The memories of those early days after Katrina’s landfall will stay with me until I meet my maker and I well remember the seemingly ardous task of itemizing our possessions for the insurance claim. In an earlier post on my flood adjustment experience I said you have to be here to fully understand the context of the events. The expedited claims procedures are such a case in point of important nuance that is easy to miss. Let’s start by revisiting The Scheme Chapter 5:
The expedited flood procedures approved by the flood program after consultation with insurers also allowed companies to settle flood claims without a site visit if satellite and aerial images showed that the home disappeared in the storm in areas that suffered storm surge or if the home sat in flood waters for an extended period of time and the damage likely exceeded the policy limits.
In addition, FEMA waived the line-by-line adjusting that was of concern to participants in the Wooley meeting after the storm. Rather than require room-by-room, item-by-item calculation of insured losses, FEMA allowed flood adjusters with two large but unnamed insurance companies to calculate damages by measuring the square footage of each room and characterizing the building materials as high, medium, or low grade, according to the GAO report.
On the surface the waiver of the line by line adjusting requirement would be a God send to both adjuster and policyholder alike. The reality is a bit different and coping with that reality after Katrina meant literally buring the candle for hours at night documenting line by line our loss. One such memorable September 2005 evening included a big ass bottle of Grey Goose Vodka my best friend and (fellow slabber) found in the mud while he was recovering personal effects.
The logical question is why go through the trouble when NFIP waived the requirement? The answer is simple and one a CPA should know, namely the Casualty Loss calculation. While IRS (far after the fact) relaxed the substantiation requirements somewhat they expect to see such a list should they come auditing. The end result for my family and the vast majority of my fellow slabber/clients was this wonderful IRS publication.
In short we prepared detailed itemized lists of our losses.
With the benefit of hindsight it is clear the “good news” delivered to me by Tammy Hardison via telephone she would no longer require an itemized list of our losses was good news only for the industry itself, not their insureds. That is not surprising since slabbers were not invited to that Atlanta meeting held by FEMA in September 2005. And while insurers got paid the same amount by FEMA to do less work, the work of the slabbed was just beginning.
sop
Interested in knowing how how the line item value compared to value using the expedited method – same, more, less?
I was underinsured for my contents Nowdy, NFIP maxes out at $100K for contents so we can’t draw conclusions from my claims. Since I was underinsured for contents and slightly under for structure it made me the desired candidate for expedited claims handling per your post. And that makes a certain amount of sense.
BUT in claims where the value of it was within the NFIP coverage limits lies where the claims dumping occured. The MID examiner found it in fact in his stratified sample but warned against extrapolating the results because of the complexities I’m pointing out.
In the cases of claims dumping as happened with best friend, the adjuster maxed out the flood and content limits despite the obvious wind damage. The way the program is set up with it’s “no lookback rules” at FEMA/NFIP, what former NFIP director Dave Maurstad did was take a silver platter and pile it high with billions of dollars of taxpayer ca$h and put it down smack in the middle of the table all the insurers were seated in the Atlanta meeting on 9/7/2005 and walk off.
Like the WaPo blog says, Government, Inc. Those two words sum up 8 years to the T starting with ENRON Raping West Coast utility consumers right on through to today and the 2008 $700 billion dollar taxpayer big business giveaway.
sop