U.S. Senator Charles Schumer, today, urged the Federal Emergency Management Agency (FEMA) to scrap the decades-old Write-Your-Own (WYO) insurance model from the National Flood Insurance Program (NFIP) and overhaul the process entirely so that flood insurance policyholders in New York and across the country are benefited in the future.
The WYO model has been in place since 1983 and allows participating insurance companies to write and service policies in their own names. There are currently over 80 different companies that sell policies.
Schumer argues that while the WYOs are subject to NFIP’s rules and regulations, the companies are servicing flood insurance claims with the same profit-driven mentality as they would have for their other lines of business, and as a result unfairly reducing payments to homeowners.
Specifically, Schumer pointed to the months-long investigation aired by ‘60 Minutes’ which brought to light evidence that private engineering companies altered engineering reports so as to not fully reflect the true impact and damage caused by Superstorm Sandy to New York homes, leading to the unjust denial or underpayment of flood insurance claims.
“Even with a system like NFIP flood insurance — paid for you by the taxpayer — the bottom line is that the standard M.O. of ‘write your owns’ is still insurance company 101: deny-deny-deny and lowball the policy holder, rather than a victim-centered system focused on promptly paying devastated disaster victims so they can get back in their homes and resume normal lives. The only way to change this unacceptable culture is to scrap it,” said Schumer.
Schumer recommends that after retiring WYOs from the current flood insurance system, the NFIP offers all flood insurance policies directly to the property owners. This may ultimately allow for FEMA to take a much more active role in ensuring coordination across government agencies, he said.
In a letter to FEMA, Schumer outlined several other suggestions for streamlining and correctling the currently flawed process for homeowners and businesses to file and receive claims following event like Superstorm Sandy. Importantly, FEMA does not need to wait for Congressional action to make these changes. It has the authority to make many, if not all, of these changes on its own, he stated.
“We know the current model is terribly flawed and there is evidence to believe that a new model will allow the NFIP program to function more effectively and efficiently going forward,” Schumer wrote.
