Looking Forward to ‘Better Than Ever’

A couple weeks ago, I participated in a meeting of the North Side Civic Association in Long Beach, Long Island. Located on the furthest west part of the outer barrier islands off the South Shore in Nassau County, readers may be familiar with Long Beach because of its iconic boardwalk, which was destroyed by Sandy in October. The residents there still are in an awful state after Sandy hit some three months ago and they came to address issues they are facing after Sandy. About 200 people attended the meeting to talk to a panel of experts and to see if they can get some relief from their dire situations. The panel was comprised of City Manager Jack Schnirman; a public adjuster; a certified public accountant (CPA); a builder; and myself—an independent insurance agent.

My heart breaks for the people who attended this meeting. As the world goes on, these people are frustratingly stuck. I heard several stories of how homeowners have fixed up a single room in their homes, where the entire family—including extended family members—is surviving together. Many people had questions about the claims process, what to expect and how to expedite it. Many stories were about FEMA, and often were the same: Disputes between flood carriers and homeowners companies can delay the claims adjustment process and settlements.

While the stories were heartbreaking, I felt comfortable with the way the meeting was going until the public adjuster intonated that consumers can take legal action against their insurance agents. My blood started to boil. It’s bad enough unscrupulous lawyers have been capitalizing on these people’s bad luck with misleading advertising (a topic I touched on in my last column and which PIA has taken up with the New York State Supreme Court Appellate Division), but how interesting it is that a public adjuster would attack agents. It reminds me of the old adage: “Don’t bite the hand that feeds you.” One major concern was FEMA’s definition of a basement: When I, and everyone else I know, think of a basement, we think of walking down a flight of stairs into a cellar. But FEMA will call anything under the outside base elevation of the house a basement. So, if a home has a den or family room three inches below grade, FEMA will not consider the claim. Imagine how angry homeowners were when they realized their homeowners policy will not cover flood and FEMA will not cover this because it’s a “basement.”

Another question at the meeting was from a woman about pollution liability. She said the flood waters had pushed over her oil tanks—they actually broke away from the moorings and 250 gallons of oil were spilled into her basement. As a result, she can’t begin to address the damage to her home until the Environmental Protection Agency comes to assess the situation. This poor woman has been waiting nearly three months for answers: from the EPA; from the village government, from her insurance company and from FEMA. Of course she was frustrated—she feels like she’s in a “catch 22” position.

A common frustration was evident in questions from people who actually had received checks from FEMA. When some of them brought the checks to their banks to be cashed, they reported that the banks withheld their endorsement to ensure the funds would go toward improving the property. Without the claims payment, many homeowners cannot afford to begin repairs.

The people I met in Long Beach have lived in their homes their whole lives—in fact, many of their homes have been passed down for generations and there is a great sense of community there. The residents of Long Beach are resilient and many have spent their life savings to do whatever they can to fix their properties with the hope of receiving insurance money. It’s an awful situation and I know it will be a long time before that town is made whole again. As they rebuild, they will be required to meet new, more stringent guidelines from FEMA, which will include elevating their homes and meeting building code requirements and current best practices.

The Biggert-Waters Reform Act means long-term changes are going into effect for the National Flood Insurance Program. Under the new law, Long Beach insurance rates are likely to increase and many insurance discounts will be eliminated.

Subsidies will be phased out and, as of January 1, 2013, premium rates for subsidized non-primary residences already have begun to increase. Rates will increase 25 percent every year until they reflect what FEMA considers full risk-rate. Later this year, premium rate increases will begin for additional categories of subsidized properties, including business properties, substantially damaged or improved properties, severe repetitive loss properties, and any property that has incurred flood-related damages where claim payments exceed the fair market value of the property.

Beginning in 2014, premium rates for other properties will increase as new or revised flood insurance rate maps become effective and full risk rates are phased in for these properties.

I left that meeting full of sympathy for these people—they are victims of the storm, but also victims of the system. Despite this, I’d be remiss if I didn’t take a moment to recognize all of the hard work of our industry—the sheer volume of claims on Long Island have made it difficult to move as quickly as anyone would like—but I am sure that when the dust finally settles the many positive things our companies and agencies were able to do will come the surface.

The people of Long Beach are committed to rebuilding and they have a model sense of community. According to the city manager, the Long Beach boardwalk will be rebuilt to withstand hurricanes and flooding with the help of the FEMA and Army Corps of Engineers. He says they will rebuild Long Beach “better than ever.” I know this is so, but it’s going to take a very long time.