They paid premiums, so why must they fight for flood insurance payouts?
DENHAM SPRINGS, La. — Kemberley Corbitt walks through her gutted home, looks at the 7-foot water line on the only interior wall still standing in the 2,000-square-foot home and tries to fathom what to do with an $87,000 check she finally received from her insurance company, six months after the August flood.
The settlement is about average for the 30,000-plus claims filed so far in the Great Flood of 2016, which FEMA calls the largest inland flooding disaster in the 50 years that the federal government has been paying private flood insurance claims. More than a dozen people died in the disaster.
Multiple contractors have estimated it will cost about $140,000 to make repairs to Corbitt’s house, and that doesn’t even count what could be another $110,000 or more to elevate the home to bring it up to local code requirements.
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“My husband and I worked extremely hard to pay for that almost $3,000-a-year flood insurance while supporting our children, while paying this (mortgage) note,” she said. “We didn't plan on a flood. But you have insurance because insurance insures that you will be taken care of. That's why you pay for it. And that's not what happened.”
After paying those large premiums to get more than $200,000 in flood coverage, Corbitt can’t understand why she has to fight so hard for an adequate payout. After all, the money isn’t coming out of the flood insurers’ pockets: The federal government reimburses them for all claims payments and for all their expenses, such as paying adjusters, engineers and lawyers. In addition, the National Flood Insurance Program, run by FEMA, tacks on as much as 30% for profit.
But Louisiana Insurance Commissioner Jim Donelon says FEMA has become “miserly” in paying flood claims because the enormous damages caused by Hurricanes Katrina and Sandy left the NFIP fund $25 billion in the red. The program is set to expire this year, and policy analysts expect a major fight in Congress over whether to renew a program that’s so far underwater.
The NFIP hasn’t been renewed since 2012, before Hurricane Sandy yielded allegations of systematic underpayments and even fraud.
Investigations by The New York Times and CBS News’ 60 Minutes in the wake of that storm exposed altered engineering reports and other documents that insurance companies were using to deny structural damage or to argue that pre-existing soil conditions or earth movement caused the loss, rather than the floodwaters. That helped lead to federal fraud investigations, the indictment and conviction of an engineering company in New York and the reopening of more than 144,000 closed Sandy flood claims.
“It’s a sad state of affairs indeed, from a corrupt industry point-of-view, as well as a politicized government entity,” Donelon said.
George Kasimos of Toms River, N.J., the founder of a grassroots group called “Stop FEMA Now,” saw these problems up close after Sandy. His home flooded and the insurance company and FEMA only offered him $80,000. It took four years, but he finally won a $246,000 final settlement.
The outspoken “Big George” kept fighting for other policyholders, too, serving as their representative on a task force formed by U.S. Sens. Charles Schumer and Kirsten Gillibrand of New York and Robert Menendez and Cory Booker of New Jersey.
And Kasimos drove an RV down to Louisiana last month to hold a series of town hall meetings and share painful flood insurance lessons with the latest bewildered victims.
He was joined by Jeff Coolidge, a former FEMA contractor who said he was ordered to limit payments to a certain level when he served as an adjuster on Sandy claims.
“I played a part in it,” Coolidge said. “For 20 years, you know, I lowballed everybody. That was my job. And I truly apologize for that.”
Kasimos, a real-estate broker in New Jersey, said Louisiana victims should be getting $150 per square foot for a fully gutted, flooded home. Instead, Corbitt has been offered just $30 per square foot.
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Corbitt carried $197,000 in coverage for the structure and $26,000 more for contents. The local authorities deemed her home 67% ruined by the flood, but the adjuster for Pilot Flood Management said Corbitt only suffered $60,000 in damage to her home, not including contents. She believes the adjuster nickel-and-dimed her on dozens of individual items. Pilot Flood Management did not respond to requests for comment.
Frank Weber’s 87-year-old mother, Carolyn, is only getting $46 per square foot, or about $54,000 for damage to her structure. Now, both Weber and Corbitt say they’re ready for a long fight with FEMA and their insurers, hoping they can learn from Kasimos’ experiences.
The head of the government program is promising better service and quicker payouts than Sandy victims saw.
“Sandy made it clear that we had lost focus on our customer. And what we have done now is change that,” NFIP Director Roy Wright said, pointing to a record $300 million in advance flood insurance payments approved by FEMA in the first 30 days after the Great Flood of 2016.
Wright, who took over the NFIP in 2015 after the intense criticism about Sandy, said he agrees with watchdogs like the Government Accountability Office and New York Attorney General Eric Schneiderman who say FEMA needs to exert more control over the insurance companies that administer the program on the government’s behalf.
Wright promised tougher oversight and a more hands-on role for FEMA staff in reviewing claims and doing their own inspections of random homes.
“I, personally, am assuring that policyholders are going to get every dollar that they're entitled to under their policy,” he said.
Follow David Hammer on Twitter: @davidhammerWWL