Wind Claims not Labeled as Flood, Report Says

The Department of Homeland Security has released a preliminary report saying it has found no evidence to support allegations that some of the country’s private insurers improperly shifted wind damage claims from Hurricane Katrina onto the government’s flood insurance program.

According to an article on the Insurance Journal website, the DHS also found that despite the fact this “limited review” didn’t uncover any evidence, that doesn’t mean it didn’t happen.

“DHS said it reviewed 98 National Flood Insurance Program claim files in Mississippi and interviewed officials from the Federal Emergency Management Agency, homeowners and insurance experts,” the article says, but the sample didn’t find any evidence that insurers attributed wind damage to flooding.

June Holmes, interim CEO for the Property Casualty Insurers Association of America (PCI), told Insurance Journal that insurers hope the report “will put to rest the plethora of misstatements accusing insurers of improperly shifting wind claims to the National Flood Insurance Program (NFIP), and that we can move forward to identify the best solutions to the nation’s natural catastrophe crisis.”

The article also says the DHS did, however, note that certain “complicating factors” meant it “could not rule out the possibility” that shifting of claims occurred. Among those complicating factors are difficulty in distinguishing between wind and flood damage, especially when all that is left on a property is slab; policy language that excludes coverage if flooding occurs concurrent with wind or other causes of damage; adjusters working for WYO insurers which it said creates a perception of conflict of interest; and limited oversight of WYO by FEMA.