Promoting Resilience and Efficiency in Preparing for Attacks and Responding to Emergencies Act

Floor Speech

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Mr. SMITH of New Jersey. Mr. Speaker, I rise today in support of the Promoting Resilience and Efficiency in Preparing for Attacks and Responding to Emergencies Act (PREPARE Act/H.R. 3583). In addition to enhancing accountability at the Federal Emergency Management Agency (FEMA), the Office of Emergency Communications, and the Office of Health Affairs at the Department of Homeland Security (DHS), this legislation makes critical reforms to the National Flood Insurance Program's (NFIP) claims process.

Nearly three and a half years have passed since Superstorm Sandy devastated New Jersey, New York, and other parts of the Northeast, yet thousands of victims are still fighting for fair and equitable treatment from the NFIP. Following Sandy, these homeowners were further victimized by the unconscionable misconduct of certain insurance companies and engineering firms who defrauded them, all of which was enabled by FEMA's inadequate control and oversight.

The Sandy Claims Review Process was launched after my colleagues and I pushed FEMA to reopen a robust and thorough claims process to review all potential Sandy-related underpayments. To date, over 19,000 NFIP policyholders have entered the review process. More than 7,000 policyholders have been offered additional claims payments, with over $46 million in actual payments made and over $89 million in proposed payments. Homeowners who pursued litigation outside of the claims process have received nearly $160 million in settlements.

Those who dutifully paid their premiums with the expectation that the NFIP would be there following a disaster deserve every penny owed to them. The tens of millions of dollars paid out thus far should have been in the hands of policyholders years ago. These homeowners were betrayed following Sandy, and reforms are necessary to restore consumer trust and taxpayer confidence in the NFIP.

In a report released last month, the DHS Office of Inspector General (OIG) found that FEMA does not provide adequate oversight of its NFIP Write Your Own (WYO) Program. As a result, FEMA ``is unable to ensure that WYO companies are properly implementing the NFIP and is unable to identify systemic problems in the program. Furthermore, without adequate internal controls in place, FEMA's NFIP funds may be at risk for fraud, waste, abuse, or mismanagement.'' Of particular concern are altered or falsified engineering reports that resulted in dramatically lower claim payments for Sandy victims. Last year, 60 Minutes' ``The Storm after the Storm'' reported on allegations of engineering reports receiving drastic alterations after being submitted to the insurer by the on-site engineer inspector. FEMA's then-Deputy Associate Administrator for Insurance told 60 Minutes that he was not going to ``conceal that fact that it happened. Because in the last three weeks, I've seen evidence of it.'' This was subsequently confirmed in delegation briefings I hosted with FEMA.

Title V of the PREPARE Act will require any final engineering reports and/or claims adjustment reports--certified and free of alterations--to be provided to the policyholder first, before any employer or agency. It also amends the claims appeal process to provide policyholders with more time to consider legal remedies. Together these provisions will help reform a fundamentally broken system and provide policyholders with the transparency and fairness they are entitled to throughout the NFIP claims process.

FEMA must deliver on its promises. That begins with the completion of the ongoing Sandy Claims Review Process and a resolution to Sandy- related litigation. Every suspected instance of fraud must be investigated and bad actors must be expelled. FEMA must closely monitor the performance of specific inspectors and adjustors that may not be illegal, but simply shoddy and incompetent. The NFIP Transformation Task Force must continue its implementation of OIG's seven recommendations to improve its oversight. Together with the PREPARE Act, these actions can restore accountability and ensure lasting reform.

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