Disaster recoveryFEMA paid cities for damages that should have been covered by insurance: Audit
Though the hurricanes which ravaged much of Florida in 2004 and 2005 are 10-year-old events, the Federal Emergency Management Agency (FEMA) is still dealing with the damages and fallout, and a new audit reveals that the agency may have paid for city damages that should have been covered by insurance companies. It is estimated that $177 million in payments may be at issue. The audit also found that FEMA improperly waived the need for hurricane-stricken communities to buy insurance to protect against future events, meaning that the agency and taxpayers may have to pay to cover future damages that they would not have had to cover if the procedures had been followed. More specifically, the audit found that FEMA stands to lose roughly $1 billion in future damage costs because of this.
Though the hurricanes which ravaged much of Florida in 2004 and 2005 are 10-year-old events, the Federal Emergency Management Agency (FEMA) is still dealing with the damages and fallout, and a new audit reveals that the agency may have paid for city damages that should have been covered by insurance companies. It is estimated that $177 million in payments may be at issue.
As the Tampa Bay Times reports, the audit — overseen by the inspector general of the Department of Homeland Security (DHS) — has found that the quality of FEMA’s insurance reviews in Florida was so sub-bar that the agency cannot account for damages it covered that could have been paid by a private insurer.
In addition, the audit found that FEMA improperly waived the need for hurricane-stricken communities to buy insurance to protect against future events, meaning that the agency and taxpayers may have to pay to cover future damages that they would not have had to cover if the procedures had been followed. More specifically, the audit found that FEMA stands to lose roughly $1 billion in future damage costs because of this.
“FEMA needs to be checking that the communities are allowing the insurance companies to pay for the portion they should be covering,” said John Kelly, the inspector general who headed the report, “It is FEMA’s responsibility to make sure tax dollars are being spent properly. It’s critical that FEMA start applying its regulations correctly and consistently.”
Kelly also said that it is especially important that these inconsistencies be identified because many of the FEMA employees who worked in Florida during that time have moved on to other disasters, such as the areas affected by Hurricane Sandy in New York and New Jersey.
“We need to make sure the same problems don’t perpetuate themselves,” he said.
Also, as a reassurance to stricken cities, Kelly was sure to add that they would not have to bear the cost of the misappropriated payments, but rather that insurance companies could be liable.
DHS first approached the Florida League of Cities to review claims in 2010, with full cooperation from leaders and officials. The Times has identified the Florida Municipal Insurance Trust as the insurance company responsible for the $177 million in unaccounted coverage. The audit, however, does not explicitly implicate the company since its review only covered government organizations.
Susan Hendrick, the press secretary for FEMA, announced that the agency “Is on track to respond to the report’s finding and recommendations in late March of 2015.”
