Superstorm Sandy Victims Say FEMA's Role Is Fatally Conflicted As Sandy victims and FEMA work to resolve accusations of falsified damage estimates, some are questioning how the agency can be both a flood insurance provider and a regulator of flood insurance.

Superstorm Sandy Victims Say FEMA's Role Is Fatally Conflicted

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This week FEMA began settlement talks with homeowners who were devastated by Superstorm Sandy in 2012. There is a lot to resolve. Homeowners say that engineers who were hired by insurance companies falsified damage estimates. They also say they're not being repaid for the actual damage that Sandy caused. From member station WSHU Charles Lane reports. Some question whether FEMA can be a watchdog for both disaster victims and the taxpayers who subsidize the federal flood program.

CHARLES LANE, BYLINE: The National Flood Insurance Program is both public and private. The public part is there to help people after disaster, getting the money to rebuild their house. The private part comes when FEMA contracts with normal insurance companies.

KATHY HANLON: I cried many times because I was so angry when I got off the phone with the insurance company.

LANE: Kathy Hanlon lives in Long Beach, N.Y. After Sandy, her life crumbled. She had no electricity, her family was traumatized, and one of her sons was getting sick. On top of that, there was the bureaucratic maze of flood insurance.

HANLON: It was demeaning. We had to send them things repeatedly. We had to wait for phone calls. We had to wait for people to come visit the house.

LANE: What Hanlon experienced is the private insurance side of the flood program where gestures are tasked with making sure damages are legitimate. Ben Rajotte is a lawyer for the Disaster Relief Clinic at Touro Law School on Long Island. He says the problem is FEMA is trying to protect the interest of policyholders while also making sure they don't get paid too much.

BEN RAJOTTE: And so that provides tension within the program. And then that tension is magnified by the fact that you have basic fundamental principles of administrative law that we don't think are being followed.

LANE: Rajotte says that his team of law students have tried to help local Sandy victims navigate the insurance maze, but he says they keep getting stuck in the flood program's dual roles. For example, he says FEMA repeatedly changed how much proof was required to show damage losses.

RAJOTTE: And you have essentially FEMA making up the rules as it's going, and the rules favor the insurers.

LANE: Rajotte wants FEMA to cede its regulator roll to a third party. This way when policy holders have a problem like questionable engineering reports, they have someplace to go that isn't also charged with keeping insurance payouts low. FEMA says it has done this. Two months ago it created a public advocate's office. Still, flood insurance companies continue to take a great deal of criticism for lowballing damage estimates. Ed Pasterick says this is because of a common misconception with what the National Flood Insurance Program is.

ED PASTERICK: The policy as it stands now only covers damage caused by flooding.

LANE: Pasterick worked in the National Flood Insurance Program for 40 years before he retired last year. He says if homeowners want what's only supposed to be a flood policy to cover other damage, Congress would have to pay for it.

PASTERICK: Well, that's - you know, that's up to somebody to decide. If they decide that the program should cover everything, then you're going to expand the program significantly.

LANE: Right now Pasterick says the premiums paid by homeowners in flood plains don't even cover all the risk created by flood alone. Taxpayers have to chip in for part of that. For NPR News, I'm Charles Lane.

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