Bloomberg News

Hurricane Irene Damage Forces FEMA to Re-certify Claim Adjusters

September 02, 2011

Sept. 2 (Bloomberg) -- A shortage of insurance claims adjusters to handle damage from Hurricane Irene has forced the Federal Emergency Management Agency to re-certify workers who let their credentials lapse.

James A. Sadler, FEMA’s director of claims, outlined the temporary reauthorizations in an Aug. 31 letter to insurance companies and agents who administer policies through the agency’s National Flood Insurance Program, according to a copy of the letter obtained by Bloomberg News. The authorization lets the adjusters work until June 1 of next year.

“FEMA welcomes these adjusters back to the NFIP and encourages them to spend time with their supervisor catching up with current procedures,” Sadler wrote in the letter, in which he predicted “many adjusting challenges.”

The adjusters may be enlisted to inspect the aftermath of Irene’s journey along the U.S. Eastern Seaboard, which left damage estimated at $12.4 billion by Kinetic Analysis Corp. The storm, which made landfall on Aug. 27, cut a path of destruction that left 45 people dead and 6.69 million homes and businesses without power from the Carolinas to New England.

The agency’s brief notice, covering adjusters whose credentials have lapsed since June 1, 2009, suggests an emergency action for a shortage that the industry has struggled with before, said Ben McKay, senior vice president of federal government relations for the Property Casualty Insurers Association of America. In this case, FEMA is “not giving a very substantial justification” for its decision, he said.

Hurricane Katrina

FEMA, which didn’t immediately respond to requests for comment, issued the letter to insurers along with a series of bulletins dating back to 2008, giving rusty adjusters advice on how to investigate flood damage. The emergency agency was widely criticized over its 2005 response to Hurricane Katrina, which also put it about $18 billion in debt.

“There’s certainly a lot of damage to homes, to businesses” from Irene, said Neil Kahn, executive vice president at Goodman-Gable-Gould/Adjusters International, a Baltimore-based firm that which represents policyholders.

Customers of the federal flood program should be given an extension beyond the 60 days they normally have to prove their damage claims, because it’s going to be especially difficult to find people to assess that damage, Kahn said. “FEMA themselves have now admitted that they’re going to great lengths to try to find staff to handle claims,” he said.

Insurers and reinsurers will probably cover about $4.9 billion of the damages, according to Kinetic, a Silver Spring, Maryland-based firm that predicts the expense of disasters

--With assistance from Elise Young and Terrence Dopp in Nj Statehouse. Editors: Gregory Mott, William Ahearn

To contact the reporter on this story: Jesse Hamilton in Washington at jhamilton33@bloomberg.net

To contact the editor responsible for this story: Lawrence Roberts at lroberts13@bloomberg.net


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