“It was a systematic, cultural plan to hold back the losses,” explains Houston attorney Steve Mostyn. For Doug Quinn, a veteran and New Jersey resident whose house was severely damaged by Hurricane Sandy, dealing with his insurance company was an infuriating process.
Quinn and Mostyn spoke about it on May 24th NPR’s broadcast of Business of Disaster, a multiplatform collaboration focused on the aftermath of Superstorm Sandy. “I’ve worked my whole life, I’ve paid good taxes…all we asked was that they do what they promised to do when they accepted our insurance premium,” says Quinn.
Quinn, like thousands of homeowners across the state, found himself battling his insurance company when the company claimed that the flood damage to his foundation was due to normal shifting of the earth, not the flood waters. As local homeowners began to talk to each other, they found virtually all of them were being denied full reimbursement, with a stock “long term differential earth movement” ruling.
With photos of his basement walls from a year earlier without cracks, Quinn had visual evidence of the “before and after.” Stories like these found their way to Mostyn, who quickly became suspicious of the claims review process and became convinced of wrongdoing.
“I’m glad [they] used [a] word template, because we found it, ” Mostyn explained to NPR’s Laura Sullivan as he showed her the identical engineers’ reports on hundreds of homes.
Mostyn also soon discovered that FEMA paid insurance companies to administer hurricane victims’ settlements from the National Flood Insurance Program (NFIP), rather than from its own coffers.
As Sullivan reported, if insurance companies paid less to Sandy victims, the NFIP’s estimated $24 billion worth of debt would not increase – a move that could save the program from Congress’ chopping block.
“The insurance companies make money on the program no matter how big the storm or the cost to taxpayers,” explains Sullivan. “But they wouldn’t make any money on the program if it was killed.”
According to NPR, the administrative payments insurance companies received from FEMA totaled $400 million.
“I think that they thought if they didn’t protect this pot…if the program went deeply into debt again, that there would be a push to end the National Flood Insurance Program. You have to protect the goose that lays the golden egg,” explains Mostyn.
For homeowners like Doug Quinn, who is still paying his mortgage and flood insurance on a house he cannot yet move back into, the process was an eye opener. “I don’t begrudge people making a living, but when they do it on the backs of others’ misery, it’s just wrong,” says Quinn.