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U.S. Department of Homeland Security
500 C Street SWWashington, DC 20472
W-05054September 21, 2005MEMORANDUM FOR: Write Your Own Principal Coordinators and the NFIP Servicing AgentFROM: David I. MaurstadActing Administrator / Director Mitigation DivisionFederal Emergency Management AgencySUBJECT: Hurricane Katrina - Flood Claim Handling StandardsThe numbers and severity of Katrina flood losses are unprecedented in the history of the NationalFlood Insurance Program (NFIP). The complexities presented, both logistically and in terms of claim handling itself, have not been encountered before. To date, the WYO companies and the NFIPServicing Agent have reported 150,000 claims. As a point of reference, the NFIP handled 74,000flood claims nationwide in 2004. The situation requires innovative claim handling that will assistour policyholders to quickly recover from these losses, while maintaining adequate controls over  NFIP funds.FEMA, with the help of claims experts from some of our WYO companies, has sought to identifycharacteristics of flood claims that would lend those losses to an expedited claim handling process.As a result, we have developed three processes, described in Attachment A, for handling claims withspecific characteristics. Process # 1 should be used to expedite the claims handling of structures thathave or have had standing water in them for an extended period of time. In order for your companyto participate in this process, you must be able to acquire a reliable square foot measurement so thatan accurate value can be developed. Some companies have a homeowner policy base that largelymatches the flood policy base and may develop the square foot measurement from that information.Process # 2 is to be used when it has been determined that the structure has been washed off itsfoundation by flood water and the square foot measurements are known. The company should usethe same settlement procedures as in process # 1. All other claims require a site visit and will behandled using the company’s normal claim procedures (process # 3).
www.fema.gov
 
Hurricane Katrina – Flood Claim Handling StandardsSeptember 21, 2005Page 2As part of a separate e-mail to individual companies, we will provide depth data that includes threesets of data identified by the value in the “floodarea” field. One set includes areas that are known tohave flooded (identified as “in”). The second set includes areas that may have flooded (identified as“near0”). The third set includes areas that did not flood to the best of our knowledge (identified as“out”). If a company receives a claim for a risk located in an area identified as “out” in the third set,it cannot use process # 1 or # 2.Attached to this memorandum are three documents:Attachment A: Description of Katrina Expedited Claim Handling Processes;Attachment B: File Documentation Requirements; andAttachment C: Example of a Valuation WorksheetThe NFIP’s general adjusters will be involved in closely monitoring the performance and proceduresof the WYO carriers utilizing this process. Their activities will include site visits to field operationsand the homes and businesses of insureds.The existing NFIP fee schedule will be modified for the claims handled by processes # 1 and # 2.The fee will be $750.00 for each claim + $400.00 if a site visit is necessary at a later date. Process# 3 will be paid based upon the existing NFIP fee schedule. FEMA will not seek reimbursementfrom the company when a subsequent review identifies overpayments resulting from the company’s proper use of the FEMA depth data and a reasonable method of developing square foot value inconcluding claims.If your company has a method of acquiring reliable square foot measurements and wants to participate in these processes of handling Katrina claims, please reply to Jim Shortley or TimJohnson at:James.Shortley@dhs.govor Timothy.Johnson@dhs.gov.If your company chooses not to participate in process # 1 or # 2, it should still use process # 3 for those circumstances.Attachments (3)cc: Vendors, IBHS, FIPNC, WYO Marketing Committee, Government Technical RepresentativeSuggested Routing: Claims, Marketing, Underwriting
 
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