Press Release

After Superstorm Sandy Victims Faced Burdensome & Fraudulent Insurance Claims Process, Senator Gillibrand Announces New Reforms To Protect Homeowners In Future Storms; Renews Push For FEMA To Move Faster On Claims

Oct 25, 2015

New York, NY – After Superstorm Sandy victims faced an extensive, burdensome and fraud-ridden flood insurance claims process, U.S. Senator Kirsten Gillibrand today announced new legislation to require more transparency and accountability from the Federal Emergency Management Agency (FEMA) so that home and property owners who carry flood insurance policies are better protected in the event of another storm. Gillibrand also renewed her push for FEMA to expedite its review of insurance claims – a process that began only after the revelation that insurance companies underpaid potentially thousands of claims.

“Three years after superstorm Sandy tore through New York, communities are still rebuilding and families are still fighting to put their lives back together,” said Senator Gillibrand. “It is unacceptable that some New Yorkers were forced to face a burdensome and fraud-ridden flood insurance claims process. We need to reform the system and require more transparency to hold FEMA accountable so that homeowners are protected when the next storm hits. This new legislation would create unprecedented oversight over FEMA and hold them accountable so that New Yorkers never again have to face the endless red tape and fraud-ridden claims process they have been forced to endure over the last three years since SuperStorm Sandy.”   

“Giving participants the guidance and answers they deserve will better serve victims of natural disasters and allow them to reconstruct their lives in the aftermath of a disaster,” said Denise ‎Neibel, Assistant General Manager of Breezy Point Cooperative in Queens. “Thank you Senator Gillibrand for your leadership and support in spearheading this legislation.”

“Senator Gillibrand’s Flood Insurance Transparency and Accountability Act of 2015 is a crucial step forward for all those homeowners who were defrauded following Superstorm Sandy, as well as those homeowners who are future potential victims of a flooding event,” said Melissa H. Luckman, Practitioner in Residence of the Touro Law Center’s Disaster Relief Clinic. “Homeowners faithfully paid yearly flood insurance premiums and trusted that they would be paid correctly following a flood, yet inexcusably, three years later, remain fighting for what is rightfully theirs. Our homeowners deserve the transparency from FEMA that Gillibrand’s legislation calls for. The NFIP reformation created by this Legislation is a vital step in restoring the faith of our Sandy survivors in FEMA as a government agency, and those policies backed by FEMA. This Legislation provides hope to so many who felt their voices were never heard.  On behalf of all those affected by Superstorm Sandy, we thank you Senator Gillibrand.”

 “This need for reform is very real to me as it relates to the well-being of my home and family but also to the integrity of my community and all NYC storm communities, said Andrea Sansom, homeowner in Red Hook Brooklyn, whose home was damaged during Hurricane Sandy. “This very common-sense Bill from Senator Gillibrand is something I’ve been waiting for since Sandy. It means that meaningful NFIP reform is not only wished for but finally within reach.”

According to court records and extensive news reports, including a devastating months-long investigation by 60 Minutes, private insurance companies appeared to have denied flood insurance claims of countless homeowners affected by Superstorm Sandy based on fraudulently altered engineering reports. Gillibrand, with Senators Charles E. Schumer (D-NY), Robert Menendez (D-NJ) and Cory Booker (D-NJ), demanded an oversight hearing to examine how FEMA handled the claims process and how FEMA managed the private insurance companies that facilitate the National Flood Insurance Program (NFIP) on its behalf. 

In the wake of these allegations, thousands of claims were re-submitted for another review process to determine if their cases were properly handled, and whether their initial claims were underpaid by the National Flood Insurance Program. While three years have passed since the storm hit, more than 16,000 claims are still under review.

Gillibrand’s new legislation, The Flood Insurance Transparency and Accountability Act of 2015 would require more transparency so that property owners have access to the documents related to their insurance claims case, including draft reports; it would also demand accountability from FEMA in its oversight of the NFIP and the contractors hired to run it.

Specifically, the legislation would do the following:

1. Make documents related the basis for deciding flood insurance claims transparent for homeowners.


There have been reports that individuals working for engineering companies hired by insurance companies to document the structural damage to homes following Superstorm Sandy fraudulently altered the engineering reports. The homeowners had no way of knowing that the reports were altered from the original engineer’s draft to the final fraudulent report. 

The new legislation would require FEMA to ensure that all documents, including drafts of reports and supporting documentation relating to a flood insurance claim are made available to the NFIP policyholder, and that the policyholder is notified within 30 days of filing a claim that those documents can be requested. This includes all draft engineering reports to ensure that reports are not fraudulently altered in the future.

2. Create a direct point of contact at FEMA for homeowners who have filed appeals with FEMA for claims that have been initially denied.

Homeowners have reported that they often do not have the ability to directly contact someone at FEMA to discuss their appeals, or the basis for the initial denial of their claims.

Gillibrand’s legislation would require the flood insurance advocate’s office, which was created by the Homeowner Flood Insurance Affordability Act, to provide all policyholders with a direct point of contact at FEMA to discuss their appeals.

3. Require FEMA to conduct yearly reviews of the “Write Your Own” insurance companies and other private entities working with flood insurance claims.

There have been reports of engineering companies and law firms improperly overbilling the Federal government.

The legislation would require FEMA to annually review all private entities that contract with the NFIP to ensure compliance with, and enforce violations to, all policies and procedures in place to protect taxpayer dollars. It would also require FEMA set up a process to ensure that all engineering and litigation costs are justified on a case by case basis to ensure that federal funds are being appropriately expended.

4. Require FEMA to publish claims data online.


The legislation would require FEMA to set up and maintain a publically searchable online database. The database would include, but would not be limited to, data on the number of NFIP claims filed, the number of claims paid in part or in full and the percentage of the claim paid for partial payments, the number of claims denied, the number of claims appealed, and the number of appeals denied.

5. Remove the “earth movement” exclusion.


The standard flood insurance policy includes the so-called “earth movement” exclusion, which states that flood insurance policies do not cover damage and loss to property caused by “earth movement,” even if the earth movement was caused by flood. This exclusion has been used as a basis to deny claims filed by many Sandy claimants.


Gillibrand’s proposed legislation states that claims against policies under the NFIP would not be denied based on the “earth movement” exclusion when the earth movement was caused by a flooding event.

6. Reform the claim appeals process.

FEMA would be required to provide claimants with clear rules, forms, and deadlines. This includes communicating to policyholder the following information at the point of their initial claims denial:

·         The effective date of the denial;

·         The justification for the denial;

·         The date on which the statute of limitations begins and ends;   


·         Contact information of a person at the NFIP with whom the    

          policyholder and/or policyholder’s representative can

          discuss the decision.


8. Require FEMA and Homeland Security to report to Congress.

FEMA would be required to provide a report to Congress no later than 1 year after the enactment of this Act, outlining the options identified by the NFIP Transformation Task Force to reform the National Flood Insurance Program, which include the following:

·         A timeline for implementing the recommendations; and

·         A description of options that require additional legislation.

The Secretary of Homeland Security would be required to report on the specific actions taken to identify and prevent individuals and private entities that participated in defrauding policyholders following Superstorm Sandy from further participation in the NFIP, based on the results of the investigation of the Department of Homeland Security Inspector General.