Among homeowners’ most common frustrations, the report found, was banks and mortgage providers holding back millions of dollars in insurance checks. The report attributed part of the delay to Fannie Mae, Freddie Mac and private-sector lenders’ policies for approving the release of insurance claim funds. A task force recommendation that is currently being implemented calls for a unified process to disburse insurance funds more quickly.
Donovan said that more than 99.5 percent of the more than 143,000 Sandy-related National Flood Insurance Program claims are closed, and more than $7.8 billion has been paid out to policyholders. But the report also acknowledged the program’s shortcomings, and that many homeowners were surprised to learn what was and was not covered by their insurance policies. The task force called for a number of improvements to the FEMA-managed program.
Asked whether a provision of the program stating that it does not cover property losses caused by earth movement, even if it is the direct result of flooding, would be revised, Donovan said that Congress would have to approve such a policy change. “Clearly, the flood insurance policy, overall, does need some reform,” he said.