FEMA BOSS PLEADS IGNORANCE ON PRIVATE SECTOR WIND RULINGS

David Maurstad, head of the US Federal Emergency Management Agency (FEMA), claimed that he had “no knowledge” of the widely assumed practice of insurers of paying out federal claims while denying their own insurance payments. Mr Maurstad further surprised Congressional questioners that, when both wind and water damage occurred, FEMA paid the damages as a matter of policy. Democratic Party Representative Gene Taylor asked Mr Maurstad to provide the legal basis for the federal government paying claims for both wind and flood damage. The flood payment programme is administered by private sector insurers, and victims of hurricane Katrina have claimed that they were often paid a federal flood damage cheque by the same insurance adjuster who refused claims for wind damage. Representative Taylor accused FEMA of being “puppets” to the insurance industry and said there was a “total lack of oversight of taxpayers’ money”. FEMA paid $21bn in claims after hurricane Katrina and three times was forced to ask Congress for an additional borrowing authority to cover payments to victims. State Farm responded that it instructed its claims adjusters to look for evidence of wind damage, and that “if there was a bias, there was a bias to pay claims, not deny them”. The hearing had discussed an alleged memo from State Farm that directed adjusters to find water damage but not wind damage. Representative Taylor told Associated Press that “company officials instructed adjusters to assign all damages to the federally backed National Flood Insurance Programme in cases where wind caused much of the damage”.