New York, NY – After an investigation by New York State’s Department of Financial Services found that banks have delayed approximately $200 million in Superstorm Sandy related insurance payments to thousands of New York homeowners, U.S. Senator Kirsten Gillibrand urged the Consumer Financial Protection Bureau (CFPB) today to review the matter and find the most efficient and effective way for financial institutions to expedite insurance claims and cut through red tape. Four major U.S. banks are holding more than two-thirds of the 6,000 delayed relief funds, or an estimated $130 million, owed to New Yorkers who need assistance to repair and rebuild in the aftermath of Superstorm Sandy.
“Our New York homeowners who suffered damages from the storm should not wait any longer for money to repair and return to their homes,” said Senator Gillibrand. “These delayed insurance checks have been held up for too long. We must cut through the red tape so the funds can finally reach those who desperately need it.”
Senator Gillibrand wrote in a letter to CFPB Director Richard Cordray, “I am requesting that you initiate an inquiry that determines the best method of expediting the transfer of insurance claims to the homeowner. With this method, I ask that CFPB urges each bank to use their best discretion to get homeowners the funds they deserve in their restoration efforts. Rather than using red tape to prevent homeowners from making repairs, the banks and insurance companies should be doing everything within their power to get homeowners the financial resources they need to rebuild their homes.”
Nearly four months after New York homeowners filed insurance claims, some of the nation’s largest financial institutions have delayed sending checks to thousands of families affected by the storm. Financial institutions have been holding these checks due to anti-fraud regulations and bureaucratic process in an effort to ensure payments go to the correct homeowner. These delays and safeguards, however, have prevented families from carrying out the work needed to recover and rebuild from the storm. Senator Gillibrand urged the CFPB to help move the process forward by looking into the best method for banks to quickly transfer claims owed to Sandy victims.
Full text of the letter is below:
Dear Director Cordray,
It is with great concern that I write to you regarding a recent report issued by New York State’s Department of Financial Services that found as much as $200 million in insurance payments due to the victims of Superstorm Sandy that has yet to be released. It is absolutely critical to the state’s economy and the well-being of these families that they are able to receive their insurance payments so that they are able to make the necessary repairs to their homes and begin the critical step of rebuilding their lives.
As a result of Superstorm Sandy, more than 335,000 homes in New York State were either damaged or left completely uninhabitable. Thankfully, many of these residents were covered by homeowner’s insurance that could help offset costly repairs. However, a full month after the storm made landfall, there were multiple reports of delayed insurance payments forcing homeowners to postpone the work needed to repair their damaged property. State regulators then initiated an inquiry and found that hundreds of millions of dollars due to homeowners are being delayed by financial institutions that are holding these payments in escrow as a result of anti-fraud regulations implemented by insurance companies.
It should be noted that the damages resulting from Superstorm Sandy contributed to an unprecedented volume of property damage claims and subsequent insurance payments, which inundated these financial institutions. Because of these large claims, the burden has been placed on these financial institutions to ensure that these payments go to the correct homeowner.
However, almost three and a half months have passed since insurance claims were filed and thousands of families are unable to move back into their homes. Four of the United States largest banks are delaying more than 4,100 checks worth over $130 million. Because of these flawed regulations, over 6,000 homeowners are forced to delay the process of rebuilding their homes and moving on from the effects of this horrible storm.
As Director of the Consumer Financial Protection Bureau, I am requesting that you initiate an inquiry that determines the best method of expediting the transfer of insurance claims to the homeowner. With this method, I ask that CFPB urge each bank to use their best discretion to get homeowners the funds they deserve in their restoration efforts. Rather than using red tape to prevent homeowners from making repairs, the banks and insurance companies should be doing everything within their power to get homeowners the financial resources they need to rebuild their homes.