After a scathing report about engineering fraud on 60 Minutes, it looks like FEMA is going to allow policyholders the ability to reopen all Superstorm Sandy insurance claims per a NPR report. As a licensed public insurance adjuster who represents policyholders and handled Sandy flood claims, it would be helpful to understood that the NFIP (National Flood Insurance Program) sets their own very rigorous and draconian adjusting practice that have lead to the situation we have here. As an example, NFIP will not allow for any discussion on the scope of the loss other than what their adjusters says was flood damaged. If there is a disagreement, then the dispute resolution process in the flood policy called appraisal cannot be used to determine scope issues, only price.

The problems that will result in this massive re-opening of these flood losses are that the main issue for the most part is about the scope of the loss.  We have had claims where adjusters are brought in from different parts of the country and are not familiar with local pricing, construction issues and to top it off they often will not even talk to us as the policyholder’s representative.

The whole flood adjusting practice and procedures need a major overhaul from top down. In my opinion the flood losses need to be adjusted based on the state laws where the flood loss occurred. There are often huge differences in what is allowed based on state laws and what has been set as policy in Washington D.C. for property adjusting rules and regulations for a flood loss. I realize NFIP  is federally funded, but for the most part the adjusting teams they send in are working for private companies who are hired by the for profit insurance companies who, guess what, are licensed by the states and thus are required to know state laws and regulations set by the various state departments of insurance. 

It is a somewhat rare occasion when a policyholder is made whole from a flood adjustment given the terms and conditions of a flood policy. The best solution would be that the standard all risk homeowner policy cover both the flood and wind peril. The loss is adjusted just as if a fire or other covered peril caused the loss. If this is not changed, it will be the same story over and over again after each Cat loss. Guaranteed!