National Flood Insurance Act Of 1968
Mr. President, I rise to support S. 2238, the Flood Insurance Reform Act of 2004. I want to thank Senator Sarbanes, my colleague from Maryland and a member of the Banking Committee that pushed this legislation through. Senator Sarbanes and…
Mr. President, I rise to support S. 2238, the Flood Insurance Reform Act of 2004. I want to thank Senator Sarbanes, my colleague from Maryland and a member of the Banking Committee that pushed this legislation through. Senator Sarbanes and I worked together as ``Team Maryland'' to ensure that this legislation addressed many of the lessons learned in the aftermath of Hurricane Isabel.
In September 2003, my State of Maryland was devastated by Hurricane Isabel. This was the worst natural disaster in Maryland history. The people who live on the Chesapeake Bay and the many rivers leading into the Bay lost their homes, their possessions, and many lost their livelihoods.
The flooded communities have names like Bowleys Quarters and Millers Island, Bayside and North Beach, Kent Islands and Hoopers Island. The people who live in these communities are hard-working people. Many are retirees who scrimped and saved to buy these homes. Some are people I went to school with. Many of these communities are still struggling with the legacy of Isabel. Some Marylanders are still living in trailers which are really glorified campers.
Right after Hurricane Isabel swept through Maryland, Senator Sarbanes and I went with Secretary Tom Ridge and Governor Ehrlich to see the damage, to talk to people, and to find out how we could work together with Marylanders to put their lives back together. When disaster strikes, we are Team Maryland and Team America, Federal and State officials, Democrats and Republicans. We saw houses moved off their foundations in North Beach. We walked the streets of Bowleys Quarters where children's toys and personal items were pushed into yards by three feet of flood waters. We saw mud more than a foot deep three blocks away from the water. We talked to a business owner on Kent Island who lost her restaurant only 6 months after she bought it.
I was incredibly moved by what I saw, not only the devastation, but the way these communities were pulling together. I heard about daring rescues from our intrepid first responders. Churches opened their doors to provide food and shelter. Neighbor was helping neighbor. I promised these communities that their Federal Government would help.
Unfortunately, the National Flood Insurance Program wasn't there the way it should have been. Today, nearly 9 months after Isabel hit, my constituents are still struggling to get the money that is owed to them. They are frustrated, confused, and frankly, many are just plain fed up. They feel like the insurance they paid for wasn't there when they needed it the most.
From Calvert County to Baltimore County to Anne Arundel County to Maryland's Eastern Shore, people told me they didn't understand what their flood insurance covered. Though their homes were damaged, they thought between homeowners insurance and flood insurance they would be covered. Nothing was explained to them when they bought these policies. They didn't know, for example, that the contents of their home wasn't covered without a separate policy. People thought if they had $200,000 worth of coverage on a home they bought for $50,000 that flood insurance would pay to replace the home. But when they put in their claims they found out they would only get a portion of what it costs to make repairs or rebuild.
Another serious problem was the way insurance agents handled people's individual claims. When people asked their insurance agents to explain things to them, they couldn't get a straight answer. That's because some of the insurance agents don't really know what these policies cover or how they really work. In Southern Maryland, some homeowners were able to get emergency advances on their claims. Others were told there was no way to get advances on their claims. Different agents gave different answers. In some cases, the same agent would give a different answer depending on the day. That is unacceptable.
When I heard these stories about claims being denied or shortchanged, I asked my constituents if they could appeal. They told me they didn't know. When they filed their claims, no one told them how to appeal, or even if an appeal was possible. My office became a clearinghouse for appeals. We asked the National Flood Insurance Program for instructions on filing an appeal; there wasn't one. So, I organized community meetings and appeals hearings. I brought FEMA and representatives from the National Flood Insurance Program to Maryland communities to explain to people what they needed to do to get a fair hearing.
Once Marylanders figured out their policies and filed their paperwork, the payments they were getting were not adequate to repair the damage. The flood insurance adjusters weren't using real world estimates for what it took to repair damages. In Bowley's Quarters, the adjuster gave people real low-ball estimates for their repairs. So the community association asked a local contractor to come in for a second opinion. When his estimate was significantly higher, the community leaders went back to the adjuster. They told the adjuster what was needed to do the job. But people shouldn't have to go through all of this to get a fair appraisal and a fair reimbursement from insurance they paid for.
These experiences led to four recommendations that I submitted when I testified before the Banking Committee earlier this year. Senator Sarbanes was instrumental in developing these recommendations and worked with the committee to make them part of this legislation. Helpful to this process were two reports that outlined the myriad of problems that surfaced after Hurricane Isabel struck Maryland. The first report was prepared by Maryland's former Insurance Commissioner, Steve Larsen, at the request of Baltimore County Executive, Jim Smith. The second report was prepared by Maryland's current Insurance Commissioner, Alfred Redmer. Many of the findings in those reports were similar to what I heard directly from constituents and were helpful in developing the following recommendations:
One, the National Flood Insurance Program must provide a clear and understandable outline of policies so policyholders understand what is covered and what is not. Two, the agents who sell flood insurance must understand what they are selling and how claims are processed so consumers don't get the runaround instead of answers. Three, there must be a clear way for policyholders to appeal their claims awards or appraisals of loss. Four, consumers need to know that the insurance they purchase will pay the real world cost of repairing damages or replacing their losses.
I support this bill because it addressed four key reforms that I believe will improve the National Flood Insurance Program. First, the bill directs
FEMA/NFIP to develop supplemental forms to the flood insurance policy. These supplemental forms will explain in simple terms the exact coverages being purchased by a policyholder, any exclusions from coverage that apply to coverages purchased, and an explanation, including illustrations, of how lost items and damages will be valued under the policy at the time of loss. Second, the bill directs FEMA/ NFIP, in cooperation with the insurance industry to establish minimum training and education requirements for all insurance agents who sell flood insurance policies, publish these requirements in the Federal Register, and inform insurance companies and agents of the requirements. Third, the bill directs FEMA/NFIP to establish a formal appeals process with respect to claims, proofs of loss, and loss estimates relating to flood policies. Fourth, the bill directs the Comptroller General of the United States to conduct a study of the adequacy of the scope of coverage provided under flood insurance policies, the adequacy of payments to flood victims under flood insurance policies, and the practices of FEMA/NFIP and insurance adjusters in estimating losses incurred during a flood.
As the one year anniversary of Hurricane Isabel approaches, I believe we need to take aggressive steps to address the inadequacies of a flood insurance program that clearly wasn't there for people in their greatest time of need. This bill goes a long way in making the flood insurance program fairer, more transparent, and reliable.