP recommended in the report included:
- Increase the transparency and clarify the scope of flood insurance coverage and any applicable exclusions, to provide consumers with a better understanding of what is and is not covered under their flood policy, through the creation of a plain language disclosure sheet;
- Provide policyholders with all documents created during the course of the flood claim administration process and ultimately relied upon in determining payment or denial of a flood claim, including all final adjuster and engineering reports, as a matter of course;
- Implement a national certification process for all engineers retained to provide structural damage assessments in the wake of a flood event; and
- Ensure the transparency of fees paid to engineering experts by implementing a standardized fee schedule for all engineering services.
Steven A. Meyerowitz
Steven A. Meyerowitz, a Harvard Law School graduate, is the founder and president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. He may be contacted at [email protected].