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Over the past four decades, New Jerseyans have received almost $6 billion in payments from the national flood insurance program to help rebuild after devastating storms like Hurricane Sandy, which is estimated to have wrought more than $36 billion in damage to the state.
It’s not surprising, then, that New Jersey has a keen interest in seeing that the National Flood Insurance Program (NFIP) is not only renewed, but improved, before it expires on September 30. More than 230,000 New Jerseyans hold flood insurance policies.
Several of the state’s congressmen weighed in recently on the program, both on its reauthorization and on language in the federal budget proposal that seeks to increase fees on policyholders.
Last week, Democratic Sen. Robert Menendez unveiled a package of reforms he wants to see incorporated in the program, created in 1968 to help property owners get affordable coverage for major flood damage. NFIP, administered by the Federal Emergency Management Agency, mishandled numerous claims filed due to Sandy and FEMA acknowledged the problems and agreed to reopen the claims of all those who felt they were unfairly compensated. About 150,000 filed claims and about 1,500 eventually sued, contending that insurers improperly denied their claims. After FEMA reopened the claims process, Sandy victims received an additional $230 million that they had initially been denied.
“In the aftermath of Sandy, I saw firsthand all of the problems with the program and all of the work that needs to be done,” Menendez said during the first committee hearing on reauthorization. “Sandy was a natural disaster, but the delays, the denials, the disputes they encountered throughout the flood insurance claims process — that was a man-made disaster.”
Menendez, a co-sponsor of a 2014 law that limits the amount of money by which FEMA can increase flood insurance rates each year, said much of hisfocuses on cutting wasteful spending by write-your-own insurers and on outside attorneys to fight legal challenges to save money and keep rates affordable. Among its key points, Menendez’s plan would:
Eliminate NFIP’s debt or transfer it to the general fund to stop $400 million in annual interest payments and bring the program to solvency.
Extend the 60-day deadline to appeal a claim to FEMA and enforce FEMA’s 90-day deadline to adjudicate an appeal, or award the full amount of the claim to the insured, and require an independent, neutral arbitrator to hear all appeals.
Develop a policyholder’s right to know and give those who are insured the right to see all documents pertaining to their claims.
Limit profits to write-your-own insurers and compensate them based on performance and impose penalties on overpayment and underpayment of claims.
Expand the program that gives up to $30,000 for work to help prevent future damage to a home by allowing people to get money for pre-disaster mitigation.
“Reauthorizing the National Flood Insurance Program is an opportunity to fix major problems we saw in wake of Superstorm Sandy,” said Rep. Bill Pascrell (D-9) and a supporter of the plan. “We also need to ensure every dollar paid by struggling homeowners is used to drive down costs and improve mitigation efforts. New Jerseyans paid into this program with the expectation that the government will provide reliable flood insurance coverage.”
Rep. Frank LoBiondo (R-2), meanwhile, has pledged to fight administration attempts to increase flood insurance charges. He said earlier this week that the budget proposal unveiled last week would require policyholders to cover $190 million now spent by the federal government on NFIP’s Flood Hazard Mapping Program, which establishes the flood map zones on which flood insurance premiums are based.
“South Jersey families and businesses are still recovering from Superstorm Sandy, appealing unjustified FEMA flood maps and claims decisions, and adjusting to a regional economy not fully recovered — we cannot and should not ask them to take on more of a financial burden,” he said. “I resoundingly reject this specific provision and will work closely and tirelessly with my colleagues representing coastal communities as the process of funding agencies and reauthorizing the National Flood Insurance Program moves forward.”
An analysis of NFIP payments from January 1, 1978 through January 31, 2017 shows that people in almost 95 percent of New Jersey municipalities have received money at least once in claims. In total during that time, New Jerseyans have submitted more than 190,000 claims, with about 83 percent paid a total of $5.9 billion. About 1 percent of those claims, or more than 1,900, were open as of the end of January.
Policyholders in a dozen towns have gotten more than $100 million over that time, with all but one – Wayne – located along the Jersey Shore. Toms River leads all towns, with about $590 million received for losses on more than 8,000 paid claims.
Of the municipalities with more than 100 claims, the average amount paid per claim filed exceeds $100,000 in just two: Mantoloking and Kearny. Mantoloking, an Ocean County Shore community hard hit by Sandy with an estimated population last year of 253, had 652 claims submitted during the 39-year period and $95.4 million paid for an average of $146,265. Kearny, parts of which are in the Meadowlands and prone to flooding, saw an average of $111,042 paid per claim on 265 claims.