Page 45 - The Long Road Home

At a time when more and more Americans need and should have access to flood insurance, many proposals for the future of the NFIP take the program in the wrong direction. Reforms must focus on the experiences of policyholders, the needs of communities, and the gaps in coverage due to mandates or cost.
FEMA must effectively regulate and reign in the profits made by insurance corporations that participate in the Write Your Own (WYO) program, or eliminate the program. First, FEMA must cap compensation for WYO companies to cover just reasonable costs associated with the administration of the program and make the compensation schedule public. Insurance companies in the program do not carry the risk and so should not be profiting from the program unduly.
It is also critical, as our research shows, to protect policyholders from under-payment by WYO companies and from unfair exemptions. In the current program structure, WYO
insurance companies are liable only for overpayment, which incentivizes them to underpay claims. The WYO program should be reformed to hold insurance companies that underpay claims responsible for making up the difference. In addition, insurance companies in the program that exhibit a pattern of underpayment should face escalating penalties culminating in removal from the program. Additionally, insurance companies’ widespread use of the “earth movement” exclusion to deny claims, which the former head of FEMA himself has acknowledged was not what was envisioned when it was defined in the NFIP,52 should be eliminated.
Tax dollars should not be used in the future to cover the costs of the attorneys working for WYO companies when policyholders are suing them for an unfair or underpaid settlement. When policyholders sue for a fair settlement, they should be able to receive attorney’s fees and expert fees rather than having to pay out of the settlement they deserved.
NEW JERSEY RESOURCE PROJECT
BELMAR FLOODING
The scene outside Krista Sperber’s home in Belmar on November 1, three days after Sandy.
Mayor Matt Doherty launched a “Home by Summer” effort that sought funds from neighbors, companies, and businesses in town. All told, it raised over $240,000 in funds or labor and supplies donated to assist families in getting home. To make the rebuilding process smoother for businesses and homeowners, the town also made a special effort to facilitate rebuilding for older homes. In Belmar, owners of pre-existing nonconforming structures were allowed to rebuild on the same footprint as long as they didn’t exacerbate whatever was unusual or out of date about their property. This allowed them to rebuild without applying for a variance, saving time and money. No fees were charged for rebuilding Sandy- damaged homes or businesses, and Belmar hasn’t had to raise taxes for seven years.
Photo: Krista Sperber, Grass Creative.
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