“…power to issue regulations is not power to change the law…”
US v. New England Coal and Coke Company
SLABBED talked the Maurstad Expedited Claim Handling Process last October. Of course, we talked among ourselves. Attorneys for the Rigsby sisters, however, are going to be talking with FEMA – Notice of Issuance of Subpoena Duces Tecum to Federal Emergency Management Agency.
If they sold tickets, I’d buy one! Of course, if I lived in DC, I could also stop by the Capitol tomorrow. According to Anita Lee’s blog, Congressman Gene Taylor is one of four congressional panelists testifying before a House Financial Services subcommittee.
[Chairwoman Maxine] Waters is expected to allow Taylor and the other congressmen/panelists to join subcommittee members in questioning the second panel: FEMA Administrator Craig Fugate and a member of the Government Accountability Office.
No guess about what Taylor might ask but no need to guess about the topics that will be covered at the deposition – they’re listed in the subpoena:
Topics upon which testimony will be taken:1.The procedures, regulations, or other rules to adjust flood claims caused by Hurricane Katrina. This topic includes the procedures set forth in the Adjusters Claims Manual and the modifications of those procedures set forth in FEMA MEMORANDAW-5038, dated August 29,2005; W-5040, dated August 31, 2005; W-5042, dated September 1,2005;W-5054,dated September 21,2005, W-5056, dated October 14,2005; W-5066, dated October 14,2005; W-5071, dated October 21,2005; and W-5076, dated October 31,2005 (collectively, the “Katrina Memos”)2. The development of procedures, regulations, or other rules to adjust flood claims caused by Hurricane Katrina, including the Katrina Memos. This topic would include any role played by insurers such as State Farm Fire & Casualty Company, State Farm Mutual Insurance Company, or any entity relating to those entities (collectively, “State Farm”) in developing those procedures.3. FEMA’s procedures for communicating with Write-Your Own (“WYO”) Carriers, including the type of information FEMA officials provide carriers on a verbal basis and whether any FEMA official could or would verbally authorize a carrier to deviate from written FEMA procedures or requirements.4. Any communications with State Farm relating to the adjustment of flood claims following Hurricane Katrina. This request includes any communications explaining, interpreting, or authorizing variations from the written FEMA procedures.5. FEMA’s procedures for making payments under flood policies. This topic includes, the authorization needed to support a flood claim payment, and how FEMA coordinates payments with WYO carriers.6. FEMA’s procedures for seeking reimbursement from WYO Carriers for incorrect flood payments made following Hurricane Katrina.7. FEMA’s procedures for authorizing adjusting flood claims using particular software tools, including when a software tool that would create an itemized assessment (such as Xactimate) was permissible and when a software tool that would create a square foot value determination (such as Xact Total) was permissible.8. FEMA’s authorization for adjusting flood claims following Hurricane Katrina based on square foot value determination methods such as Xact Total.9. Whether FEMA authorized insurers adjusting flood claims following Hurricane Katrina to presume that certain types of damage was caused by flood rather than making damage determinations on an individual claim basis.
Documents Requested:1. All communications with State Farm Fire & Casualty Company, State Farm Mutual Insurance Company, or any entity related to those entities (collectively, “State Farm”) relating to the development of procedures for handling NFIP claims for Hurricane Katrina. The request includes any communications related to the Katrina Expedited Claim Handling Procedures announced on September 21,2005, in memorandum W-5054.2. All communications with State Farm relating to the adjustment of flood claims caused by Hurricane Katrina. This request includes any communications analyzing, explaining, or interpreting NFIP policies and requirements, as well as any communications discussing or authorizing variations from the written FEMA procedures.3. All communications with State Farm relating to reimbursement for incorrect flood claim payments made following Hurricane Katrina.4. All communications with State Farm relating to authorization for adjusting Hurricane Katrina flood claims based on square foot value determination methods such as Xact Total.5. All communications with State Farm authorizing State Farm to presume that certain types of damage were caused by flood following Hurricane Katrina.
I attended Maxine Waters subcommittee hearing…interesting crowd.
HR 1254 is unlikely to pass….not because it isn’t good legislation, but rather there are too many sceptics asking the same question: would it solve the fiscal integrity problem?….FEMA and GAO don’t think so….I would have thought that they needed to be convinced as a precondition for this to pass.
The bill does address that problem (aka actuarial soundness), but these features are not sufficiently highlighted or proven (….get out the CBO report….cite it repeatedly.
For instance, it changes existing law so as to (more rapidly) phase-in actuarily sound rates for wind/flood and if the claims dumping theory is correct, the wind premium is already covered in the flood premium, so the government would benefit from capturing the bigger and more profitable wind premium….
And Gene Taylor is right that the multiperil insurance would eliminate the whole hot potato causality issue and conflict of interest problem in the WYO adjustment.
….but there is significant scepticism about whether the federal govt will achieve these new promises because the existing NFIP did not achieve many of its original promises, like: ..balancing availability of insurance with strong land use and building code requirements (to mitigate damage) and culling repetitive loss properties and getting the flood map accurate and policing the mandatory clause for mortgage initiation……..
This program has such a long history of poor management that it seems more likely that the NFIP could get killed…..wouldn’t that be something……GAO seems to be leaning to the death penalty….FEMA looks like it wants to be relieved of the headache…and the environmentalists want coastal development to stop…no better way than to make insurance prohibitively expensive or make property owners bare the true risk.
Plus Gene Taylor continues to argue the insurance fraud issue. That is a mistake. His frustration and exasperation are palpable……and self-defeating…….sorry Gene….this isn’t about justice for property owners or whether the insurers gamed the system robbing the federal treasury….it has to be about best practices and rationalizing (reforming) the existing program so that it works much better…..actually you are making the case for killing the whole thing.
The business community, including the insurers, the homebuilders and the realtors are genuinely scared….the NFIP is an income stream and a precondition for business….and if this is not fixed….existing coastal real estate values will continue to lag ….as the “true” cost of hurricane exposure is internalized……
all-in-all a great way to spend the day…..
Interesting points, James. I wise I had time to comment all tonight but I don’t – and really no time to comment on this one – but I can’t resist!
In the 25 or so years that I’ve worked in or around government agencies, I’ve never known an agency to support a single piece of legislation the agency didn’t develop or participate in the development of before the legislation was introduced. Although some are more subtle than others, agencies actively attempt to undermine all other legislation.
Add to my insider or close up view of “business as usual”, the total inability of FEMA to do anything as an agency but write contracts and GAO’s limited understanding of the law governing the operation of the NFIP.
For example, look at the law at
Having examined these issues in depth for 2 years I’ll add the administration’s remarks did not add much substance to the discussion. To the extent the NFIP evolved into a piggybank for private for profit business interests what happened to its solvency would have happened regardless of Katrina. Hard to build reserves when the WYO companies take so much of the premiums to push paper.
We have the NFIP because the private sector wanted no part of insuring flood risks. We have government run wind pools for the same reason. Eventually Obama and the gang will get off being stuck on stupid and devise a solution that benefits the citizenry instead of corporate America and offshore reinsurers.
HR1264 will pass the House again with or without Obama.
sop