"AIR Worldwide (AIR) is the scientific leader and most respected provider of risk modeling software and consulting services. AIR founded the catastrophe modeling industry in 1987 and today models the risk from natural catastrophes and terrorism in more than 50 countries. More than 400 insurance, reinsurance, financial, corporate and government clients rely on AIR software and services for catastrophe risk management, insurance-linked securities, site-specific wind and seismic engineering analyses, agricultural risk management, and property replacement cost valuation." — About AIR (from website)
"Two years after Hurricane Katrina decimated the homes of thousands of Gulf Coast residents, the American Association for Justice (AAJ) today released a report exposing how insurance companies systematically denied paying policyholders fair and just claims following this and other natural disasters.
"The report...reveals how insurers collected billions in premiums from policyholders and then stiffed them in their time of greatest need. Shockingly, in the two years since the nation's worst natural disaster, insurance companies have reaped more $100 billion in profits.
"The AAJ called on insurance regulators to immediately initiate investigations into companies that continue to unfairly delay and deny thousands of unresolved claims in light of the obscene profits insurers have pocketed over the past two years. A special AAJ website People over Profits will also enable citizens to contact their state officials with the same demand."—Press release (August 28, 2007)
This special issue features articles on the economic loss impact of Hurricane Katrina. Contents include: Bradley T. Ewing, Jamie Brown Kruse & Daniel Sutter, An Overview of Hurricane Katrina and Economic Loss; William A. Carden, Sound and Fury: Rhetoric and Rebound after Katrina; Kivanc Kirgiz, Michelle Burtis & David A. Lunin, Petroleum-Refining Industry Business Interruption Losses due to Hurricane Katrina; Mark J. Kaiser, David E. Dismukes & Yunke Yu, The Value of Lost Production from the 2004-2005 Hurricane Seasons in the Gulf of Mexico; Mark A. Thompson, Hurricane Katrina and Economic Loss: An Alternative Measure of Economic Activity; Benjamin Kleidt, Dirk Schiereck & Christof Sigl-Grueb, Rationality at the Eve of Destruction: Insurance Stocks and Huge Catastrophic Events; Ron S. Jarmin & Javier Miranda, The Impact of Hurricanes Katrina, Rita and Wilma on Business Establishments; Mark A. Yanochik & Risa Kumazawa, Interest Rate Manipulation, Environmental Damage, and Loss Valuation; Douglas M. Walker & John D. Jackson, Katrina and the Gulf States Casino Industry; and Apoorv Dabral & Bradley T. Ewing, Analysis of Wind-Induced Economic Losses Resulting from Roof Damage to a Metal Building.
"Hurricane Kartrina and similar natural disasters raise significant legal issues. Potentially liable parties quickly invoke the common law Act of God doctrine as a limitation on liability.
"However, the defense is severely restricted in its application. For example, the common law held it was inapplicable when an Act of God coalesced with an Act of Man, in other words human negligence, to cause injury.
"This article analyzes the traditional Act of God defense while positing that most large scale natural disasters entail human errors, such as in design, construction, operations, maintenance, inspection, regulation, or preparation or response to an emergency. The legal result is the same whether the Act of God is viewed as a defense, duty issue, or intervening causation issue.
"Two follow up articles, in a trilogy dealing with the legal issues involved with natural risks and societal responses to emergencies, are The Duty to Disclose Gelologic Hazards in Real Estate Transactions, 1 Chapman Law Review 13 (1998) and Emergency Action Plans: A Legal and Practical Blueprint Failing to Plan is Planning to Fail, 63 U. Pitt. Law Review 791 (2002)." —Abstract.
"The authors consider personal and commercial insurers in their empirical analysis. The dataset is drawn from the annual statement data from the National Association of Insurance Commissioners, containing underwriting and financial information for all U.S. property insurers from the period studied, and supplemented with rate regulations and the incidence, by state, of natural catastrophes. They also reveal evidence to support the following hypotheses regarding insurers’ loss ratios, insurers’ losses, and insurers’ premiums." — Executive Summary
"Hurricane Katrina was an unprecedented physical and administrative disaster. In addition to the loss of life, human suffering and physical debris left in its wake, there was substantial financial and procedural disorganization in the provision of relief services due to fraud, understaffing, unclear guidelines, and general lack of preparation. This paper explores the problem of fraud after Katrina and offers a solution for providing aid more effectively in the event of a future disaster. This can be achieved through use of Electronic Benefits Technology (EBT) and the centralization of beneficiary demographic databases, which would require much broader information sharing among federal, state, and local governments and non-profits in order to provide faster and broader emergency services and safeguards against fraud.
"Problems will doubtlessly arise because vast information sharing decreases the privacy of victims and leaves them open to criminal prosecution and deportation. In addition, reliance on public databases to provide verification of identification for emergency benefits is likely to aggravate the ability of vulnerable populations, such as undocumented aliens, to obtain aid, which could result in the denial of services to actual residents in great need. An emergency system must therefore endeavor to use EBT and information sharing resources to speed intake and prevent fraud, while not neglecting these vulnerable populations by installing strict privacy regulations and providing victims with the assurance that their information will not be used for any adverse purpose. A fully interoperable EBT system together with advanced planning and increased staffing will almost certainly ensure that the next disaster will not be an administrative tragedy."—Abstract.
Discusses the market for catastrophe insurance and proposals permitting insurance companies to establish tax-deductible reserve funds for catastrophes.
"It is likely that in some heavily damaged parts of New Orleans redevelopment will be restricted, either temporarily, or even permanently. The possibility of such restrictions immediately gives rise to the following question: Will restrictions on development in New Orleans effect compensable regulatory takings under the Fifth Amendment of the U.S. Constitution? In this paper, we try to answer that question, or to at least provide a framework for answering it. We conclude, although cautiously, that it is more likely than not that temporary restrictions will not effect compensable takings because property owners still have economically valuable interests, while it is more likely than not that permanent restrictions will result in compensable takings because of owner expectations and a lack of reciprocity of advantage.
"We have three primary goals. First, we summarize the proposal for redevelopment which explicitly allows for the possibility of moratoria on redevelopment in certain neighborhoods. Second, we situate the current case law on this issue within the larger context of takings jurisprudence. Understanding the courts' trends on this issue, if any are discernible, will be indispensable in trying to get a sense of how courts would rule in litigation that might arise out of regulating redevelopment in New Orleans. Third, we give an analysis of how current holdings on takings issues might apply to the situation in New Orleans. Because of the complexity of takings jurisprudence, and because of the somewhat unusual nature of the situation in New Orleans, it is difficult to make a confident prediction about how such claims would come out."—Abstract.
"The legal system ostensibly plays a central role in disaster prevention, response, and management. Attorneys, members of the judiciary, and decision-makers at every level of government must anticipate and respond to disasters in a coordinated manner. It is increasingly clear, however, that the law is woefully unprepared to handle disasters. A growing community of academics recognizes this problem, and is formulating solutions under the rubric of disaster law. This emerging legal academic field encompasses a wide-ranging, intra- and inter-disciplinary body of thought, research and dialogue which seeks to inform and improve disaster-related decision-making.
"On June 25th, 2007, eighteen law professors and legal practitioners who count disasters among their primary research interests, gathered at U.C. Berkeley Law School to chart disaster law's course for the immediate and long-term future. Appendix A, Workshop Participants and Agenda. Over the course of the day, participants highlighted a wide variety of important intellectual concerns and potential problem-solving strategies regarding disaster management.
"In a series of productive discussions, participants first addressed central normative issues of disaster law, including terminology and the role of the legal academy. The group then addressed four sub-areas of disaster law: international collaboration, social justice, compensation and insurance, and prevention and response. Participants' recommendations for action included the creation of an annual disaster law conference, the integration of disaster law into law teaching, and an increased internet presence.
"This white paper, a record of the milestone June 25th workshop, is intended as a
tool for use by disaster law practitioners and academics in mapping the direction and
future of the field."—Executive Summary.
The Report, available as three component PDF files from this site, sets out the recommendations of the Task Force convened in February 2000. "The newly formed Task Force sought to recommend floodplain management strategies designed to reduce flood losses and maximize the benefits of floodplains. The Task Force found that existing programs are inadequate to accomplish these goals and that time is of the essence."—Executive Summary.
Papers in French and English based on four weeks of addresses, debates, and collective understanding of the law as it relates to international catastrophes at the Hague under the aegis of the Hague Academy of International Law in 1995.
"The study...surveys existing and future costs associated with climate change and the growing potential for abrupt, widespread impacts. The study reports that the insurance industry will be at the center of this issue, absorbing risk and helping society and business to adapt and reduce new risks."—Press release 200K
For fifteen months following Hurricane Katrina, The Center for Public Integrity highlighted the best coverage of Hurricane Katrina's aftermath and tracked government contracts awarded for cleanup and reconstruction. "The Katrina Watch project presents original reports by the Center for Public Integrity and an archive of links to information culled from media and government Web sites." -Center for Public Integrit, Katrina Watch
"This report by the Congressional Budget Office (CBO) addresses factual questions about the values of properties insured at subsidized rates (hereafter called subsidized properties) under the NFIP. Specifically, it compares the values of the properties covered by subsidized and unsubsidized insurance policies, and it examines in particular the subset of properties that are not primary residences—vacation properties, second homes, or rental properties.
"The analysis uses data on the values of more than 10,000 NFIP-insured properties, sorted into four groups as subsidized or unsubsidized properties in coastal or inland areas."—Summary and Introduction.
"In reviewing various proposals to cover risk relating to natural or man-made catastrophes, the report focused on approaches to deal with natural disasters: H.R. 4366, the Homeowners' Insurance Protection Act of 2005; H.R. 846, the Homeowners' Insurance Availability Act of 2005 (HIAA); and tax deductible reserves.
"In addition, the authors looked at both the Terrorism Risk Insurance Act of 2002 (TRIA) and the extension of TRIA that was passed in 2005. That law, which provides a federal backstop for the commercial insurance industry in the event of a terrorist attack, will expire at the end of 2007 unless it is extended again.
"The study presents arguments advanced by advocates and critics of each of the proposals and assesses each in terms of potential effectiveness, analyzing the options but not endorsing any of the potential approaches." —Press release.
"Hurricane Katrina not only devastated a large area of the nation's Gulf coast, it also raised fundamental questions about ways the nation can, and should, deal with the inevitable problems of economic risk and social responsibility. This volume gathers leading experts to examine lessons that Hurricane Katrina teaches us about better assessing, perceiving, and managing risks from future disasters.
"In the years ahead we will inevitably face more problems like those caused by Katrina, from fire, earthquake, or even a flu pandemic. America remains in the cross hairs of terrorists, while policy makers continue to grapple with important environmental and health risks. Each of these scenarios might, in itself, be relatively unlikely to occur. But it is statistically certain that we will confront such catastrophes, or perhaps one we have never imagined, and the nation and its citizenry must be prepared to act. That is the fundamental lesson of Katrina.
"The 20 contributors to this volume address questions of public and private roles in assessing, managing, and dealing with risk in American society and suggest strategies for moving ahead in rebuilding the Gulf coast."
"DisasterAssistance.gov provides information on how you might be able to get help from the U.S. Government before, during and after a disaster." — About Us.
"One of the primary goals of the Federal Emergency Management Agency (FEMA) is the
prevention, or mitigation, of this country's losses from natural hazards. To achieve this
goal, we as a nation need to ask what level of performance do we expect from our buildings during an event such as an earthquake. In order to answer this question, FEMA is exploring the possible development of "performance-based seismic design" criteria.
Such criteria could be voluntarily used by this nation's engineers and designers to improve the performance of critical classes of buildings that are currently only designed to a
"lifesafety" level to avoid collapse, but would infact probably still suffer significant damage in a design event.
"FEMA contracted with the Earthquake Engineering Research Institute (EERI) (contract
number EMW-92-K-3955, Task 13) to solicit the input of the nation's leading seismic
professionals in developing an action plan that could be used to develop performance-
based seismic design criteria. This project and the resulting action plan have gone a long
way in identifying key issues that will need to be addressed in this process.
"This action plan builds upon a similar effort that FEMA funded in 1993 with the Earthquake Engineering Research Center, now the Pacific Earthquake Engineering Research Center (PEER). The end product of that study was a similar plan, "Performance Based Seismic
Design of Buildings" (FEMA-283), published by FEMA in September 1996. The material in
that plan had an emphasis on the research that would be required, and has in fact been
used by PEER inthe last several years as the basis for their research work inthis arena.
While this action plan does an excellent job of describing the requirements that would be
needed to successfully develop performance based seismic design criteria, FEMA does
has some concerns, such as the proposed budget, which exceeds what FEMA is capable
of devoting within the recomended time frame. FEMA is planning to identify some of the
key elements of the plan and to begin to address them through a series of projects under
its Problem Focused Studies program. However, without additional specific funding for
this plan, it will be very difficult to accomplish the entire plan. To avoid further delay, FEMA has decided to publish this document as a "final draft for informational purposes only. Publication of this document in no way obligates this or any other Federal agency to any portion of plan contained herein. The information and opinions contained in this document are solely those of EERI and the project participants and do not necessarily
represent the views of FEMA.
"In closing, FEMA sincerely wishes to express its, gratitude to all who were involved in this project. The results of their hard work will play an important role as this country moves forward towards performance-based seismic design and reducing the losses suffered by this nation's citizens after the next earthquake."—Foreward.
"The U.S. Congress established the National Flood Insurance Program (NFIP) with the passage of the National Flood Insurance Act of 1968. The NFIP is a Federal program enabling property owners in participating communities to purchase insurance as a protection against flood losses in exchange for State and community floodplain management regulations that reduce future flood damages. Participation in the NFIP is based on an agreement between communities and the Federal Government. If a community adopts and enforces a floodplain management ordinance to reduce future flood risk to new construction in floodplains, the Federal Government will make flood insurance available within the community as a financial protection against flood losses. This insurance is designed to provide an insurance alternative to disaster assistance to reduce the escalating costs of repairing damage to buildings and their contents caused by floods."—NFIP Program Description.
"In the two years since Hurricane Katrina, the federal government has provided more than $114 billion in aid. But walk the streets of the Gulf Coast, and you might wonder where all that money has gone."
+Fleischer, Miranda Perry, University of Illinois College of Law, Why Limit Charity?(provided by: SSRN) (U Illinois Law & Economics Research Paper No. LE07-020) (June 2007)
"In the wake of Hurricane Katrina, Congress temporarily lifted one of the most puzzling limits in the tax Code: the cap that prevents an individual from claiming a charitable deduction greater than 50% of her income, even if she gives more than half her income to charity. Although scholars often criticize the cap in passing for creating unnecessary complexity, few have explored its theoretical underpinnings, and those who have appear hard-pressed to find a satisfactory justification.
"This Article fills that void by proposing two complementary explanations for the AGI limits, one grounded in economic theory and one in political philosophy. The economic explanation proceeds directly from the literature conceptualizing the charitable deduction as a way of overcoming market and government failure for various public goods by spurring non-profits to produce them. It suggests that the AGI limits reflect a bargain between individuals whose preferred public goods are fully funded by the government and those whose projects are only partially subsidized. The philosophical explanation is anchored by the idea of reciprocity inherent in liberal democratic theory. It argues that allowing some individuals to pay no taxes, even if supporting a 'good' cause, is tantamount to allowing them to opt out of a previously agreed-to scheme of cooperation and undermines the stability of our democratic society."—Abstract.
"We investigate determinants of private and public generosity to Katrina victims using an artifactual field experiment. In this experiment, respondents from the general population first viewed a short audiovisual presentation that manipulated respondents' perceptions of the income, race, and deservingness of Katrina victims in one of two small cities. Respondents then decided how to split $100 between themselves and a charity helping Katrina victims in this small city. We also collected survey data on subjective support for government spending to help the Katrina victims in the cities. We find, first, that our income manipulation had a significant effect on giving; respondents gave more when they perceived the victims to be poorer. Second, the race and deservingness manipulations had virtually no effect on average giving. Third, the averages mask substantial racial bias among sub-groups of our sample. For instance, whites who identify with their ethnic or racial group strongly biased their giving against blacks while whites who do not identify with their ethnic or racial group biased their giving in favor of blacks. Finally, subjective support for government spending to help Katrina victims was significantly influenced by both our race and deservingness manipulations, but not by the income manipulation. White respondents supported significantly less public spending for black victims and significantly more for victims who were described in more flattering terms, such as being helpful and law-abiding."—Abstract.
"Economic theory suggests that countries should ignore uncertainty for public investment and behave as if indifferent to risk because they can pool risks to a much greater extent than private investors can. This paper discusses the general economic theory in the case of developing countries. The analysis identifies several cases where the government's risk-neutral assumption does not hold, thus making rational the use of ex ante risk financing instruments, including sovereign insurance. The paper discusses the optimal level of sovereign insurance. It argues that, because sovereign insurance is usually more expensive than post-disaster financing, it should mainly cover immediate needs, while long-term expenditures should be financed through post-disaster financing (including ex post borrowing and tax increases). In other words, sovereign insurance should not aim at financing the long-term resource gap, but only the short-term liquidity need."—Abstract.
The legal publisher BNA makes its Web Watch available for free. This posting includes links to federal government hearings and panels, as well as NGO publications. Despite the title of the posting, many of the resources cover issues beyond contract fraud.
The legal publisher BNA makes its Web Watch available for free. This posting includes links to federal government agencies and legislation, GAO reports, and a House committee report.
"The series of recent large-scale catastrophes casts doubt on the ability of the private insurance and reinsurance markets alone to absorb losses resulting from large-scale disasters in the future. And 'mega-risks' are beyond the capacity of the insurance industry or even governments to insure and clearly call for privatepublic partnership and international co-operation.
"Preparing to deal effectively with the hugely complex threats of the 21st century and their financial consequences is a major challenge for decision makers in government and the private sector alike, and one that needs to be addressed as a matter of urgency."—The issues at stake.
"Hurricane Katrina was the costliest hurricane, as well as one of the deadliest, in U.S. history. The storm formed over the Bahamas on August 23, 2005 and crossed southern Florida soon thereafter as a Category 1 hurricane before strengthening rapidly in the Gulf of Mexico. Katrina made its second U.S. landfall as a Category 3 storm on the morning of August 29, 2005 in southeast Louisiana. Between 1,300 and 1,500 people lost their lives as a result of Hurricane Katrina.
"Five years later, Hurricane Katrina remains the largest single loss event in the history of the global insurance industry, causing an estimated $41.1 billion in insured damage ($45.1 billion in 2009 dollars) and 1.7 million claims across six states. Louisiana and Mississippi were the hardest-hit states.
"This number does not include $16.1 billion in losses from flooding insured by the national flood insurance program (nfip), or the $2 billion to $3 billion of insured damages to offshore energy facilities.
"Damage from Hurricane Katrina shattered the previous record for a natural catastrophe event set in 1992, when Hurricane Andrew caused $15.5 billion in insured losses at the time it occurred ($22.2 billion in 2009 dollars), with 790,000 claims in three states."—Introduction.
"Climate change will increase risks significantly in many areas of society, and also will render far less measurable many risks that were previously calculable. If our society is to survive climate change without significant human costs, we must develop robust institutions and practices to manage these risks. The insurance industry is our society's primary financial risk manager, and needs to play a leading role in developing these institutions and practices. But climate change poses an unprecedented challenge to the insurance industry, because factors such as increasing uncertainty and the potential for highly correlated losses will make it difficult to insure against climate change-related risks and will strain capital markets' ability to compensate those who are affected. If the industry rises to the challenge, it stands to profit while facilitating our most successful responses to climate change-related threats around the world. If not, insurers will suffer along with everyone else. A report issued recently by a major financial firm identified climate change as the number one 'strategic threat' facing the insurance industry, noting that it is a 'long-term issue with broad-reaching implications that will significantly affect the industry.' To date, however, there has been relatively little effort to examine what supply- and demand-side barriers may be impeding development of insurance products that address climate change risk effectively. In this context, this Article examines the incentives that insurance products provide to influence the climate change-mitigating and adaptive capacity-building behavior of policyholders and other actors. It also looks at the reasons that insurers might or might not choose to provide those products and the reasons individuals and businesses may or may not choose to purchase those products. Finally, it examines the extent to which the insurance industry's products are likely to play a significant and effective role in affecting private actors' responses to climate change. The Article concludes that although it is not yet clear whether and how the insurance industry will be able to address climate change in a way that systematically creates solutions, the industry's future - and perhaps the rest of ours as well - may rest on the success or failure of its adaptation to a world with a changing climate." —Abstract.
This article begins with a critical account of what occurred in the aftermath of Hurricane Katrina. This critique serves as the backdrop for a discussion of whether there are international laws or norms that give poor, black Katrina victims the right to return to and resettle in New Orleans. In framing this discussion, this article first briefly explores some of the housing deprivations suffered by Katrina survivors that have led to widespread displacement and dispossession. The article then discusses two of the chief barriers to the return of poor blacks to New Orleans: the broad perception of a race-crime nexus and the general effect of the imposition of outsider status on poor, black people by dominant groups. Finally, the article explores the international law concept of the right of return and its expression as a domestic, internal norm via standards addressing internally displaced persons, and considers how such a domestic right of return might be applicable to the Katrina victims."
"The single largest loss in the history of the insurance industry occurred two years ago this month when Hurricane Katrina struck the Gulf Coast, causing $40.6 billion in insured damage. Nearly two years later, the overwhelming majority of claims have been settled.
"Insurance companies have paid an estimated $40.6 billion to policyholders on 1.7 million claims for damage to homes, businesses and vehicles in six states. By contrast, Hurricane Andrew, the previous record holder, resulted in $15.5 billion in losses in 1992 ($22.2 billion in 2006 dollars) and 790,000 claims."—Press Release
Dr. Robert Hartwig, president and chief economist for the Insurance Information Institute, testified at a hearing before the House Financial Services Subcommittee on Oversight and Investigations on Wednesday, February 28, 2007. The hearing focused on insurance issues affecting residents of the Gulf Coast as a result of damage caused by Hurricane Katrina. Links to testimony transcript available in PDF and Word Formats.
"Average insured homeowners throughout Gulf and Atlantic coastal communities have taken just half the steps which would best position them to recover from a major storm, according to a new Hurricane Readiness Index released today. The Index is based on a survey which asked individuals to [sic] whether they had taken eight key preparedness steps, including whether they have an inventory of their possessions, whether they feel they have enough homeowners or federal flood insurance, and whether they have critical documents ready to go in case of evacuation. The poll was taken for seven of the nation's leading property and casualty insurance companies."—Press Release. The Index appears following the Press Release.
Insurance Information Institute (III) website containing recent developments and general information on terrorism insurance issues. Includes papers on such topics as "9/11 and Insurance: The Five Year Anniversary"; "Terrorism, Insurance and the United States Government"; TRIA [Terrorism Risk Insurance Act]: Terrorism and Insurance"; "The Cost of Terrorism: How Much Can We Afford?"; "Long Shadow of September 11th"; and "September 11: One Hundred Minutes of Terror that Changed the Global Insurance Industry Forever."
"This symposium provides a forum for scholars to begin conceptualizing a new field of legal scholarship devoted to catastrophic risks. It is hard to think of anything equally important that has received so little sustained attention from lawyers and law professors. Hurricane Katrina involved over a thousand deaths and $100 billion in losses. There is no reason to consider Katrina the 'worst case scenario.' Yet, scholars have not yet systematically addressed the legal and policy issues posed by major disasters. Ultimately, the goal should be assembling the best portfolio of social policies, institutions, and legal rules to deal with catastrophic risks—a portfolio that includes prevention measures, mitigation incentives, emergency response strategies, liability rules, insurance, and reconstruction planning. In this symposium, papers by legal scholars and policy analysts will address these as well as other issues relating to this critically important subject."—Dan Farber, Editor, Introduction. Access to this bepress journal requires a subscription.
+Jadacki, Matt, Deputy Inspector General for Disaster Assistance Oversight, United States Department of Homeland Security (DHS), Statement for the Record (Committee on Financial Services, Subcommittee on Oversight and Investigation, and Committee on Homeland Security, Subcommittee on Management, Investigations, and Oversight, United States House of Representatives) (June 12, 2007) (PDF — 444K)
"In our review, we have concluded that the Federal Emergency Management Agency (FEMA) needs to increase oversight over damage claims that involve both wind and water on the same structure. Our limited review of the flood claims indicated that payouts on flood claims were timely and complied to [National Flood Insurance Program] terms. However, there is little evidence in flood claim files to determine whether flood payouts were fair and equitable for damages caused by both wind and water affecting the same structure."
+Jadacki, Matt, Deputy Inspector General, Office of Disaster Assistance Oversight, United States Department of Homeland Security (DHS), Office of Inspector General, Congressional Inquiry Regarding Southwest Charter Lines, Inc. (OIG-07-47) (May 2007) (PDF — 180K)
"The allegation that Southwest Charter Lines Inc. intentionally over-billed FEMA is not substantiated. We concluded that the alleged over-billing was unintentional. However, during this review, there were issues of concern regarding internal controls and billing errors for items such as overtime and delivery charges, which were not allowed under the contract."
"In the aftermath of the 2004 Indonesian tsunami and America's continued vulnerability to seismic hazards, including the 2006 Hawaiian earthquake, Members of Congress might elect to focus attention on the vulnerability of the U.S. coastlines to offshore earthquakes and tsunamis, and the potential effects of a major earthquake on both the homeowners' insurance market and the overall U.S. economy. Congress has debated the vulnerability of America's coastlines to earthquake and tsunami hazard risks, leading to legislative action following the April 1992 California earthquake/tsunami and the 1964 earthquake/tsunami at Alaska's Prince William Sound. Although a federal flood insurance program was eventually enacted in 1968 in response to the 1964 earthquake, it took Congress another decade to address the nation's exposure to earthquake hazards with the enactment of the Earthquake Hazard Reduction Act of 1977. Congress did not create an explicit federal earthquake insurance program, albeit the National Tsunami Hazard Mitigation Program was established in 1992. Some insurance and disaster policy experts suggest the time has come to implement a federal insurance or reinsurance program for earthquakes and other seismic risks. Conversely, other experts question the need for such a program. This report will be updated as events warrant."—Summary.
"In the aftermath of the devastating 2005 hurricane season, three broad policy issues for the 110th Congress have emerged related to post-Katrina economic uncertainties: (1) the massive insured and uninsured property losses and their impact on Gulf Coast property insurance markets and rebuilding after Katrina, (2) assertions that insurers have shifted the cost of damages onto the federal flood program and U.S. taxpayers, and (3) unreliable government flood maps that are used in decision making by homeowners for purchasing insurance."—Summary.
+Kousky, Carolyn, Erzo F.P. Luttmer & Richard Zeckhauser, Private Investment and Government Protection (Harvard University, John F. Kennedy School of Government, Faculty Research Working Papers Series, RWP06-017) (May 1, 2006) (PDF — 374K)
"The devastation wrought by hurricane Katrina along the Gulf Coast has once again reminded citizens, policymakers, and academics of the difficulties of making decisions regarding development in risk-prone locations. This paper has highlighted that government does not face a simple decision of how much protection to offer investments, nor do private entities face a simple decision of how much to invest in an area with a given risk level. Instead, government and investors respond to each other, with investment increasing when protection levels are raised, and government raising protection when investment in a risky location grows. When the marginal value of protection increases with the level of protection provided, the game may have multiple equilibria. Thus, given an ill-behaved benefits function, a local optimum may not be the global optimum, which complicates policy decisions, as does the uncertainty regarding the level of investment that will follow a given level of protection."—Conclusion.
"Your testimony indicates that FEMA distributed $20 million under the Individuals and Households Program to individuals who claimed damages for both Hurricane Katrina and Hurricane Rita. Some press reports have jumped to the conclusion that all of the $20 million was improperly paid. I want to be clear about the facts of your investigation because in some instances FEMA's regulations and policies do permit separate payments for damages resulting from separate disasters. Is it your conclusion that the entire> $20 million was paid improperly or is the $20 million the amount that potentially was paid improperly? Did you investigate each payment comprising the total $20 million?"—Question.
"Prior GAO audit and investigative work on FEMA's controls over IHP [Individuals and Households Program] payments and DHS's controls over purchase cards emphasizes one fundamental concept—that fraud prevention is the most effective and efficient means of minimizing fraud, waste, and abuse. GAO estimates that FEMA made about 16 percent or almost $1 billion dollars in improper and potentially fraudulent IHP payments to registrants who applied using invalid information, illustrating what can happen when fraud prevention controls are ineffective. For example, GAO found that FEMA made payments based on bogus damaged addresses, false identities, and identities belonging to federal and state prisoners. These findings highlight the need for effective controls over all types of recovery disbursements. With effective planning, relief agencies should not have to make a choice between speedy delivery of disaster recovery assistance and effective fraud prevention."—What GAO Found.
"This preliminary report on the institutional donor response to hurricanes Katrina and Rita is based on information provided by foundation, corporate, and other institutional donors via press releases, Web postings, and other public announcements."—Sources of Data.
"This report presents the most comprehensive record available of the resources that institutional donors have provided in response to the Gulf Coast hurricanes and captures the experience and insights of several leading funders. It offers two distinct views of giving. The first part of the report presents findings from mid-2007 interviews with ten leading independent foundation Gulf Coast response funders to identify the challenges they faced, the role of collaboration in their grantmaking, their assessment of outcomes to date, their lessons learned, the extent to which they remain involved in recovery and rebuilding efforts, and their perspective on the impact of foundations overall in the region. The second part, which is based on giving commitments tracked by the Foundation Center through June 2007 in our Gulf Coast response database, updates our examination of the scope,
purposes, and recipients of hurricane response giving by foundations, corporations, and other institutional donors."—Introduction.
"This paper describes how America's National Flood Insurance Program came into existence and seeks to answer the question of why private flood insurance never developed in the United States on a significant scale. It consists of three sections. The first section attempts to provide a brief theoretical framework for thinking about flood insurance. It describes what flood insurance does and presents a theory as to how it ought to work.
The second section provides the early history of the flood insurance program. It outlines how the federal government first took on the responsibility of protecting the nation from flooding and how Congress failed in its first effort to offer federal flood insurance. The third section explains how America got the system of flood insurance that it has today. It explains how the Tennessee Valley Authority, U.S. Geological Survey, and a variety of local governments gathered enough risk data to make federal flood insurance palatable to Congress, how Congress implemented a program, and then stripped it of its risk-based character.
The paper reaches a simple conclusion: Flood insurance, in its current form, did not emerge as a result of market failure. While some factors, including the role of state regulation, remain undetermined, the current situation represents an example of what economists call 'government failure.'"—Executive Summary.
"Much of the risk perception literature relies on the important but unstated assumption that manipulating public opinion to conform to scientific assessments of risk could help the public and, in turn, policymakers make better decisions about whether and how to regulate. This paper argues that the assumption fails in the context of certain 'multilayered' risks, or risks that pose tiered policy choices—not just whether to regulate in the first instance, but how to respond to derivative risks arising from the first set of regulatory changes. Examining the debate about the role of nuclear power in the United States' approach to climate change, the paper observes that first- and second-tier risks often differ in character, or require different types of regulatory solution (market-based versus command-and-control). Due to these variations, the public may hold starkly different views about regulation of each tier, and those views may be differently 'sticky'—that is, differently susceptible to persuasion.
"In the context of the nuclear power debate, this tiering of opinion has perverse implications. The first-tier risks of nuclear power are those associated with individual reactors, including the risks of accident or terrorist attack; the second-tier risks are those associated with mining, transport, processing, storage, and disposal of radioactive materials. Recent work asserts that despite entrenched public fear of nuclear power, it may be possible to induce people to support construction of low-emissions reactors as a strategy for mitigating climate change. But even if policymakers could employ the risk education strategies discussed in the literature to shift public opinion in favor of economic incentives for nuclear reactor development, there is no reason to think such strategies would be equally effective at changing attitudes toward second-tier risks and the command-and-control regulations necessary to address them. To the contrary, many people would likely continue to oppose certain types of government action on these latter problems, even assuming the complete success of the hypothesized first-tier education strategy. As a result, the United States could find itself with a thriving nuclear power sector, but without the political will to address the grave collateral risks.
"These observations lead to two conclusions, one related to the nuclear power example, and one to risk regulation more broadly. First, differently sticky public attitudes toward first- and second-tier nuclear risks and their regulatory solutions may defeat any effort to respond to climate change by significantly and safely increasing U.S. reliance on nuclear power. Second, efforts to change public risk perceptions may not advance a regulatory agenda, and may even prove counterproductive. Specifically, where multiple risk layers exist, a successful first-tier education effort and consequent policy changes could create or expose second-tier risks that defy regulatory solution, leaving policymakers stranded at the abrupt and unexpected end of a half-built bridge. Depending on the gravity of the second-tier risks, this regulatory dead end could be one that neither policymakers nor the public would have chosen ex ante."—Abstract.
"This article reviews the risk of governmental tort liability associated with disaster management, in light of current statutory and case law regarding governmental tort immunity."—Introduction.
"Through its Disaster Loan Program, the Small Business Administration (SBA) has been a maor source of assistance for the restoration of commerce and households in areas stricken by natural and human-caused disasters since the agency's creation in 1953. SBA offers direct loans to businesses to help repair, rebuild, and recover from economic losses after a disaster, but approximately 80% of the agency's approved direct disaster loans are made to individuals and households (renters and property owners) to help repair and replace homes and personal property."
+Louisiana State University Medical & Public Health Law Site, Levee Law
List of legal cases, particularly in Louisiana and Fifth Circuit, dealing with levees.
"Rather than trying to second-guess the collective wisdom of the private sector, this paper establishes five principles that should guide any catastrophic natural disaster insurance reform. Underpinning these principles is the belief that the private sector, state governments, and—as a last resort—the federal government could take many actions short of creating a CAT fund that would provide greater stability to the insurance market at a lower cost to most taxpayers." —Matt A. Mayer, et. al
"As the United States sees more and more property damage result from domestic disasters it quickly becomes apparent that the insurance industry as it exists cannot provide sufficient economic relief from natural disasters. This paper begins with a brief overview of the problem that Katrina has left the Gulf Coast and as a result the rest of the nation. Subsequently Katrina will be compared to other natural catastrophes in terms of economic issues.
"The second main portion of this article discusses the problem of catastrophe insurance. Two possibilities for reform are discussed. These are (1) a change to the tax structure that inhibits insurance companies from maintaining the large cash reserves required for catastrophe coverage and (2) a reformation of the National Flood Insurance Program (NFIP)."—Abstract.
"While insurers' dominant response to rising catastrophe losses has been to withdraw from at-risk areas and raise prices, both of these reactions have limited potential and could ultimately lead to a shrinking business and a backlash from consumers, investors, and regulators. Insurers themselves acknowledge that a more proactive approach is needed....
"With this in mind, a vanguard of insurers have begun to take concrete actions that generate well earned profits while maintaining insurability and protecting their customers from extreme weatherrelated losses, as well as reducing greenhouse gas emissions. Many of these strategies are already in practice, providing benefits and savings for insurers and their customers. We identified 190 real-world examples, provided by 104 insurers, brokers, and insurance organizations from 16 countries employing one or more of these methods. More than half of the examples come from U.S. companies. In addition to offering new products and services, these insurers are leading by example with in-house energy management programs, investments in the clean-technology sector, and climate change disclosures. They are also participating in the process of enhancing scientific understanding of climate change's impacts, building public awareness, and participating in the public policy process. Insofar as these strategies are profitable for insurers, they represent 'no-regrets' opportunities irrespective of their climate-related benefits."—Executive Summary
"The Natural Hazards Review stands on the realization that natural disaster losses result from interactions between the physical world, the constructed environment, and the character of the societies and people who occupy them. The journal is dedicated to bringing together the physical, social, and behavioral sciences; engineering; and the regulatory and policy environments to provide a forum for cutting edge, holistic, and cross-disciplinary approaches to natural hazards loss and cost reduction.... Social and behavioral sciences topics addressed include a range of issues related to hazard mitigation and human response as well as significant issues related to the built environment such as land use, building standards, and the role of financial markets and insurance."—Aim and Scope.
"This report addresses the Federal Emergency Management Agency’s (FEMA) oversight of the Write-Your-Own companies’ performance in adjusting National Flood Insurance Program flood claims in the wake of Hurricane Katrina. We were directed in the Department of Homeland Security Appropriations Act, 2007 to determine whether damages from wind were improperly attributed to flooding. We examined relevant documentation and interviewed FEMA and insurance officials to assess the flood insurance adjustment process. This report provides Congress and FEMA with our findings and conclusions." —Preface
"[T]he OECD organised a conference on 22-23rd November 2004 in Paris, to stimulate high level policy discussion betwee representatives of governments, the private sector and the academia from OECD and emerging economies on ways to handle losses caused by large-scale catastrophes.The conference brought together some 150 participants, including experts from relevant ministries and supervisory authorities, institutions in charge of catastrophe or specifically terrorism risk compensation, representatives of the insurance and reinsurance industry, brokers, modelling firms, rating agencies, security firms, etc. as well as leading academic experts and representatives from various international organisations...This volume provides a selection of papers and reports presented at the conference." -foreword
"This testimony updates past work and provides information about ongoing GAO work on issues including (1) [National Flood Insurance Program's] (NFIP)financial structure, (2) the extent of compliance with mandatory requirements, (3) the status of map modernization efforts, and (4) FEMA's oversight of the NFIP."—Why GAO Did This Study
"Hurricane Katrina, the largest disaster in the history of the United States, caused widespread property destruction throughout the Gulf Coast, but particularly in the city of New Orleans. Although the storm created an environment which facilitated increased mortgage defaults in the area, the Article analyzes data from the Orleans Parish Recorder of Mortgages Office and from the Orleans Parish Civil District Court and concludes that foreclosure filing rates in the year after Katrina in fact decreased significantly from the rates for the corresponding period in the year prior to the storm. This result is contrary to what would normally be expected in a usual mortgage lending market, where an increase in the rate of mortgage default would lead to an increase in the rate of foreclosure.
"The Article evaluates in detail the legal and market responses to mortgage default after the storm that contributed to the reduction in foreclosure actions in Orleans Parish in the year after Katrina. Secondary mortgage market initiatives provided the principal means for mortgage relief, because Louisiana debtors received little in the way of formal legal relief. Even though secondary market responses were successful in protecting mortgage debtors after Katrina, their limitations in scope make them inadequate to address the years of financial distress that might likely follow any disaster of the magnitude of Katrina. Thus, while the Katrina experience demonstrates that secondary market interventions can effectively reduce debtor distress after a major disaster, such interventions should not been seen as a substitute for more traditional legal responses to address mortgage debtor distress after disasters or other economic crises." —Abstract.
"In 2005, two events garnered great national attention: the controversy over the death of Terri Schiavo and the destruction of New Orleans by Hurricane Katrina. Although each event was compelling and even tragic, only the former, which focused on whether a single individual would be removed from life support, was widely understood as implicating constitutional questions. Using a population-based perspective that is influenced by the discipline of epidemiology and focuses attention on both the interests of and the impact of law on populations, this Article analyzes why a controversy concerning the life and death of one woman was understood as raising questions of constitutional law while the failure to protect thousands was not viewed as such. The Article begins reviewing the courts' embrace of an individualistic right-to-reject treatment in cases such as Cruzan v. Director, Missouri Department of Health and contrasting that embrace with the Supreme Court's rejection, in cases such as DeShaney v. Winnebago County Department of Social Services, of any broad right to care and protection. Taken together, these cases demonstrate that contemporary constitutional law fails to appreciate the interdependency of risk and the social and population context in which health threats, and treatment decisions, arise. As a result, the rights vindicated in cases such as Cruzan and Schiavo are particularly shallow as they cannot provide either individuals or populations (such as that in New Orleans) with the opportunity to make meaningful risk-reducing choices. In addition, because of the influence of constitutional discourse in our society, the shallowness of constitutional rights spills over to influence political and legislative priorities. Hence, the fact that the population of New Orleans had no legally recognizable constitutional right to protection against hurricanes may have abetted the government's failure to protect the city's residents. Likewise, a constitutional discourse that focuses on the plight of a single woman while overlooking the multitude of problems faced by large populations may reinforce the political system's failure to protect populations from other potential natural disasters, such as a potential influenza pandemic."—Abstract.
"Many Mississippi homeowners who suffered property damage in Hurricane Katrina had insurance policies containing exclusions that denied recovery for damage caused by water. The Attorney General of Mississippi filed suit in response, attempting to declare these water damage exclusions void as against public policy. This paper examines the merits of the suit, addressing the central legal and economic reasons why the suit will likely be unsuccessful. The paper then proposes prescriptive measures, including changes to the National Flood Insurance Program and possible implementation of a federal comprehensive natural disaster insurance program, which may facilitate more efficient and widespread flood insurance coverage in the future."—Abstract.
"This report examines proposals before Congress for the federal government to take on an
expanded role in providing insurance to property owners threatened by hurricanes and other
coastal storms. Its basic conclusion is that most of the pending proposals are misguided and, to the extent possible, the United States should stay out of the insurance business and allow private companies to provide disaster coverage that reflects its true market cost."—Executive Summary
"The Public Affairs Research Council of Louisiana and the Nelson A. Rockefeller Institute of Government today released a report on federal funding in response to the 2005 hurricanes Katrina and Rita. Spending Federal Disaster Aid is an analysis of two major types of aid being used for reconstruction and economic recovery. This analysis of FEMA Public Assistance (PA) grants and Community Development Block Grants (CDBG) demonstrates many of the intergovernmental challenges and problems federal, state, and local officials face as they navigate through the stops and starts of the two-year-old recovery effort toward long-term stability for the region."—Press release (September 17, 2007)
"This mega-hurricane created important opportunities to assess the ways in which federal, state and local officials, business leaders and community leaders are prepared to respond to natural catastrophes every time an event occurs. The property casualty insurance industry was able to receive valuable takeaways from Katrina so that human and property losses may be reduced and insurance operations and disaster recovery efforts can be enhanced in the future.
This report addresses the insurance-related lessons learned from Katrina and improvements since the August 2005 crisis. Major lessons include the following:
Promote greater awareness of the importance of loss mitigation.
Minimize business disruptions and have a more flexible disaster recovery plan.
Use more advanced technologies to improve customer communications and service.
Educate the public on the need for flood insurance.
Continue developing and using more sophisticated catastrophe models."; — Lessons Learned: A Property Casualty Insurance Perspective
"This paper addresses the complex institutional structure in the United States for dealing with victim compensation in cases of catastrophic loss. It will appear as a chapter in a multinational study that compares the institutional frameworks adopted by Western European nations and the United States.
"Part I of the paper focuses on catastrophic loss triggered by potentially responsible human agencies, and as a consequence, discussion of tort law is central. But what of situations where no human agency can be charged with responsibility for catastrophic harm? In these cases there is no recourse to tort in most instances, and victims of catastrophic loss ordinarily must rely exclusively on private insurance coverage, or, when available, on public insurance systems. The latter can be parsed into two separate categories: social welfare schemes (discussed in section II of this paper), such as government disability and unemployment insurance legislation, which are available to all claimants meeting general eligibility requirements - without reference to the source of the harm that has occurred. And, legislative no-fault or insurance schemes that have been established with designated types of catastrophic loss in mind. This second category of social welfare legislation is discussed, along with a description of private insurance coverage, in section IV - after examining the government agency whose work is devoted exclusively to disaster relief (in section III, on the Federal Emergency Management Agency).
"Section V of the paper serves as a reprise on the somewhat patchwork design of the U.S. system by isolating for special consideration three case studies of particularly salient disaster events that illustrate the range of approaches discussed earlier: First, the terrorist acts of September 11, and, in particular, the legislative no-fault compensation scheme that was enacted to compensate the personal injury victims; second, Hurricane Andrew, which initiated a mixed private/public insurance scheme in Florida and recast FEMA's approach to disaster relief; and third, commercial airline crashes, as a category, which invoke tort as the principal source of disaster relief compensation.
"A concluding section VI of the paper returns to a more general overview of the system, offering a brief final commentary on fairness and efficacy considerations."—Abstract.
"Traditional law and economics has no place for price controls. Yet public support for anti-gouging legislation has led to the enactment of a variety of legal regimes to control price hikes following natural and man-made disasters such as hurricanes and terrorist attacks. This Essay provides an economic justification for such laws. First, the Essay surveys the existing models of anti-gouging legislation. Then, the Essay describes the traditional economic critique of price caps, a critique applied to laws that attempt to control post-disaster prices. Finally, the Essay argues that anti-gouging laws enhance economic efficiency by ensuring a functioning consumer market after the collapse of electronic payment systems on which the American economy now depends. The externalities of consumption in post-disaster environments mean that the costs of consumers forgoing needed products are not adequately captured by a reliance on market mechanisms. This analysis suggests that current anti-gouging laws should be restructured to include a more discrete focus on areas actually affected by physical damage from natural or man-made disasters." —Abstract.
"In response to last summer's Gulf Coast hurricanes, U.S. foundations have already committed more than $577 million for relief, recovery, and rebuilding, according to a report released today by the Foundation Center. Giving in the Aftermath of the Gulf Coast Hurricanes: Report on the Foundation and Corporate Response documents the extent of foundation giving after the disasters, challenges concerns about 'donor fatigue,' and explores funders' perspectives on their role in responding to major disasters."—Press Release, August 9, 2006.
+Rhee, Robert J., Participation and Disintermediation in a Risk Society(provided by: SSRN) (Law, Property, and Society, Robin Paul Malloy, ed., Ashgate Press, Forthcoming) (U of Maryland Legal Studies Research Paper No. 2007-21) (PDF — 104K)
"This is a book chapter in a forthcoming book, Law, Property, and Society (Ashgate Press). The chapter argues that financing extreme catastrophic loss will become more problematic as catastrophes become more frequent and severe. An effective strategy must increase the level of participation in the spreading of risk and loss. Currently, risk spreading is done largely through insurers and government as they are the default aggregators of private and public capital. An enlargement of participation may mean the disintermediation of the traditional insurance and public compensation functions, thus allowing more direct and efficient participation between those are exposed to risk and those who are willing to bear it. This chapter also argues that tax policy should consider catastrophe risk and compensation as a way to positively influence risk-taking behavior. Currently, tax policy focuses on the equity and fairness of taxation of individual income, but these considerations are also at the heart of public financing of catastrophes."—Abstract.
"Emitters of greenhouse gases externalize the true costs of their contribution to climate change. Efforts to recover these costs, which manifest both through the costs of impacts and the costs of efforts to prevent impacts, can take the form of insurance claims as well as legal remedies. The most widely discussed insurance-related consequences of climate change are the impacts of property damage from extreme weather events. However, there is increasing awareness of the relatively subtle but equally important dimension of liability. Liability insurance risks - risks to insurers from claims of third-parties who allege injury or property damage that may be the fault of the insured - are rising as scientific uncertainty surrounding climate change declines. This Article explores three major dimensions of the issue: (1) sources of climate-change-related legal liability to third parties and their nexus with insurance and law, (2) new liabilities associated with potential technological responses to climate-change, and (3) potential roles for insurers, reinsurers, and other industry actors in proactively managing climate change-related liability insurance risks for themselves and their customers. Because the insurance sector is the world's largest industry, the response of insurers to the broader climate-change challenge will no doubt be key to the ultimate success of society's overall response."—Abstract.
"Unfortunately, Attorney General Hood's colorful observation has proven untrue. Hurricane Katrina's direct physical toll has been estimated to exceed $200 billion, only a fraction of which is recoverable under existing insurance law. As many policyholders and citizens have realized, insurance is something we tend to think about only after a disaster. Indeed, this oversight is a central explanation for why the system for allocating flood losses in the United States has failed.
"Now that Katrina's waters have receded, it is time to reconcile insurance law and policy to reality: Catastrophic losses create interdependencies among public and private actors that must be managed rather than avoided. Our current systems for preventing, mitigating, and allocating these losses are fractured, diffuse, and maddeningly counterproductive. No single actor is vested with both the incentive and the power to manage this risk effectively.
"As with healthcare, the system for allocating catastrophic loss is characterized primarily by the evasion of responsibility at all levels: private, commercial, and governmental. The result (as in healthcare) has been dysfunction. Before Katrina's seemingly indelible memories recede - as they are destined to - it is time to recalibrate the relationship between government and the private market.
"This Article focuses on the two insurance systems that inadequately govern the distribution of flood risk: The National Flood Insurance Program (NFIP) and the private market for property insurance. There have been a number of studies detailing the structure and limits of these systems. However, scant attention has been directed toward the role that insurance law plays in driving the systems toward failure. What follows is a synthesis of insurance law, economics, and regulatory criticism, leading to the ineluctable conclusion that these two systems rest on a foundation of sand.
"I propose a market-based alternative that draws on the comparative advantages each system offers. To the information-generating of the marketplace, we may add a more precisely targeted governmental role in subsidizing some policyholders and reinsuring others. There are inevitable tradeoffs, and my proposal has a number of drawbacks - only some of which can be guessed at here. But the alternative is a system that has proven itself unable to cope adequately with the predictable losses of a bad year, let alone the greatest natural disaster in American history." —Abstract.
"GAO identified several significant system and logistical challenges that SBA experienced in responding to the Gulf Coast hurricanes that undermined the agency's ability to provide timely disaster assistance to victims. For example, the limited capacity of SBA's automated loan processing system—the Disaster Credit Management System (DCMS)—restricted the number of staff who could access the system at any one time to process disaster loan applications. In addition, SBA staff who could access DCMS initially encountered multiple system outages and slow response times in completing loan processing tasks. SBA also faced challenges training and supervising the thousands of mostly temporary employees the agency hired to process loan applications and obtaining suitable office space for its expanded workforce. As of late May 2006, SBA processed disaster loan applications, on average, in about 74 days compared with its goal of within 21 days."—What GAO Found.
"This Flood Management White Paper presents an overview of the current condition of flood management in the Central Valley and outlines a plan to reduce flood risks through an integrated approach for better planning, new investments, improved management of our infrastructure and closer collaboration between water agencies and users."—Executive Summary.
"This Policy Comment analyzes the connection between hurricane mitigation and insurance. As many people fail to purchase government-subsidized flood and earthquake insurance, some researchers argue that market failure explains the lack of mitigation. But empirical evidence shows that markets do value natural hazards risks, including hurricane mitigation, and thus the case for market failure has been overstated."—Abstract.
"Katrina demonstrated the growing vulnerability of the United States to major hurricanes. This paper analyzes the sources of growing hurricane vulnerability, due to the increasing number of people and property in the U.S. Atlantic and Gulf counties since 1950. The analysis specifically focuses on policy interventions in insurance markets, or states with "hurricane pool" residual market mechanisms. Regressions show that coastal county growth increased after establishment of a pool by 16,000 to 22,000 persons and 4,000 to 6,000 housing units per decade. But hurricane pools do not affect the percentage growth rates of population or housing units. Direct election of insurance commissioners may have contributed to growth as well, but this increase fails to attain statistical significance. Together these results indicate a possibly significant role for insurance subsidies as driving coastal population growth. A land-falling hurricane did not slow growth during a decade, but counties with greater hurricane risk also grew significantly faster, which may be evidence that people ignore hurricane risk in making location decisions."—Abstract.
"Losses from hurricane catastrophes have accelerated in recent years, with seven of the top nine hurricanes ranked by insured losses occurring during 2004 and 2005. Hurricane losses have affected the availability of insurance in coastal states and contributed to enormous growth in state residual wind markets. Of particular policy concern is the possibility that homeowners, businesses and insurance companies are not investing in the efficient amount of mitigation to reduce hurricane losses.
"This paper examines some of the potential barriers to the adoption of efficient mitigation and reviews specific state insurance regulation and legislation that impedes and encourages mitigation. Premium discounts and hurricane deductibles, which are waived if property owners invest in mitigation, provide incentives for mitigation, but mitigation discounts mandated by legislators potentially could represent disguised insurance subsidies. Irrationalities in decision-making such as low-probability event bias, myopia, and inertia might make it difficult for insurers to convince property owners to invest in mitigation. But this is not different in type from the problem entrepreneurs face in general in making consumers aware of the value of products. Restrictions on contractual mechanisms insurance companies can use to encourage mitigation, like requiring mitigation as a condition for renewal of coverage or funding mitigation after a disaster through long term loans or contracts, could prevent insurers from using effective incentives for mitigation, and could reduce the supply of insurance in coastal areas."—Abstract.
"Little can be done to prevent hurricanes, but their impact on society depends greatly on actions taken before, during, and after the event. The insurance industry is one institution that particularly affects societal vulnerability to and recovery from disasters. Insurance spreads risk across a community and provides households and businesses with resources to recovery after disaster strikes. Although insurance is based on voluntary, contractual private agreements, many states regulate the industry extensively, guaranteeing coverage to high-risk properties at below market rates."—Abstract.
"Building codes have been stressed as a measure to reduce vulnerability to hurricanes and other natural disasters. Almost all U.S. states have adopted a building code, but building codes do not enforce themselves. In this paper, Professor Sutter explores the determinants of building code enforcement across states using ratings from Insurance Services Office. Overall enforcement is not outstanding, as only five communities have the best rating of 1 and less than 7% have one of the three top ratings. Although proposed as a means to reduce damage from natural hazards, enforcement is not on average better in states vulnerable to hurricanes and earthquakes; enforcement is actually lower in states vulnerable to earthquakes. Enforcement generally improves with a larger state and local government, while political corruption reduces enforcement for personal insurance lines. Building codes are better enforced in more urban states, consistent with beneficial competition between local governments, although this result might be an effect of income. Greater inequality does not affect enforcement."—Abstract.
"The International Association for the Study of Insurance Economics, or by its short name "The Geneva Association", is a unique world organisation comprised of a maximum of 80 chief executive officers from the most important insurance companies in the world (Europe, North and South America, Asia, Africa, and Australia). It is a non-profit organisation. Its main goal is to research the growing importance of worldwide insurance activities in all sectors of the economy. It tries to identify fundamental trends and strategic issues where insurance plays a substantial role or which influence the insurance sector. In parallel, it develops and encourages various initiatives concerning the evolution - in economic and cultural terms - of risk management and the notion of uncertainty in the modern economy." — The Geneva Association Introduction
"The U.S. Army Corps of Engineers Principal Assistant Responsible for Contracting requested a review on the administration of the ice delivery process between International American Products, Worldwide Services and the U.S. Army Corps of Engineers. Specifically, we limited our review to only the administration of the ice delivery process during the Hurricane Katrina recovery effort. The report also addresses other matters identified during our review of the administration of the 2003 ice delivery contract. We issued DoD Inspector General Report No. 2006-116, 'Ice Delivery Contracts Between International American Products, Worldwide Services and the U.S. Army Corps of Engineers,' on September 26, 2006. That report addressed Congressman Bennie Thompson's concerns on the award of the ice delivery contracts between International American Products, Worldwide Services and the U.S. Army Corps of Engineers. This report addresses the administration of the 2003 ice delivery contract related to the Hurricane Katrina recovery effort....
"The U.S. Army Corps of Engineers Charleston District did not effectively administer the 2003 ice delivery contract for the Hurricane Katrina recovery effort. The Corps Charleston District did not provide adequate training and guidance for invoice processing over the National Ice/Water Mission. They made inaccurate or inadequately supported payments on 142 of the 342 invoices received in the amount of about $262,000."—Executive Summary.
"Results. USACE reporting of obligations related to Hurricane Katrina relief efforts was not always timely and efficient. Specifically, USACE did not make timely updates to the Corps of Engineers Financial Management System or perform timely closeouts of mission assignments. USACE also did not reconcile mission assignments and corresponding amendments with FEMA and did not track all funding from Congress. As a result, USACE increased the risk of not accurately reporting obligations and expenditures. (See the Finding section of the report for the detailed recommendations.)"—Executive Summary.
"The audit is one of several reviews of procurements by the Program Support Center (PSC) and other components of the Department of Health and Human Services (HHS) in response to Hurricanes Katrina and Rita in 2005.
"The Federal Acquisition Regulation (FAR) and the Health and Human Services Acquisition Regulation (HHSAR) provide, among other things, that HHS agencies award each contract to a responsible party and document compliance with requirements for full and open competition and the determination that the price was fair and reasonable.
"As part of HHS's hurricane relief operations, PSC awarded a contract to the Louisiana Department of Health and Hospitals, Bureau of Minority Health Access (Louisiana) to address the State's health and housing needs. Our objective was to determine whether PSC complied with FAR and HHSAR requirements during the award process involving Louisiana. PSC complied with the requirements."—Executive Summary.
"The audit is one of several reviews of procurements by the Program Support Center (PSC) and other components of the Department of Health and Human Services (HHS) in response to Hurricanes Katrina and Rita in 2005.
"The Federal Acquisition Regulation (FAR) and the Health and Human Services Acquisition Regulation (HHSAR) provide, among other things, that HHS agencies award each contract to a responsible party and document compliance with requirements for full and open competition and the determination that the price was fair and reasonable.
"As part of HHS's hurricane relief operations, PSC awarded a contract to the Mississippi Department of Health, Office of Health Disparity Elimination (Mississippi) to address the State's health and housing needs. Our objective was to determine whether PSC complied with FAR and HHSAR requirements during the award process involving Mississippi. PSC complied with the requirements."—Executive Summary.
"The audit is one of several reviews of procurements by the Program Support Center (PSC) and other components of the Department of Health and Human Services (HHS) in response to Hurricanes Katrina and Rita in 2005.
"The Federal Acquisition Regulation (FAR) and the Health and Human Services Acquisition Regulation (HHSAR) provide, among other things, that HHS agencies award each contract to a responsible party and document compliance with requirements for full and open competition and the determination that the price was fair and reasonable.
"As part of HHS's hurricane relief operations, PSC awarded a contract to the Nevada Hospital Association (the Association) to furnish a 100-patient mobile hospital unit for hurricane victims. Our objective was to determine whether PSC complied with FAR and HHSAR requirements during the award process involving the Association. PSC complied with the requirements."—Executive Summary.
"The audit is one of several reviews of procurements by the Program Support Center (PSC) and other components of the Department of Health and Human Services (HHS) in response to Hurricanes Katrina and Rita in 2005.
"The Federal Acquisition Regulation (FAR) and the Health and Human Services Acquisition Regulation (HHSAR) provide, among other things, that HHS agencies award each contract to a responsible party and document compliance with requirements for full and open competition and the determination that the price was fair and reasonable.
"As part of HHS's hurricane relief operations, PSC awarded a contract to the Tennessee Department of Health, Office of Minority Health (Tennessee) to address the State's health and housing needs. Our objective was to determine whether PSC complied with FAR and HHSAR requirements during the award process involving Tennessee. PSC complied with the requirements."—Executive Summary.
"The audit is one of several reviews of procurements by the Program Support Center (PSC) and other components of the Department of Health and Human Services (HHS) in response to Hurricanes Katrina and Rita in 2005.
"The Federal Acquisition Regulation (FAR) and the Health and Human Services Acquisition Regulation (HHSAR) provide, among other things, that HHS agencies award each contract to a responsible party and document compliance with requirements for full and open competition and the determination that the price was fair and reasonable.
"As part of HHS's hurricane relief operations, PSC awarded a contract to the Texas Department of State Health Services, Office for the Elimination of Health Disparities (Texas) to address the State's health and housing needs. Our objective was to determine whether PSC complied with FAR and HHSAR requirements during the award process involving Texas. PSC complied with the requirements."—Executive Summary.
"The audit is one of several reviews of procurements by the Program Support Center (PSC) and other components of the Department of Health and Human Services (HHS) in response to Hurricanes Katrina and Rita in 2005.
"The Federal Acquisition Regulation (FAR) and the Health and Human Services Acquisition Regulation (HHSAR) provide, among other things, that HHS agencies award each contract to a responsible party and document compliance with requirements for full and open competition and the determination that the price was fair and reasonable.
"As part of HHS's hurricane relief operations, PSC awarded a contract to Doleac Electric Company, Inc. (Doleac), to repair electrical lines on the site of a portable hospital unit that furnished emergency medical services to hurricane victims. Our objective was to determine whether PSC complied with FAR and HHSAR requirements during the award process involving Doleac. PSC complied with the requirements."—Executive Summary.
"The audit is one of several reviews of procurements by the Program Support Center (PSC) and other components of the Department of Health and Human Services (HHS) in response to Hurricanes Katrina and Rita in 2005.
"The Federal Acquisition Regulation (FAR) and the Health and Human Services Acquisition Regulation (HHSAR) provide, among other things, that HHS agencies award each contract to a responsible party and document compliance with requirements for full and open competition and the determination that the price was fair and reasonable.
"As part of HHS's hurricane relief operations, PSC awarded a contract to Pamela Gilyard Catering Services (Gilyard Catering) to furnish meals for HHS staff engaged in hurricane relief efforts. Our objective was to determine whether PSC complied with FAR and HHSAR requirements during the award process involving Gilyard Catering. PSC complied with the requirements."—Executive Summary.
"We audited public assistance grant fund awards to the City of Richmond, California (City) for FEMA Disaster Number 845-DR-CA. The objective of the audit was to determine whether the City expended and accounted for FEMA funds according to federal regulations and FEMA guidelines."—Memorandum from Matt Jadacki, Deputy Inspector General, Office of Disaster Assistance Oversight, to David Garratt, Acting Director, Recovery Division, FEMA (February 7, 2007)
"At the request of Senators Byron L. Dorgan and Mary L. Landrieu, we reviewed FEMA's award of 36 contracts worth $3.6 billion for the maintenance and deactivation of travel trailers and manufactured housing needed after Hurricanes Katrina and Rita....
"Overall, FEMA contracting officials treated bidders fairly during the bid process. However, to fully realize its goal of maximizing local participation, they should have established better criteria for determining whether a bidder was a local firm. They also should have analyzed prices more thoroughly before awarding the contracts to ensure that costs were reasonable.
"The Senators ask us to provide answers related to the following topics:
Destruction of bidding material
Information provided to bidders
Wide range of cost estimates among winning bidders
Qualifications of winning bidders
Public availability of winning bids and post-award meetings
Adequacy of services provided to travel trailer residents
Award of four $100 million contracts to a joint venture"
"Our objective for this interim report was to determine whether NFIP [National Flood Insurance Program] claim records included indications that participating insurance companies attributed wind damage to flooding. We reviewed a sample of flood claim files in Mississippi, analyzed legal opinions, and quality control reports prepared by the Federal Emergency Management Agency (FEMA) on selected claims. In addition, we interviewed officials from FEMA, the Mississippi Coast Coliseum and Convention Center in Biloxi, Mississippi, insurance association representatives, insurance adjusters, WYO officials, and other experts in the field. Our sample revealed no evidence that wind damages were improperly attributed to flooding."—Executive Summary.
+United States Department of Homeland Security (DHS), Office of Inspector General, Jasper-Newton Electric Cooperative, Inc. (Audit Report Number DD-07-09) (July 11, 2007) (PDF — 540K)
"We audited public assistance funds awarded to the Jasper-Newton Electric Cooperative, Inc. (Co-op)located in Kirbyville, Texas. Our audit objective was to determine whether the Co-op expended and accounted for Federal Emergency Management Agency (FEMA) funds according to federal regulations and FEMA guidelines."
"The attached report presents the results of a review of the Special Transient Accommodations Program for the hotel/motel lodging of evacuees of Hurricane Katrina under FEMA contracts...awarded to the American Red Cross and Corporate Lodging Consultants.... The [four reportable conditions] included non-validation of eligibility, inability to validate occupancy, excessive billing of room rates and inability to ensure billing integrity. The review also noted other matters that impacted the contracts."—Matt Jadacki, Deputy Inspector General, Disaster Assistance Oversight.
Judge Richard J. Leon's opinion holding FEMA must restore housing assistance and pay back rent to evacuees deemed ineligible for long-term housing assistance. See also the judge's order filed the same day.
"A federal judge in Mississippi rules that the Nationwide Mutual Insurance homeowners' policy purchased by a Gulf Coast couple before Hurricane Katrina excludes coverage for "water and water-borne" damages caused by "flood, surface water, waves, tial waves, overflow of a body of water, [and] spray from these, whether or not driven by wind." The court concluded that "[a]lmost all of the damage to the [plaintiffs'] residence is attributable to the incursion of water." The legal decision could affect thousands of similiar Nationwide Mutual Insurance policyholders affected by Hurricane Katrina."
"The Department of Homeland Security (DHS) Federal Emergency Management Agency (FEMA) HMA programs present a critical opportunity to reduce the risk to individuals and property from natural hazards while simultaneously reducing reliance on Federal disaster funds.
Together, these programs provide significant opportunities to reduce or eliminate potential losses to State, Tribal, and local assets through hazard mitigation planning and project grant funding. Each HMA program was authorized by separate legislative action, and as such, each program differs slightly in scope and intent." — Funding Opportunity Description
"NFIP is subject to periodic reauthorization and its current authorization has been extended until March 2009. As Congress considers reauthorization of NFIP and potential reforms to the program, we have been asked to provide a briefing on (1) the percentage and geographic distribution of policyholders that purchase the maximum NFIP coverage, (2) the availability of private commercial and residential flood insurance, (3) the potential effect of adding business interruption coverage to commercial flood insurance, particularly for small and medium-sized businesses, and (4) the challenges and issues surrounding the potential creation of an NFIP loss fund." —from introductory letter addressed to Representative Barney Frank
"Natural hazards adversely affect hundreds of thousands of people worldwide each
year and cause extensive property damage. In 2007, a year that was not considered
an exceptional one for natural hazards, natural hazards caused an estimated 14,600
deaths and $70 billion in property losses. For that year, the insurance industry
covered $23.3 billion in losses. In catastrophic loss years, such as 2005—the year that saw Hurricane Katrina—losses can be far greater. Scientific assessments indicate
that climate change is expected to alter the frequency and severity of natural hazard
events, and as a result, losses can be expected to climb. Given this scenario,
examining policies that are used in other countries to reduce the loss of life and
property caused by natural hazard events and examining insurance approaches that
provide coverage for natural hazard losses can help identify practices in both areas
that could benefit the United States. Similarly, given the ongoing challenges facing
the United States, international cooperative efforts may provide instructive examples
of risk management and disaster reduction."—Introductory Letter to Congressional Committee on Financial Services
"In February 2006, the Deficit Reduction Act of 2005 (DRA) appropriated $2 billion for certain health care costs related to Hurricane Katrina through Medicaid and the State Children's Health Insurance Program (SCHIP). The Centers for Medicare & Medicaid Services (CMS) was charged with allocating the $2 billion in funding to states directly affected by the hurricane or that hosted evacuees.
"GAO performed this work under the Comptroller General's statutory authority to conduct evaluations on his own initiative. In this report, GAO examined: (1) how CMS allocated the DRA funds to states, (2) the extent to which states have used DRA funds, and (3) whether selected states—Alabama, Louisiana, Mississippi, and Texas—anticipate the need for additional funds after DRA funds are expended."—Why GAO Did this Study.
"In our December 6, 2006, testimony, GAO stated that FEMA made tens of millions of dollars of potentially improper and/or fraudulent payments associated with both hurricanes Katrina and Rita. These payments include $17 million in rental assistance paid to individuals to whom FEMA had already provided free housing through trailers or apartments. In one case, FEMA provided free housing to 10 individuals in apartments in Plano, Texas, while at the same time it sent these individuals $46,000 to cover out-of-pocket housing expenses. In addition, several of these individuals certified to FEMA that they needed rental assistance.
"FEMA made nearly $20 million in duplicate payments to thousands of individuals who claimed damages to the same property from both hurricanes Katrina and Rita. FEMA also made millions in potentially improper and/or fraudulent payments to nonqualified aliens who were not eligible for [FEMA's Individuals and Households Program]. For example, FEMA paid at least $3 million to more than 500 ineligible foreign students at four universities in the affected areas. This amount likely understates the total payments to ineligible foreign students because it does not cover all colleges and universities in the area. FEMA also provided potentially improper and/or fraudulent IHP assistance to other ineligible non-U.S. residents, despite having documentation indicating their ineligibility.
"Finally, FEMA's difficulties in identifying and collecting improper payments further emphasized the importance of implementing an effective fraud, waste, and abuse prevention system. For example, GAO previously estimated improper and potentially fraudulent payments related to the IHP application process to be $1 billion through February 2006. As of November 2006, FEMA identified about $290 million in overpayments and collected about $7 million."—What GAO Found.
"Hurricanes Katrina and Rita wreaked havoc on small businesses in the Gulf Coast, and much federal assistance has been provided to help these businesses. GAO was asked to describe (1) the amount of assistance provided to Gulf Coast small businesses through the Small Business Administration’s (SBA) disaster and Gulf Opportunity (GO) loans, state-administered business assistance programs funded by the Department of Housing and Urban Development’s (HUD) Community Development Block Grants (CDBG), and the Economic Development Administration’s (EDA) Revolving Loan Fund (RLF) program; (2) the extent to which Gulf Coast small businesses received federal contract funds; and (3) the current state of and improvements in the region’s economy. GAO analyzed data on SBA and EDA loans and states’ use of supplemental CDBG appropriations, data on prime and subcontracts awarded for hurricane recovery activities, and economic indicators both before and after the hurricanes."—Why GAO Did This Study.
"NFIP paid an unprecedented dollar amount for a record number of claims from Hurricanes Katrina and Rita. Congress increased NFIP's borrowing authority with the U.S. Treasury from a pre-Katrina level of $1.5 billion to about $20.8 billion in March 2006, but FEMA will probably not be able to repay this debt on annual premium revenues of about $2 billion. As of May 2006, NFIP had paid approximately 162,000 flood damage claims from Hurricane Katrina and another 9,000 claims from Hurricane Rita. Most paid claims were for primary residences where flood insurance was generally required....
"FEMA has made progress but has not fully implemented the NFIP program changes mandated by the Flood Insurance Reform Act. For example, 15 states had adopted minimum education and training requirements for insurance agents who sell NFIP policies, as of October 2006."—What GAO Found.
"GAO examined (1) the rationale for and resources of federal and state programs that provide natural catastrophe insurance; (2) the extent to which Americans living in catastrophe-prone areas of the United States are uninsured and underinsured, and the types and amounts of federal payments to such individuals since the 2005 hurricanes; and (3) public policy options for revising the federal role in natural catastrophe insurance markets. To address these questions, GAO analyzed state and federal programs, examined studies of uninsured and underinsured homeowners and federal payments to them, identified and analyzed policy options, and interviewed officials from private and public sectors in both high- and low-risk areas of the United States. GAO also developed a four-goal framework to help analyze the available options.
"This report examines seven public policy options for changing the federal government's role, including establishing an all-perils homeowner insurance policy, providing reinsurance for state catastrophe funds, and creating a mechanism to provide federal loans for state catastrophe funds."—Purpose of study.
"The number of federal flood insurance policies in force nationwide increased 36 percent from 1997 through 2006, but most homeowners at risk of flooding still lacked such insurance. While average insurance amounts (per policy) increased 78 percent from 1997 through 2006—consistent with rising home values—the average premium decreased 3 percent from 1997 through 2006, likely driven in part by the increase in policies sold in moderate- to low-risk areas. Conversely, loss amounts fluctuated by year, peaking at more than $17.7 billion in 2005. Seventy-nine percent of the funds paid out through NFIP from 1997 through 2006 were for hurricane-related claims, but the percentages in individual years varied widely (correlating with hurricane activity). Finally, the extent of claim payments attributed to repetitive loss properties (those with two or more claims in a rolling 10-year period) increased from 1997 through 2006, from $3.7 billion to nearly $8 billion, with the most significant increases resulting from the 2005 Gulf Coast hurricanes.
"Because of data limitations, GAO was not able to determine the actual number of properties acquired through FEMA mitigation programs, which are intended to minimize the damage and financial impact of floods. Information on completed mitigation projects (which encompass multiple properties) indicates that about one-third of properties approved for acquisition from 1997 to 2006 were acquired. However, these data are limited because they do not include a count of properties acquired in ongoing projects. Projects may take several years to complete, and FEMA does not report properties acquired until a project is complete. Further, FEMA collected property acquisition data (for completed projects) in an ad hoc manner because FEMA's grants management system lacks the capability to record acquisition data. As a result, FEMA cannot readily determine the extent to which flood-damaged and repetitive loss properties have been acquired through its mitigation programs.
"Lack of monitoring records, inconsistent application of procedures, and lack of coordination have diminished the effectiveness of FEMA monitoring of NFIP-related contracts. While federal internal control standards state that records should be properly maintained, FEMA did not consistently follow its monitoring procedures for preparing or maintaining monitoring reports and was unable to provide copies of the majority of monitoring reports GAO requested. Further, FEMA offices did not coordinate information and actions relating to contractor deficiencies and payments. In some cases, key officials were unaware of decisions on contractor performance. As a result, FEMA cannot consistently ensure adherence to contract requirements and lacks information critical for effective oversight of key contractors. Given the reliance of NFIP upon contractors, it is important that FEMA have in place adequate controls that are consistently applied to all contracts." — What GAO Found.
Judge Jack B. Weinstein, senior federal judge in the Eastern District of New York, has presided over many of the landmark mass tort cases involving Agent Orange, DES, asbestos litigation, repetitive stress injury, and other environmental toxic torts. He published his landmark decisions in these cases as well alongside articles he has written analyzing the problems relating to complex mass tort litigation. The book documents prominent features of mass tort litigation, and Judge Weinstein's views concerning the most fair and efficient resolution of these massive litigations.
Chapter 2 deals specifically with "The Law's Reaction to Disasters", discussing various types of disasters, jurisdictional issues, "desirable conditions for disaster management by courts", procedural tools and models, and proposing a national disaster court.
"The mission of the Wharton Risk Management and Decision Processes Center is to carry out a program of basic and applied research to promote effective policies and programs for low-probability events with potentially catastrophic consequences. The Center is especially concerned with natural and technological hazards and with the integration of industrial risk management policies with insurance. The Center is also concerned with promoting a dialogue among industry, government, interest groups and academics through its research and policy publications and through sponsored workshops, roundtables and forums."
+Williams, Orice M., Director, Financial Markets and Community Investment, United States Government Accountability Office (GAO), National Flood Insurance Program: Preliminary Views on FEMA's Ability to Ensure Accurate Payments on Hurricane-Damaged Properties (Testimony Before the Subcommittee on Oversight and Investigations, Committee on Financial Services, and the Subcommittee on Management, Investigations, and Oversight, Committee on Homeland Security, House of Representatives, GAO-07-991T) (June 12, 2007) (PDF — 176K)
"NFIP does not collect and analyze both wind and flood damage claims data in a systematic fashion, which may limit FEMA's ability to assess whether flood payments on hurricane-damaged properties are accurate. Instead, NFIP focuses only on the flood claims data to determine whether the amount actually paid on a claim reflects the damages caused by flooding. Flood claims data, collected by NFIP through the write-your-own (WYO) insurers—including those that sell and service both the wind and flood policies—do not include information on total damages to the property from all perils. That is, NFIP does not systematically collect information on wind damages from the WYO insurer when a flood claim is received. FEMA officials state that they do not have authority to collect wind damage claims data from WYO insurers, even when the insurer services both the wind and flood policies on the same property. As a result, for hurricane-damaged properties, such as those damaged by Hurricanes Katrina and Rita, NFIP does not have all the information it needs to ensure that its claims payments were limited to damage caused by flooding. Concerns over the processing of these flood claims are heightened when the same insurance company serves as both NFIP's WYO insurer and the property-casualty (wind) insurer for a given property. In such cases, the same company is responsible for determining damages and losses to itself and to NFIP, creating a potential conflict of interest."—What GAO Found.
"By request of the Department of Financial Services of the State of Florida, Risk Management Solutions (RMS) has conducted an impact analysis of the My Safe Florida Home (MSFH) program. The RMS® U.S. Hurricane Model was used to analyze the impact of the program on individual structures retrofitted with MSFH grant money. Unlike other studies that focus on the benefits to individual structures, this study explores the benefits on a statewide basis. The results of the study found that the MSFH program has reduced the statewide economic liability and the risk carried by the homeowners in Florida." — Executive Summary
