FEMA to start sweeping review of Sandy insurance claims by end of May

The National Flood Insurance Program plans to begin sending letters by the end of May to homeowners across the region to initiate a sweeping process to review claims that may have been underpaid after superstorm Sandy, according to people familiar with the matter.

The first round of roughly 15,000 notices is scheduled to be mailed May 18 to storm victims whose homes were inspected by engineering firms, including those suspected of falsifying damage reports after the 2012 storm. Letters to the remaining 130,000 homeowners who filed claims are scheduled to go out in waves through mid-June, sources said.

The Federal Emergency Management Agency outlined its tentative plans Wednesday to lawmakers in Washington. A FEMA spokeswoman said the agency is still gathering input before finalizing the process.

The effort to reopen up to 144,000 Sandy claims comes after dozens of homeowners from Long Island and elsewhere accused private companies hired by the government-run insurance program of forging documents and using other methods to deny settlements.

The allegations have led to a state criminal probe and the departure of two top officials at the flood-insurance program.

The letters, which FEMA had hoped to send by May 1, will direct homeowners who want their claims reopened to register online or call a toll-free number within 90 days. After an initial 15-minute interview, FEMA will give homeowners two weeks to submit documents proving they were underpaid, according to people briefed on the process.

If homeowners don't have receipts, the agency will accept sworn statements for expenses up to $7,500 per claim. FEMA will also extend the two-week deadline if storm victims need more time to compile evidence.

The agency is hiring roughly 150 adjusters to help with the reviews. Homeowners who disagree with the outcome will have the option to appeal to a third-party arbiter. The head of the flood insurance program, Brad Kieserman, will have the final say over any settlements.

The private insurance companies that initially calculated the settlements will not be part of the review process, sources said.

Homeowners who have their claims reviewed won't automatically receive a bigger settlement. Some may wind up having to repay the flood-insurance program if adjusters determine their initial settlement was too large. Kieserman, however, has said he expected those instances to be rare.

Sen. Kirsten Gillibrand (D-N.Y.), who is among the lawmakers who pushed for the review, said the effort is crucial for storm victims. “But it's vitally important,” she said, “to get this process right for there to be any chance of success.”