[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]



 
                 A LOOK AT THE NATIONAL FLOOD INSURANCE
                  PROGRAM: IS OHIO READY FOR A FLOOD?

=======================================================================

                             FIELD HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                   HOUSING AND COMMUNITY OPPORTUNITY

                                 OF THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                               __________

                            AUGUST 17, 2005

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 109-51


                    U.S. GOVERNMENT PRINTING OFFICE
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                 HOUSE COMMITTEE ON FINANCIAL SERVICES

                    MICHAEL G. OXLEY, Ohio, Chairman

JAMES A. LEACH, Iowa                 BARNEY FRANK, Massachusetts
RICHARD H. BAKER, Louisiana          PAUL E. KANJORSKI, Pennsylvania
DEBORAH PRYCE, Ohio                  MAXINE WATERS, California
SPENCER BACHUS, Alabama              CAROLYN B. MALONEY, New York
MICHAEL N. CASTLE, Delaware          LUIS V. GUTIERREZ, Illinois
EDWARD R. ROYCE, California          NYDIA M. VELAZQUEZ, New York
FRANK D. LUCAS, Oklahoma             MELVIN L. WATT, North Carolina
ROBERT W. NEY, Ohio                  GARY L. ACKERMAN, New York
SUE W. KELLY, New York, Vice Chair   DARLENE HOOLEY, Oregon
RON PAUL, Texas                      JULIA CARSON, Indiana
PAUL E. GILLMOR, Ohio                BRAD SHERMAN, California
JIM RYUN, Kansas                     GREGORY W. MEEKS, New York
STEVEN C. LaTOURETTE, Ohio           BARBARA LEE, California
DONALD A. MANZULLO, Illinois         DENNIS MOORE, Kansas
WALTER B. JONES, Jr., North          MICHAEL E. CAPUANO, Massachusetts
    Carolina                         HAROLD E. FORD, Jr., Tennessee
JUDY BIGGERT, Illinois               RUBEN HINOJOSA, Texas
CHRISTOPHER SHAYS, Connecticut       JOSEPH CROWLEY, New York
VITO FOSSELLA, New York              WM. LACY CLAY, Missouri
GARY G. MILLER, California           STEVE ISRAEL, New York
PATRICK J. TIBERI, Ohio              CAROLYN McCARTHY, New York
MARK R. KENNEDY, Minnesota           JOE BACA, California
TOM FEENEY, Florida                  JIM MATHESON, Utah
JEB HENSARLING, Texas                STEPHEN F. LYNCH, Massachusetts
SCOTT GARRETT, New Jersey            BRAD MILLER, North Carolina
GINNY BROWN-WAITE, Florida           DAVID SCOTT, Georgia
J. GRESHAM BARRETT, South Carolina   ARTUR DAVIS, Alabama
KATHERINE HARRIS, Florida            AL GREEN, Texas
RICK RENZI, Arizona                  EMANUEL CLEAVER, Missouri
JIM GERLACH, Pennsylvania            MELISSA L. BEAN, Illinois
STEVAN PEARCE, New Mexico            DEBBIE WASSERMAN SCHULTZ, Florida
RANDY NEUGEBAUER, Texas              GWEN MOORE, Wisconsin,
TOM PRICE, Georgia                    
MICHAEL G. FITZPATRICK,              BERNARD SANDERS, Vermont
    Pennsylvania
GEOFF DAVIS, Kentucky
PATRICK T. McHENRY, North Carolina
CAMPBELL, JOHN, California

                 Robert U. Foster, III, Staff Director
           Subcommittee on Housing and Community Opportunity

                     ROBERT W. NEY, Ohio, Chairman

GARY G. MILLER, California, Vice     MAXINE WATERS, California
    Chairman                         NYDIA M. VELAZQUEZ, New York
RICHARD H. BAKER, Louisiana          JULIA CARSON, Indiana
WALTER B. JONES, Jr., North          BARBARA LEE, California
    Carolina                         MICHAEL E. CAPUANO, Massachusetts
CHRISTOPHER SHAYS, Connecticut       BERNARD SANDERS, Vermont
PATRICK J. TIBERI, Ohio              STEPHEN F. LYNCH, Massachusetts
GINNY BROWN-WAITE, Florida           BRAD MILLER, North Carolina
KATHERINE HARRIS, Florida            DAVID SCOTT, Georgia
RICK RENZI, Arizona                  ARTUR DAVIS, Alabama
STEVAN, PEARCE, New Mexico           EMANUEL CLEAVER, Missouri
RANDY NEUGEBAUER, Texas              AL GREEN, Texas
MICHAEL G. FITZPATRICK,              BARNEY FRANK, Massachusetts
    Pennsylvania
GEOFF DAVIS, Kentucky
CAMPBELL, JOHN, California
MICHAEL G. OXLEY, Ohio


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    August 17, 2005..............................................     1
Appendix:
    August 17, 2005..............................................    41

                               WITNESSES
                       Wednesday, August 17, 2005

Berginnis, Chad, Mitigation Branch Chief, Ohio Emergency 
  Management Agency and immediate past Chair, National Mitigation 
  Policy Liaison, ASFPM..........................................    18
Crecelius, Cynthia J., Program Manager, Ohio Department of 
  Natural Resources..............................................    21
Dozier, Derrick, Supervisor, Property and Casualty Unit, Office 
  of Consumer Services, Ohio Department of Insurance.............    23
Levengood, Patty, Director, Tuscarawas County Homeland Security 
  and Emergency Management Agency................................    25
Maurstad, David I., Acting Director and Federal Insurance 
  Administrator, Mitigation Division, Federal Emergency 
  Management Agency, Department of Homeland Security.............     3
Metzger, Terry, Commissioner, Tuscarawas County, Ohio Commission.     9
Quinlin, Richard, Coordinator, Belmont County, Ohio Emergency 
  Management Agency..............................................    26
Roskovich, Elaine, flood victim..................................    15
Upson, Rev. Karen, Director, Ohio Valley Relief Center and 
  Donation Management, Belmont County, Ohio......................    27
Wilson, Hon. Charles, Ohio State Senator, 30th District..........     7

                                APPENDIX

Prepared statements:
    Ney, Hon. Bob................................................    42
    Berginnis, Chad..............................................    44
    Crecelius, Cindy.............................................    61
    Dozier, Derrick..............................................    71
    Levengood, Patty.............................................    75
    Maurstad, David I............................................    77
    Metzger, Terry...............................................    86
    Quinlin, Richard.............................................    88
    Roskovich, Elaine............................................    89
    Upson, Karen.................................................    91
    Wilson, Charles..............................................    93


                      A LOOK AT THE NATIONAL FLOOD
                       INSURANCE PROGRAM: IS OHIO
                           READY FOR A FLOOD?

                              ----------                              


                       Wednesday, August 17, 2005

             U.S. House of Representatives,
                            Subcommittee on Housing
                         and Community Development,
                           Committee on Financial Services,
                                                   Washington, D.C.
    The subcommittee met, pursuant to notice, at 10:00 a.m., in 
the McDonald/Marlite Conference Center, 143 McDonald Drive, 
S.W., New Philadelphia, Ohio, Hon. Bob Ney [chairman of the 
subcommittee] presiding.
    Present: Representative Ney.
    Chairman Ney. Today the Subcommittee on Housing and 
Community Opportunity meets here in New Philadelphia, Ohio, for 
its first field hearing of the 109th Congress to continue its 
review and oversight of the National Flood Insurance Program. 
This hearing will focus on how State and local governments 
operate under the National Flood Insurance Program (NFIP), and 
the steps being currently taken by the Federal Emergency 
Management Agency (FEMA), local officials, and the insurance 
industry to resolve problems dealing with inconsistencies and 
delays inherent to the program. In addition, our hearing will 
investigate current implementation difficulties in counties 
such as Tuscarawas, Ohio; specifically, how implementation of 
the Flood Insurance Reform Act has affected constituents and 
local organizations.
    Our Committee is the Financial Services Committee and the 
Subcommittee that I chair is the Housing and Community 
Opportunity Subcommittee. Maxine Waters of California, by the 
way, is the Ranking Member of that subcommittee. The Full 
Committee is chaired by Mike Oxley of Ohio, and Barney Frank of 
Massachusetts is the Ranking Member. Last year, our 
subcommittee and the Full Committee spent considerable time and 
effort on legislation to reauthorize and reform the National 
Flood Insurance Program. On June 30, 2004, President Bush 
signed into law the Flood Insurance Reform Act. This 
legislation reauthorizes the National Flood Insurance Program 
through September of 2008.
    During deliberations on the reauthorization legislation, 
many concerns were raised across the United States regarding 
the administration of the program. And these concerns were 
brought to the attention of FEMA. Policy holders often did not 
have a clear understanding of their policy; insurance agents 
often did not understand what they were selling or how to 
process claims correctly; many policy holders did not know of 
or understand the appeals process; and many questioned the 
adequacy of payments ad the adjustment system. A lack of 
coordination between private insurers, NFIP and FEMA, and 
inadequate training were listed as possible sources for some of 
the administrative problems affecting the program.
    Since the enactment of the Flood Insurance Reform Act, 
members of Congress have continued to hear from their 
constituents who are frustrated with the NFIP, with the Act. 
This subcommittee has continued its oversight in an effort to 
address many concerns that continue to be raised regarding the 
administration and implementation of the program. We have had 
hearings in Washington, D.C., so this is an official House 
hearing, and without objection, written statements can be 
entered for the record. And this will be the third in a series 
of hearings on this issue.
    Floods have been and continue to be one of the most 
destructive and costly natural hazards to our Nation. During 
this past year alone, there have been three major floods in my 
district in eastern Ohio. All three of these incidents 
qualified for Federal flood relief granted by the President. 
And here in this county, as we all know, about 7,000 people had 
to be evacuated. I see many faces in the room, local officials, 
legislative officials, and EMA, whom we worked with. Other 
counties were affected, Dick Quinlin is in the audience from 
Belmont and he went through floods for about 22 years or so, 
but the three floods last year were pretty horrific around many 
parts of the 18th Congressional District. Recent flooding in 
January resulted in historic levels in several local dams. And 
of course, in Tuscarawas County, as I mentioned, three 
communities were forced to evacuate which displaced about 7,000 
people. I was able to witness firsthand this devastation in 
Guernsey County and Belmont and many other counties throughout 
the District. By the way, I have also traveled to other 
Members' districts with hurricanes in Florida and we have seen 
incredible devastation also across the United States.
    The National Flood Insurance Program is a valuable tool in 
addressing the losses incurred throughout the country due to 
floods. It assures that businesses and families have access to 
affordable flood insurance that would not be available on the 
open market.
    Prior to the passage of the National Flood Insurance Act in 
1968, insurance companies generally did not offer coverage for 
flood disasters because of the high risks involved. Today, 
almost 20,000 communities participate in the National Flood 
Insurance Program. More than 90 insurance companies sell and 
service flood policies, and there are approximately 4.4 million 
policies covering a total of $620 billion.
    Last year's Flood Insurance Reform Act achieved significant 
reforms to this important Federal program and I look forward to 
hearing from all of our witnesses today as we discuss how best 
to implement the legislation as well as determine whether new 
reforms and initiatives are in order to compliment the work 
that we did last year.
    I want to thank David Maurstad from FEMA, who is here and 
who has participated in all of our hearings on flood insurance 
to this date. I also want to thank our Senator Charles Wilson 
and also Commissioner Kerry Metzger is here on behalf of all 
the Commissioners. I just saw Commissioner Abdul and I was 
talking to him about this issue about an hour ago. Also, while 
Commissioner Chuck Prost on behalf of the Belmont County 
Commissioners, could not be here today, he did submit testimony 
that will be part of the official hearing record. And I want to 
thank all of our witnesses, local officials, local mayors, and 
citizens as we continue our oversight of this important Federal 
program.
    This hearing is important because we can take this back to 
Washington as part of the official record.
    Before we begin, I wanted to let all the gentlemen on this 
panel introduce themselves. They all come from Washington, 
D.C., which we really appreciate, and they are the nuts and 
bolts. As you know, as elected officials, you have all the 
people who are there and do all the work, I guess, and the 
processing of everything and the thinking. I just want these 
three individuals, we will start with Jeff Riley, to introduce 
themselves and tell you what they do.
    Mr. Riley. Hello. I am Jeff Riley, I am with the Minority 
part of the committee. I am representing Barney Frank and 
Maxine Waters. Thanks for being here today.
    Chairman Ney. Thanks.
    Mr. Johnson. I am Tallman Johnson. I work for Congressman 
Bob Ney on the Financial Services Committee.
    Mr. Kangas. I am Paul Kangas. I work for Chairman Mike 
Oxley of the full Committee on Financial Services, where I work 
on flood insurance issues for him. Chairman Oxley extends his 
thanks also for being here today.
    Chairman Ney. We will begin with our first panel of David 
Maurstad, who is the Acting Mitigation Director and Federal 
Insurance Administrator for the Emergency Preparedness and 
Response Directorate of FEMA within the Department of Homeland 
Security. His areas of oversight include the National Flood 
Insurance Program, National Earthquake Hazards Reduction 
Program, the National Dam Safety Program and the National 
Hurricane Program.
    Thank you.

  STATEMENT OF DAVID I. MAURSTAD, ACTING DIRECTOR AND FEDERAL 
INSURANCE ADMINISTRATOR, MITIGATION DIVISION, FEDERAL EMERGENCY 
       MANAGEMENT AGENCY, DEPARTMENT OF HOMELAND SECURITY

    Mr. Maurstad. Good morning, Chairman Ney. I am David 
Maurstad, the Acting Director and Federal Insurance 
Administrator of the Mitigation Division in FEMA and I want to 
thank you for this invitation to appear today before your 
subcommittee to talk about the National Flood Insurance 
Program.
    As you indicated, over 37 years ago, the NFIP was 
established to reverse the trend of rising costs to 
communities, States and the Nation from flood disasters. Prior 
to the NFIP, flood insurance was expensive and largely 
unavailable. Further, community management of flood risk was 
not an established practice. Today, there are over 4.7 million 
policies issued for citizens living and working in over 20,072 
participating communities. The State of Ohio has 726 of those 
participating communities with nearly 37,000 flood insurance 
policies in effect providing over $4 billion worth of coverage. 
After humble beginnings, the NFIP has now become the largest 
single-line property insurance writer in the United States.
    The NFIP is designed to provide a reasonable method of 
sharing the risk of flood loss that requires balancing 
competing demands and discouraging unwise development, while 
providing affordable insurance to offset individual property 
owner risk. The Federal Government assumes a significant 
portion of the risk by managing the National Flood Insurance 
Fund, while the insured still retains a portion of the risk 
through deductibles and coverage limitations. Participating 
communities are required to reduce their risk of flood loss as 
a condition of making affordable flood insurance available for 
their citizens.
    I believe we have been successful in achieving that 
balance. I am proud to state that the more than 20,000 
participating communities that I referenced earlier that have 
adopted and enforced construction standards that save over $1 
billion annually in avoided flood damages. In fact, one of the 
most successful components of the NFIP is the Community Rating 
System. CRS is a voluntary incentive program that provides 
flood insurance premium discounts in communities where 
floodplain management activities exceed the minimum NFIP 
requirements.
    I am also pleased to note that the NFIP annually pays 
policy holders an average of between $750- $800 million in 
claims payments. In catastrophic years such as last year, we 
have paid as much as $1.7 billion. Ohio policy holders received 
more than $35 million in flood insurance claim payments last 
year. Over the past 5 years in Ohio, the NFIP has received more 
than 4,500 claims and paid out nearly $62 million in flood 
insurance claims. The program's ability to provide this 
resource reduces the taxpayer burden for disaster assistance 
and clearly meets our objective of distributing more fairly the 
economic burden of flood risk in the United States.
    Another strength of the program is NFIP partnerships. As 
you indicated, over 96 private insurance companies known as 
Write Your Own (WYO) companies, sell and service approximately 
95 percent of the existing policies in force. It is the 
responsibility of these Write Your Own companies to manage NFIP 
policies as a part of their insurance portfolio and it is the 
NFIP's responsibility to ensure their effective performance. 
FEMA, through its various audit programs, routinely conducts 
over 70 audits of WYO companies a year to ensure consistent 
program delivery and policy management. FEMA conducts claim 
reinspections of WYO companies to ensure their compliance with 
program standards and directives. If errors are discovered in 
the audit process or during claims reinspections, FEMA works 
with the WYO company to put procedures in place to make sure 
the errors do not reoccur. FEMA conducts workshops for both 
adjusters and agents that address underwriting and claims 
issues.
    Also immediately after a major event, FEMA provides a 
briefing to the adjusters in the area regarding local 
conditions and continues to provide guidance as needed. 
Insurance specialists are detailed to FEMA Joint Field Offices 
(JFO) to assist policy holders with their questions during 
recovery. For example, after the February 15 flooding disaster 
declaration in Ohio this year, NFIP staff at the JFO 
established a flood insurance task force comprised of FEMA JFO 
staff and State staff to address NFIP issues associated with 
the disaster. Flood Risk Information Open Houses were conducted 
by FEMA regional staff and the Ohio Department of Natural 
Resources staff to educate the public on the specific flood 
risk they are facing, inform them of ways to reduce that flood 
risk, and highlight the benefits of the NFIP. Local official 
meetings were held to educate Floodplain Administrators and 
community and county officials on the role that the preliminary 
Flood Insurance Rate Maps play in floodplain management.
    We have also partnered with our State counterparts to help 
us implement the NFIP. For example, the State of Ohio has 
incorporated effective local floodplain management programs 
into its criteria and evaluation of all Hazard Mitigation Grant 
Program, Pre-Disaster Mitigation Grant Program, and Flood 
Mitigation Assistance Program applicants. State policy requires 
effective local floodplain management as a condition for 
communities to receive mitigation funding. The policy promotes 
sustainability and avoids the damage-repair-damage cycle that 
occurs if risk reduction standards and strategies are not 
developed and implemented. NFIP information has been included 
in packets for local officials at mitigation briefings. Over 25 
briefings were held from March 8th through March 31st this past 
year in Ohio.
    Nonetheless, as you indicated, we recognize there is room 
for improvement. FEMA is committed to ensuring that all agents 
are provided the necessary tools to provide policy holders 
timely, comprehensive, and accurate information on the coverage 
afforded by their policies. As I stated at the April 14th 
hearing before this subcommittee, we are providing a robust 
program of flood insurance training for insurance agents via 
live seminars across the Nation and online training modules 
available to agents at any time. Both beginning and advanced 
flood insurance training topics are provided to interested 
agents. In most States, agents earn continuing education 
credits for attending the NFIP training seminars. As we work 
with the State insurance commissioners, such as Ann Womer 
Benjamin, to implement section 207 of the Flood Insurance 
Reform Act of 2004, more agents will take advantage of these 
training opportunities to fulfill their State's new mandatory 
flood insurance training requirements.
    Consistent with the Flood Insurance Reform Act of 2004, we 
have developed a comprehensive information package for all new 
and existing policy holders that provides easy-to-understand 
information on NFIP coverage, regulations, and procedures. This 
package features plain language forms developed to help policy 
holders understand their flood insurance coverage.
    However, I have noticed that the NFIP is hindered in some 
cases by a fundamental misunderstanding of its intent. For 
example, some policy holders believe that if they carry flood 
insurance coverage with a $250,000 limit on their dwelling, 
they are entitled to a claims payment for that amount 
regardless of the actual flood damages sustained. Another 
common misperception is that flood insurance coverage should 
fully restore policy holders to pre-flood condition. My review 
of the program since its inception clearly indicates that the 
NFIP was never intended to fully restore policy holders to pre-
flood condition. It was designed to help them recover.
    FEMA has been working in cooperation with insurance 
industry representatives to fulfill the requirements of Title 
II and starting October 1, 2005, several new documents will be 
distributed to NFIP policy holders at the time of policy 
purchase, renewal and upon reporting a claim. Specifically, the 
summary of coverage, claims handbook, the loss history, and the 
acknowledgement of receipt of materials will enable policy 
holders to gain a clear understanding of coverage and claims 
procedures. Insurance agents will be informed by the insurance 
companies they represent of these materials and will be offered 
training on them to answer policy holders' questions. In 
addition, many insurance companies are planning to reinforce 
their flood insurance customer service operations with staff 
members prepared to address flood insurance inquiries on the 
new material.
    As you are well aware, Title II also includes additional 
agent training requirements. The subcommittee's hearing last 
April also identified agent training as an area in need of 
improvement. FEMA has been coordinating with the National 
Association of Insurance Commissioners and the insurance 
industry to establish and publish minimum flood insurance 
training and education requirements for all agents who sell 
flood insurance policies. Because State insurance commissioners 
have the authority for insurance agent licensing and continuing 
education requirements, FEMA's role is to establish the 
training course content that enables agents to have a good 
understanding of the NFIP, to offer incentives whereby trained 
agents receive sale leads from FEMA's advertising campaign and 
larger cost shares for their own flood insurance advertising 
activities, and provide technical assistance to the States.
    FEMA conducted a webcast teleconference for all State 
insurance commissioners, licensing directors, and other staff 
on July 13, 2005. This was the third NFIP webcast 
teleconference for State insurance departments since August 
2004, wherein FEMA offered assistance to State insurance 
department staff. FEMA staff members are available to meet 
individually with any State insurance department to provide 
specialized training to the staff members. And I might add, we 
had 46 States involved in that last webcast.
    The flood hazard identification component of the NFIP is 
also undergoing a major overhaul.
    The Ohio Department of Natural Resources serves as the NFIP 
State Coordinating Office. Through this office and the 
partnership FEMA has built with the State, direct technical 
assistance is provided to each Ohio community that participates 
in the NFIP.
    FEMA has worked closely with State organizations such as 
the Ohio DNR and our many other stakeholders and partners to 
implement a major initiative of modernizing the Nation's flood 
maps.
    Since fiscal year 2003, FEMA has provided over $133 million 
to Cooperating Technical Partners, like Licking County, Ohio, 
who are working with FEMA to develop the flood hazard 
information for their communities.
    In fiscal year 2005, we plan to initiate studies for close 
to 500 additional counties, which will bring the total number 
of counties that will have flood hazard map updates underway to 
nearly 1,300.
    So to conclude, I want to thank you, Chairman Ney, for 
holding this field hearing in the beautiful State of Ohio, and 
I would also like to thank your subcommittee for its oversight, 
which in fact the diligent oversight of this committee has 
helped the program become successful and will make it even 
stronger in the future.
    [The prepared statement of Mr. Maurstad can be found on 
page 77 of the appendix.]
    Chairman Ney. Thank you. Before we move on, I wanted to 
recognize Representative Sayer, who is also here in the 
audience. Representative Sayer represents this county and two 
other counties.
    Next, we have State Senator Charles Wilson, who is an 
elected member of the Ohio State Senate, having taken office 
this past January. He's from Belmont County, previously a State 
Representative for the 99th House seat and also a small 
business owner, Wilson Funeral Home.
    We are very happy to have Senator Wilson

STATEMENT OF THE HONORABLE CHARLES WILSON, OHIO STATE SENATOR, 
                         30TH DISTRICT

    Mr. Wilson. Thank you, Chairman Ney.
    Good morning and thank you for the opportunity to speak 
this morning and discuss the issue of flood insurance and how 
it affects the citizens of Tuscarawas County and this region.
    Last September, the flood waters came and washed away the 
dreams, the hard work and, for some, their only possession. You 
or I might see a shingled house with a mailbox, but for the 
homeowner, it was where they grew up, where their parents were 
born, and in many cases where memories were made and where life 
was simple and away from this hectic world. And in the blink of 
an eye, rising waters moved foundations, cracked walls, and 
with the force of Mother Nature destroyed a home in a matter of 
hours. The neighbors helped each other, friends carried boxes, 
relatives pitched in and brought food, all in hopes that their 
lives could be put back together. Fire departments worked 
countless hours and volunteers showed their generosity that has 
many ways and many names and a boundless hope for the future.
    Congressman Ney and I joined then-State FEMA Director Dale 
Shipley and Dick Quinlin in Belmont County and flew in a 
helicopter over parts of the area to see first hand the 
devastation and the magnitude of the flood waters. I visited 
Belmont, Jefferson, and Columbiana counties to see the 
residents and how the effects of the flooding would happen.
    What I found was confusion, and, on the minds of the 
citizens who were attempting to put back their lives, total 
frustration. Speaking with Joe Bachman, Tuscarawas County 
engineer, he described a system of eligibility that depended on 
personality rather than facts. In my opinion, we must 
communicate the procedure and depth of our services at the 
beginning rather than offering misinformation and bureaucracy. 
He also explained that our flood maps are next to worthless and 
they need to be updated. I can see that the prospective 
homeowner would be paying the additional cost to survey the 
property to determine its flood status, or that they may be 
needlessly paying it for years because the maps were 
inaccurate. Also, there is a communication gap between Federal, 
State, and local governments because of a lack of enforcement 
in floodplain rules. Since Tuscarawas County does not require a 
building permit, nor does it have zoning in many of the 
affected areas, developers and homeowners are taking their 
chances and are unsure of their need for flood coverage.
    I support the message of Patty Levengood, Director of 
Tuscarawas County Homeland Security and EMA, who will be 
speaking here this morning, that there is confusion on the part 
of homeowners as to their coverage. When a disaster occurs, we 
need to have answers and communications systems in place to 
direct residents, not giving them an 800 number and ultimately 
winding up with an answering machine.
    I also offer you the insight of Mike Wallace of Belmont 
County, who is a 30-year veteran of the fire department and 
currently the floodplain coordinator in Belmont County. He 
believes that both the insurance agents and the homeowners need 
to be educated on the National Flood Insurance Program. He 
witnessed firsthand how renters who lost items in recent floods 
received settlements and homeowners, whom you would think would 
be eligible, received nothing.
    I have with me an example of an invoice basically for the 
renewal of flood insurance, showing that in many cases there is 
a $5,000 deductible, showing in many cases that it is only for 
replacement cost and that it be mandatory that this replacement 
cost be done in a certain way. There seems to be a real 
disconnect of the dots between the insurance owner and the 
person they buy from and the reality of what the insurance will 
do.
    Also, I found that the insurance companies view a basement 
differently than a homeowner does. The company sees a concrete 
floor with a water heater and a washtub. The homeowner has a 
recreation room with carpet, computer desk for kids, and an 
entertainment system. Many times it may be a mother-in-law 
suite so that she can be close to her grandchildren. Once 
flooding occurs, this area is destroyed and unusable. The 
homeowner finds out that little, if any, of this is covered. 
They find out that the premium of $400 to $600 a year that they 
have been paying for flood insurance for the past 10 years was 
only for replacement cost, not for damage. They receive little 
if any compensation and are frustrated for months waiting for 
an answer.
    I hope that we can address this communication gap and the 
level of education to all parties with the insurance issue. 
Last year, we stood in the mud and witnessed the effects of the 
rushing water. We know that our response and effectiveness was 
critical to our constituents. Today, we see that the bridge 
here in Tuscarawas County on County Road 19 is beginning 
construction, and countless roads and parts of our 
infrastructure all over southeastern Ohio are not fixed.
    Our goal should be to put people's fears to rest by 
protecting their property. My testimony, along with others here 
today, should give you some insight and personal examples to 
the problems that face residents regarding issues of insurance.
    I look forward to working and improving your agencies' 
methods so that we can be more responsive and more effective to 
the people.
    Thank you for this opportunity to testify.
    [The prepared statement of Sen. Wilson can be found on page 
93 of the appendix.]
    Chairman Ney. I want to thank Senator Wilson for his time 
and attention to this issue and for testifying today.
    Next is Commissioner Kerry Metzger. He serves as 
Commissioner for Tuscarawas County, and chairs the legislative 
committee also for the Association of County Commissioners of 
Ohio. He is a former State Representative, a hard working guy 
in the area, and a dentist by profession.
    Thank you, Commissioner.

 STATEMENT OF TERRY METZGER, COMMISSIONER, TUSCARAWAS COUNTY, 
                        OHIO COMMISSION

    Mr. Metzger. Thank you, Mr. Chairman, and I welcome you and 
your subcommittee to Tuscarawas County.
    I want to thank you for the opportunity today to provide 
public testimony on the National Flood Insurance Program and 
its impact here in Tuscarawas County, especially in light of 
the recent flooding issues we have had throughout the county.
    While I have not had any direct personal experiences with 
the National Flood Insurance Program, I have had conversations 
with our Director of the Tuscarawas County Homeland Security 
and Emergency Management Agency, Patty Levengood, regarding the 
frustrations and the confusion the county residents have 
experienced with the program, as she has conducted local damage 
assessments throughout the county.
    Director Levengood has told me that the general public has 
a general lack of knowledge and understanding of the different 
forms of insurance that could cover claims brought forth by a 
flooding event. Most are unaware of what their coverage is 
until after the disaster has occurred and when help is most 
needed. Unfortunately, it is then that they are informed, after 
the fact, that their claims are denied because they did not 
have the proper insurance coverage at the time of the event.
    I would wager that a majority of homeowners are unaware 
that their regular homeowner's insurance does not cover their 
property from flood damage. Or that, even if they had some form 
of flood insurance coverage, that it may not cover them for 
sewer backup or earth movement damage, even though the damage 
may have been caused by the flooding incident. The property 
owner, more often than not, believes that this is part of their 
regular homeowner's insurance or their flood insurance policy, 
not knowing that this additional coverage needed to be obtained 
with the purchase of riders to their insurance policy. The 
system is too confusing and complex and it is no wonder people 
get frustrated and angry with government officials or private 
insurance agents when their claims are denied.
    That is why I believe that the system should be simplified. 
Instead of having to go to multiple sources to obtain essential 
coverage for flooding, sewer backup or earth movement, a system 
should be created where this type of disaster coverage can be 
obtained from a single source--a one-stop shop, if you will. 
The consumer will benefit from having the myriad of insurance 
options explained to them once and then can make informed 
decisions on the risks they are prepared to assume and the 
coverage they wish to obtain.
    Should this not be feasible, then I would recommend that 
the governmental agencies like FEMA, and the private insurance 
industry, the agencies and the agents, be mandated by law to 
discuss, explain, and inform the general public on the 
insurance coverage options that may affect flooding issue 
claims prior to the consumer obtaining flood insurance. This 
will allow the consumer to become better educated and informed 
about their insurance coverage and allow them to make better 
proactive, rather than reactive, decisions regarding their 
potential flood insurance claims.
    Again, thank you for the opportunity to testify before the 
subcommittee, Mr. Chairman.
    [The prepared statement of Mr. Metzger can be found on page 
86 of the appendix.]
    Chairman Ney. I want to thank the Commissioner for his 
testimony.
    I have also noticed Lisa Duval is here from Congressman 
Strickland's office. Thank you, Lisa.
    I just have a few general questions and what I wanted to 
ask of Mr. Maurstad is can you explain the difference once 
again between replacement cost coverage and actual cash value 
coverage under the flood insurance policy? Because I think this 
is something that is confusing. So again, that would be the 
difference between replacement cost coverage and actual cash 
value coverage.
    Mr. Maurstad. Well, Chairman Ney, replacement cost coverage 
is available on the dwelling of a flood insurance policy, first 
of all. And I am going to make a distinction that it is not 
available on the contents. The contents coverage is always on 
an actual cash value basis. Replacement cost coverage can be 
afforded on the dwelling if the insured purchases insurance 
that represents 80 percent of the insured value of the 
property. If that is done, then the loss would be covered on a 
replacement cost basis. The adjuster would go in, look at the 
covered damaged property, determine what it would cost to 
repair or replace that damaged property and reimburse the 
policy holder for that amount, less the policy holder's chosen 
deductible on the property--or on the policy.
    For a loss that is not adjusted under the replacement cost 
provision--if a policy holder did not purchase 80 percent of 
the insured value of the property--that loss would be covered 
on an actual cash value basis. Let me use an example, to repair 
or replace the damaged property would be $10,000. But instead 
of paying that amount less the deductible, under the actual 
cash value scenario, depreciation would be determined for that 
damaged property, and let us just for example say that the 
depreciation factor was 50 percent. In that case, then the 
policy holder would receive the $10,000 minus the $5000 
depreciated amount, so the policy holder would receive $5000 
less their deductible in that scenario.
    That is why we are encouraging people to insure to value 
for a flood insurance policy, the same as they insure to value 
on their homeowner's policy. The testimony provided earlier was 
right on the mark; there are in fact two issues that we are 
stressing in our public awareness campaign, Flood Smart, which 
is a nationwide public awareness campaign for the NFIP 
program--two issues. One, we are stressing to any individual 
property owner across the country that a flood could happen to 
them wherever they are. It does not just happen in hurricane 
alley, it does not just happen right up next to a river or a 
stream. So, number one, we are stressing that a flood can 
happen to them.
    And second, that a normal homeowner policy does not cover 
them for flood loss and that they need to purchase a separate 
flood insurance policy, not a rider on their homeowner policy, 
but a separate flood insurance policy from an agent in their 
participating community.
    So we are stressing those two factors that we believe will 
go a long way toward a better understanding of the program.
    Chairman Ney. What responsibility does FEMA have to ensure 
the performance of the claim adjusters? Is there any 
responsibility within FEMA?
    Mr. Maurstad. It is a shared responsibility, sir, with the 
Write Your Own companies who, through their arrangement with 
the program, agreed to have their losses under the NFIP program 
be adjusted on the same basis and under the same scenario that 
they would handle losses to their non-flood portfolio. So, we 
audit the Write Your Own companies, we do reinspections of 
losses of Write Your Own companies to make sure that they are 
following our procedures and practices. But I would say that 
through the arrangement that we have with those 96 private 
insurance companies, they are the first line of responsibility 
here in making sure that their adjuster employees or the 
contractors that they utilize to adjust claims on their behalf 
and the program's behalf are doing so appropriately.
    Chairman Ney. The new law establishes a pilot program for 
repetitive loss properties. Would you like to comment on that 
pilot? Is it geared up? And what it does for repetitive loss 
for citizens that have that type of situation.
    Mr. Maurstad. Well, we have been involved in addressing 
repetitive loss properties for well over a decade through the 
Flood Mitigation Assistance Program, which has been funded from 
the fees of policies that are purchased. We are in the process, 
we continue to be in the process of developing the repetitive 
loss pilot program that was a part of the reauthorization last 
year and we--Undersecretary Brown, Secretary Chertoff, the 
Administration, is committed to repetitive loss and the 
positive effects that it can have in the damage-repair-damage 
cycle of those properties that continue to be put at risk. And 
we are hopeful to continue to make progress on getting that 
program implemented.
    Chairman Ney. A final question I have, I just wanted to 
note that on April 14th, we had a flood insurance hearing in 
Washington, Congressman Dutch Ruppersberger of Maryland 
strongly suggested that policies should be written in plain 
English, which is what I think other officials have stated. Are 
Ohioans--well, not only Ohioans, but the Nation--getting their 
policies in plain English? I know there are certain legal items 
that have to be written and everything, we all know that. Any 
comments from anyone? Do you think there are ways we could 
actually sit down and try to get this--I know Panel II when 
they come here are going to say some things that we want to be 
able to take what they are saying that did not work and through 
this hearing be able to try to literally go in and correct 
those types of things. So do you think there is a way that 
things could be written easier?
    Mr. Maurstad. Chairman Ney, let me lead off and then I will 
pass the microphone. I would say that the NFIP policy was 
written so that it would coincide with a homeowner policy and 
what is considered to be the plain English format for insurance 
policies a few years ago.
    We are, as you are well aware, through the reauthorization, 
developing additional tools that will go along with that policy 
that will be written, I believe, in even plainer English, so 
that some of those issues that have been raised in the past and 
continue to be raised will be addressed starting October 1st 
and into the future. But I would also submit that as a former 
insurance agent for over 20 years, whether it be funeral 
directors or dentists or homeowners that I insured, you needed 
to sit down regularly and have discussions between the agent 
and the policy holder, whether it be a small business owner or 
a homeowner and discuss the provisions of that policy, because 
as you indicated, that policy is a contract, it is a two-party 
contract between the company and the policy holder. And so that 
is what I continue to encourage, that people contact their 
agent and that the agent provide the necessary services to that 
policy holder so there is a better understanding of what is 
being purchased, what is covered, what is not covered, what the 
deductible is, and the various provisions that are important 
that come up time and time again, such as the basement issues 
and the sharing of the burden for that part of a property that 
is below the base flood elevation, that is the most likely part 
of that structure to be flooded. So that communication I 
believe best occurs over that kitchen table or over that 
business owner's desk.
    Mr. Wilson. If I may, Mr. Chairman, in discussing it with 
an insurance agent back home and asking him what he felt some 
of the issues were, some of it he felt were the expectations of 
the people who bought the insurance. Sometimes even though they 
were told this is not replacement or whatever, however it was 
going to be, they had their own sort of profile on what it 
really meant. So I think some of it is a misunderstanding from 
the boilerplate, if you will, of how difficult it is to 
understand, and then second, the expectations of the people 
buying it. And third, I think it is exacerbated by the fact 
that it happens at a bad time when people are emotionally upset 
and seeing everything, as I said in my testimony, being washed 
away, things that perhaps do not have a dollar value but they 
really do have an emotional value. I think that is a part of 
it.
    And one of my concerns that I mentioned in my testimony 
also is the updating of the maps so that we have maps that if 
this is in the 100 year floodplain, that it be said that way 
and it is something that I think could be very helpful.
    Chairman Ney. I just wanted to comment on the maps. We have 
had a hearing in Washington on the maps and now the 
appropriators did something I just read the other day about 
monies that they were going to put in or not put in. During the 
hearing, basically it was pointed out--not to go into every 
detail of it, but one side of it is that maybe these companies 
are out here and one company had digitized England and maybe 
those companies should do this work that is more up to date. 
Then again, local communities would have to purchase that, they 
would almost have like a copyright.
    But there was a question of what can be mapped, what cannot 
be mapped, but obviously trying to bring everything up to 
modernization. Because there are some areas, and we have got a 
case right now in Belmont County where someone says this is a 
new line, the owners that want to put some jobs in there have 
to dispute that themselves, you have to almost have a civil 
engineer and 90 days to do it. So the county commissioners are 
taking a look at trying to help with that. But if there was an 
up-to-date map, it would not have been anybody guessing whether 
this is a flood zone or not. So the mapping issue is huge that 
you mentioned, and we are trying to work with it.
    I think FEMA said during the testimony that within ``X'' 
amount of months, there were some upgrades that they were 
doing, but it is a huge issue in Washington that we are trying 
to address.
    Mr. Wilson. Mr. Chairman, may I ask is there funding to 
help the Commission with trying to address this?
    Chairman Ney. With our committee?
    Mr. Wilson. Yes.
    Chairman Ney. Yes.
    Mr. Riley. Yes, we are working on it. Mr. Maurstad could 
probably address that.
    Mr. Maurstad. The flood modernization mapping is a 5-year 
program that we are about at the halfway point. It is a billion 
dollar program over 5 years, with both additional funding 
coming from Congress and the full support of the Congress and 
the Administration and also funds continuing to be moved from 
the National Flood Insurance Fund along with the $200 million 
that is appropriated. So it is a multi-year program, we are 
working very closely with the States. I think you will hear 
testimony later about that working relationship, and we are 
committed to making sure we have modernized maps for that 
portion of our country that is at flood risk.
    Chairman Ney. Anything you want to add, Commissioner?
    Mr. Metzger. Thank you, Mr. Chairman.
    The only thing, to answer your question, the original 
question that you had was should the language be made simpler. 
And I think that it is common sense, the simpler the language 
can be made, the more the language can be put into layman's 
terms, the better off. The less confusing it will be for policy 
owners because quite frankly sometimes I look at my policies 
and I wonder, what does that mean? And most people I think are 
under that. And again, being part of the legislature for 8 
years, sometimes things are written--I have always said they 
are kind of written for full employment for attorneys, you 
know, to make sure that they have a job, to be able to 
interpret what was written in law or in policies or whatever.
    The other thing is, getting back to earlier, I think it is 
good that FEMA is moving the insurance agents to make sure that 
they discuss the coverages, but I still feel it is important--
you are leaving that up to the insurance agent to be able to 
determine what he wants to cover. I still think there should be 
something mandated in law that makes sure and requires them, 
each and every one, to consistently talk with their policy 
owners on the different types of coverages and to be able to 
explain that to them so that they have a full awareness of what 
is covered and what is not covered.
    Thank you.
    Chairman Ney. Thank you. One issue that has been raised is 
consumer education. Would you like to comment on that, as added 
to the legislation?
    Mr. Maurstad. Again, sir, we try to--we have got a multi-
million dollar effort, Flood Smart, that is not only a public 
awareness campaign across the country through print media, TV, 
radio, the normal media channels. We have also developed a very 
comprehensive website, floodsmart.gov, where we encourage 
people to go and learn about their flood risk, learn about the 
National Flood Insurance Program. They can find agents that are 
near them that are a part of the program.
    So we are trying to do what we can with the resources that 
we have available to make sure that we get the message out 
about the flood insurance program, especially in those areas 
that are most flood prone. We are giving it our best shot.
    Chairman Ney. In trying to get the information out, I know 
you go to insurance commissioners, I would assume. Have you 
also gone to the EMA directors across the country, did they get 
an e-mail on that, because they're the ones usually that get 
calls in the counties.
    Mr. Maurstad. We work very closely with the State emergency 
managers across the country, local managers. I attend a number 
of their meetings trying to communicate with them. We host a 
flood conference every year.
    Chairman Ney. So you go through the State and then the 
State should go through the local?
    Mr. Maurstad. Yes, sir.
    Chairman Ney. Are there any further questions for the 
witnesses?
    [No response]
    Chairman Ney. I want to thank--Senator Wilson had to 
leave--I want to thank all the witnesses and also local 
officials, Senator Wilson and Commissioner Metzger and other 
officials that are here, EMA directors that spent a lot of 
personal time trying to help people during the rounds of floods 
we had.
    With that, we will move on to Panel II, we will take a 
second to set up.
    [Pause]
    Chairman Ney. Thank you. We will move on to Panel II. 
First, we have Elaine Roskovich, who lives in Lansing, Ohio, 
Belmont County. Her home was damaged by a flood in September 
2004. She is here today to tell us about her experience 
collecting insurance and her experience with the NFIP.
    Next, we have Chad Berginnis, who is the Chief, Mitigation 
Branch, in the Ohio Emergency Management Agency. He has co-
authored a comprehensive revision of model State floodplain 
regulations using his previous experience as a director of the 
Perry County Planning Commission. Mr. Berginnis is testifying 
today on behalf of the Association of State Floodplain 
Managers, an organization representing the flood hazard 
specialists of local, State and Federal Government, the 
research community and the insurance industry.
    Cindy Crecelius is a Program Manager in the State and 
National Flood Insurance Program Coordinator with the Division 
of Water in the Ohio Department of Natural Resources. She is a 
certified floodplain manager and is recognized by the National 
Association of State Floodplain Managers and is an Ohio 
Floodplain Management Association Board member. During her 
tenure as program manager of Ohio's Floodplain Management 
Program, she has been recognized by the Association of State 
Floodplain Managers as a recipient of the Tom Lee Award of 
Excellence.
    Derrick Dozier is a Supervisor for Property and Casualty 
Insurance in the Office of Consumer Services, Ohio Department 
of Insurance. Please give our regards to Director Ann Womer, 
Benjamin.
    And Patty Levengood is no stranger to this county, she has 
been the Director of the Tuscarawas County Homeland Security 
and Emergency Management Agency for the past 10 years and has 
been a certified emergency manager since 1995. During the past 
2 years, her county has dealt with one tornado and four 
Presidential disaster floodings.
    Dick Quinlin is the Emergency Management Director with the 
Belmont County Disaster Services, where he has served since 
1985. Prior to his appointment as the Coordinator, he served 
the agency for 10 years as a volunteer. And we know Dick quite 
well in Belmont County. I want to say to both directors, I have 
personally worked with them and been personal friends with Dick 
for years, worked with both directors and your staff, 
unbelievable job that you all did under a lot of stress. And I 
know there were nights where if you and your staff got 2 hours 
of sleep, you were very happy. But you really did a lot for the 
people and I wanted to mention that.
    Also, Karen Upson is the Director of the Ohio Valley Relief 
Center and Donation Management for Belmont County. Reverend 
Upson is a United Methodist Church pastor and a disaster 
coordinator for United Methodist Church, and has done so much 
also to help people in the communities.
    I would note Chuck Prost, Commissioner of Belmont County 
Commission, will submit testimony. And with that, we will give 
you basically 5 minutes or so to sum up your testimony and your 
statement will be placed in the record for the hearing.
    We will start with Elaine.

          STATEMENT OF ELAINE ROSKOVICH, FLOOD VICTIM

    Ms. Roskovich. Yes, thank you for letting me be here today. 
I would like to share my story with you. But when I tell you 
what happened to me on September 17th, I am not speaking only 
for myself; I am speaking for hundreds of other people who went 
through the same thing.
    So I will start my story with September 17th. I got up in 
the morning and went to work at my shop like I normally did for 
almost 30 years. About 1:00 in the afternoon, I got a phone 
call from a lady that lives on Rain Barton Road and one of her 
relatives lived on the same street as my shop. She said I think 
you had better get home, there is something going on in Blaine, 
and they may close the road. And of course, everyone knows 
Perkins Field and Brookside gets flooded first. So if they 
blocked those two areas, I cannot get to Lansing.
    So okay, I finished my appointment and I did go home. When 
I left my shop and drove through Wheeling, you would not 
believe what I drove through. It looked like every corner was a 
lake and I figured when I got to the Marion Street exchange in 
Bridgeport, they would flag me onto 214, but luckily they let 
me go through. Well, there were cars backed up. When I got into 
Bridgeport, there was a landswell and mud slide at St. 
Anthony's, and when I got further out, there was water coming 
down with gravel that you just would not believe.
    In Brookside, it was starting to come up. It was in Perkins 
Field, it was already starting to seep across 40. When I got up 
almost to stop 16 by Bridgeville, there by the Workmen's Bureau 
of Compensation, there was a big hump of mud, debris, gravel, 
everything. So I was just trembling to get home.
    The road at U.S. 40 by Lansing Carryout was unstable from 
Hurricane Frances' 4 inches of rain. It had already started to 
dig some of the side wall out. So when I did finally get up 
there, which took me almost 45 minutes to drive home, I drove 
across the road, it hadn't caved in, part of it was--it was 
gone a little bit, like just by the guardrail, and there was a 
fire truck sitting there and the water was coming over the road 
towards the Lansing Carryout.
    Well, I live at least 2 blocks away from the creek, so when 
I finally got home and pulled in the driveway, my next door 
neighbor was leaving. She said that she was not staying to 
watch the water get in her house. Well, I would have sworn that 
water was never going to get in the house because water has 
always lain around there, but it has always gone down fast.
    So I went on in and I said well, I am home early and it is 
Friday, I am going to clean house. So I changed my clothes, put 
a pair of shorts on and a T-shirt, and came back out of the 
bedroom. When I looked out the living room window, there was my 
other neighbor, across from me, who is in her 80's, being 
helped through waist-high water. So I opened the door and I 
yelled at her and she said water was coming in her house. At 
that time, my front steps floated away, so I tied them off. I 
went to the back deck and looked. I still had a foot on my 
deck, another foot to come up onto my deck and another step to 
come into the house.
    At that time I saw my next door neighbor behind me jump off 
his deck and he had told me--he was an engineer--that he was 
above the flood level. I just would have sworn I was not going 
to get any water.
    My phone rang and they said what is going on in Lansing and 
just then the water came through the door, hit my furnace with 
the cold water and water just started shooting out of the 
registers. I figured it was time to get out of there, so I just 
threw some stuff in a container, got my cat, and tip-toed out 
of there, because the water was all the way up to my chin.
    The water was not gushing, it was not swirling, it wasn't 
doing anything; it was a very calm water. It just came up 
within 15 minutes. I mean I did not know that the road had 
caved in and dammed it up and back-flushed this water. So the 
water was up in Lansing for probably 12 to 14 hours. I did not 
sleep that night. I went up to the Methodist Church in Lansing 
but I walked Green Bank that whole night, walked where the edge 
of the line was.
    It was sometime in the morning, I do not know, it was dark 
out, the boat came in, I guess looking for survivors, and I was 
standing there like a crazy woman screaming get away from my 
house because the boat has one speed--fast, and it was going 
around and around and around my house and circling the other 
ones. I could see the waves slapping up against my house. I 
presume that is why all my furniture was turned upside down, 
and the water had gotten so high in the house, because it 
covered everything.
    And I do not think we would have had any flood if it had 
not been for Route 40 caving in, because we go downhill, when 
you get past that little turn, that goes downhill. We are much 
higher, but we got it when the road caved in, it dammed up.
    I was raised in this area, I have never seen Lansing 
flooded like that before and there was a gentleman that night 
who was across from the church who said his people built that 
house 83 years ago and that was the first time any water got in 
the basement. But of course, that probably leaves what, 14 to 
15 years of a 100-year flood; so you know, you don't know what 
happened before that 83 years.
    When I purchased my land in Lansing, I purchased it after--
which I found out now, I did not know before that it was in a 
floodplain. Nobody ever told me it was in a floodplain. And I 
just assumed it was not because I grew up there and I never--
you know, that was an old ball field that they had platted out, 
you know, in half acre lots. So when I purchased the land, I 
was told I was not in the floodplain. The mortgage company went 
through it, they were supposed to do--they hire these title 
companies to do all the survey. What happened to the title 
company, why did they not know this was a floodplain? This is 
what they get paid for. When I was on the island, I had to have 
flood insurance because I was in the floodplain, so I was not 
unfamiliar with flood insurance. They told me all I needed was 
homeowner's. But why would a bank give you all that money and 
never do a complete search on your property. I owe $56,000 on 
my house, I had purchased it--I had bought the land at the end 
of 1988, around the end of the summer, and had the house put on 
just around Christmas time, December of 1988, it wasn't 
completely finished until the beginning of 1989, which was a 
year and a half, almost 2 years, after it was deemed a 
floodplain.
    And I am mad, I am mad that my mortgage company did not 
tell me I needed it. I had the house refinanced in 1999. My 
husband was diagnosed with cancer at that time, he passed away 
3 years ago, and I had it refinanced to make it a little bit 
easier for me. And that was Chase Manhattan Mortgage, which is 
part of J.P. Morgan Trust, which is the largest bank in the 
world. They did not tell me. Do the title companies that these 
mortgage companies are hiring not do their job? Whose fault is 
this that I would not have flood insurance.
    I am not blaming the county, I am blaming my mortgage 
company and the title company. But I now have flood insurance. 
I have flood insurance that FEMA gave me on a home that has 
been torn down. I have it until 2007. My house was condemned by 
Belmont County when they looked at it. FEMA measured the water 
inside, and said 30 inches to 3 feet from where the water line 
that they measured down. It was full of mold and they said, you 
know, it was unlivable and then Belmont County came down and 
tore down my house which was put in there at the end of 1988.
    And I am mad, I am mad because someone did not tell me that 
I needed flood insurance and I do not know who to blame. I hope 
that FEMA can explain to some of these mortgage companies the 
people that need flood insurance.
    I understand that when you have flood insurance, you are 
not going to get back everything that is owed to you, 
everything you lost. I mean, I lost everything, furniture, 
clothes, appliances and I collected diamond rings from the time 
I opened my business, it was just one of the things I did, it 
was like diamonds are 25 percent of me, if you ever need them, 
you have got them. And I lost between $60- and $100,000 worth. 
I mean I lost everything.
    To make a long story short, I went from living in a 
$100,000 home, with $50,000 worth of contents, personal 
property, and an Olympic sized pool in the backyard to being a 
bag lady in 15 minutes because I did not have flood insurance 
and no one had told me. Somehow or other, they should make 
these mortgage companies give you a flood determination when 
you buy property because I did not do any search on it. I could 
have probably done a better title search than they did and I 
paid them all those closing costs.
    So, as I said, I am glad that I came here and you let me 
voice my opinion on everything and I do not know why I have 
flood insurance now, but I do until 2007 on an empty piece of 
ground, which I could are less whether it floods or not now.
    I hope I said a little bit for other people too, to see if 
they can change around the insurance, and the title companies.
    Thank you very much.
    [The prepared statement of Ms. Roskovich can be found on 
page 89 of the appendix.]
    Chairman Ney. Thank you. We will have some questions but we 
will just go straight down the line and then I have some 
questions I want to ask you. Thank you for your time.
    Chad.

  STATEMENT OF CHAD BERGINNIS, MITIGATION BRANCH CHIEF, OHIO 
EMERGENCY MANAGEMENT AGENCY AND IMMEDIATE PAST CHAIR, NATIONAL 
                MITIGATION POLICY LIAISON, ASFPM

    Mr. Berginnis. Good morning, Chairman Ney. Thank you for 
allowing me, on behalf of the Association of State Floodplain 
Managers and the Ohio Chapter, the Ohio Floodplain Management 
Association, to testify before you today.
    Indeed, the NFIP is approaching 4 years old and like any 
other program that is large and complex has been revised, 
updated, and managed to reflect current conditions. While not 
perfect, the NFIP has been in many respects one of the world's 
best solutions in addressing flooding issues based on what 
other countries have or have not done compared to our own 
program in the United States.
    Still, today we are not focused on the world, but 
floodplain managers and citizens affected by flooding here in 
Ohio. The balance of my testimony will address the National 
Flood Insurance Program where challenges exist and where 
opportunities lie. Although I will be talking from an ASFPM 
perspective, all of what I say has applicability to Ohio. I am 
hoping that my experience as a local floodplain manager as well 
as working here in the State of Ohio will contribute to that.
    First, let us discuss how State and local governments 
operate under the NFIP. State floodplain management programs 
are unique. Some programs focus on technical assistance and 
building community capability while others focus more on 
mapping. The point is under the NFIP each State is given the 
flexibility to develop programs that best fit their State. 
However, it must be recognized that coordinating the NFIP is 
the beginning point for doing comprehensive flood management 
and not the end point. Even under the rules of the NFIP, States 
are encouraged to do other activities that result in more 
comprehensive floodplain management.
    The ASFPM has recently produced a document, Effective State 
Floodplain Plan Management Programs 2003, that identifies 10 
principles for effective State floodplain management. Based on 
that document, all States need to become more effective in 
their work. One recommendation the ASFPM makes in regard to 
State programs is that FEMA allow for delegation of all or 
portions of floodplain management related programs. For 
example, FEMA is currently looking how portions of the flood 
mapping programs can be delegated to qualified and willing 
States.
    At the local level is truly where the rubber meets the 
road. Although in an ideal world, floodplain management 
decisions would be based on good data, local regulations, and 
building standards, and with the full backing of the community, 
this is often not the case. Political pressures, the lack of 
data, resources, and sometimes the low priority of floodplain 
management in the broader context with everything the community 
has to do are the reality of local floodplain management. The 
NFIP, while it does not directly fund the position of a local 
floodplain manager, does provide incentives for communities to 
participate in the program, such as what Mr. Maurstad had 
talked about, the community rating system. The ASFPM supports 
continuing community incentives to support effective 
implementation of local floodplain management programs.
    In terms of problems, inconsistencies, and delays, again 
let me stress that one of the unique features of the NFIP is 
that there are many entities involved, so usually it is in a 
post-disaster situation that things become really hectic. 
However, I submit that here in Ohio, that situation has not 
been as problematic as it has been in some other States in 
recent years. Undoubtedly there are issues and instances and 
certainly as Ms. Roskovich had indicated, there are some 
disjointed issues with the NFIP.
    For example, Lawrence County, which was sanctioned by the 
NFIP in the 1990's is now one of the best programs in the 
State. This is on the Ohio River. This is not to say again that 
there are not some individual problems. From the ASFPM 
standpoint, some improvements can still be made in the post-
disaster environment. These include: better notification of 
recipients of disaster assistance that local permits are 
required before repair and reconstruction; improved sharing of 
disaster assessment and insurance claims information with local 
officials to help identify potentially substantially damaged 
structures; and fully utilizing ICC insurance coverage by 
promoting its use, streamlining the claims process and 
implementing provisions allowing the more expansive use of ICC 
has changed in the 2004 Reform Act.
    Mr. Chairman, your opening statement during a hearing in 
2003 on the NFIP mentioned issues in the Powhatan Point. To 
illustrate how the program can work, the Powhatan Point 
floodplain administrator, using the tools provided under the 
NFIP, was able to access ICC funds to pay $30,000 towards 
elevating a home, making it no longer vulnerable to flood 
damage from a 100 year flood. These programs can work; however, 
there are some tweaks that can be made.
    Another area where problems tend to creep up is when a 
flood disaster occurs in an area that has not experienced that 
event for a long period of time, from both a community 
compliance standpoint and from an insurance standpoint. The 
Title II provisions of the 2004 Reform Act should more clearly 
help policies be explained to policy holders and provide them 
with more detailed information on the claims and appeals 
process, which I personally remember helping folks in the 
Stowe, Ohio, area talk about because it was quite ambiguous in 
terms of how that process worked.
    From a funding standpoint, the ASFPM believes that the NFIP 
is currently affected by one primary thing, the lack of funds 
to implement the 2004 Reform Act programs. We have already lost 
one year in 2005, and in 2006, we were happy to learn that the 
House fully supported full finding of those programs; however, 
the Senate did not. We are hoping that during the conference 
committee, that the House members will win out.
    Floodplain maps are a foundational element of the NFIP. We 
simply have not invested funds to maintain the maps and 
complete the initial mapping effort that FEMA has done in the 
past. However, FEMA's map modernization program has the ability 
to make real and significant improvements. The ASFPM has always 
been a supporter of map modernization and we played a crucial 
role in the developing of the flood map coalition that garnered 
widespread support for map modernization efforts.
    A couple of points to be made about map modernization. As 
previous panelists have indicated, map modernization must be 
about making quality flood maps that identify the proper extent 
of flooding in a community, ensures flood zones match 
topography and that flood studies are at a certain level of 
detail.
    The map coalition, communities and property owners 
throughout Ohio and the Nation are depending on the recognition 
by Congress that map modernization is a worthwhile endeavor and 
that funding can continue with this program. There has been 
some discussion in past hearings about the cost of map 
modernization and the ASFPM does believe, based on data, that 
it will exceed the $1 billion amount. Given the testimony that 
was provided, again we would submit that updating the flood 
maps is critical to the Nation's interest and that the Congress 
would continue to be interested in funding that modernization.
    Is Ohio ready for the next flood? We are much better 
prepared than if the NFIP did not exist. In my professional 
experience in over 10 years with the NFIP, I can say that it 
has made significant improvements in the lives of Ohioans but 
there is still always a chance to improve.
    Thank you.
    [The prepared statement of Mr. Berginnis can be found on 
page 44 of the appendix.]
    Chairman Ney. Thank you.

   STATEMENT OF CYNTHIA J. CRECELIUS, PROGRAM MANAGER, OHIO 
                DEPARTMENT OF NATURAL RESOURCES

    Ms. Crecelius. Good morning, Chairman Ney. I am Cindy 
Crecelius and I am representing the Ohio Department of Natural 
Resources Division of Water, and we have been designated as the 
State Coordinating Agency for over 30 years. I would like to 
thank you for the opportunity to share the State coordinator's 
perspective on how well the National Flood Insurance Program 
works in this State.
    In Ohio, the NFIP is an active partnership. The State and 
the communities have as much interest in reducing flood risk as 
the Federal Government. The State role is that of leadership 
for cooperative management of floodplains. We are building 
capability in all aspects of the NFIP and we complement the 
NFIP objectives by integrating floodplain management with State 
agency action, policy, and funding.
    The NFIP framework allows Ohio to develop a floodplain 
management program based upon our needs, strengths, and 
opportunities, and this is a huge benefit.
    The community role is tied to health, safety, and the 
economy of each community. Addressing flood problems is a local 
health and safety concern. The community has to commit to the 
need and the purpose of floodplain management in order to be 
successful in the NFIP.
    To support these roles, FEMA can build upon the Community 
Assistance Program (CAP). The CAP is an efficient cost-shared 
funding mechanism that has been building State capability for 
over 30 years. FEMA should explore partnership models that use 
business plans and performance metrics to allow for delegation 
of NFIP and map modernization activities.
    The 2004 Reform Act is well-focused on changes to better 
link mitigation funds and NFIP compliance, improving insurance 
agents' knowledge and creating easily understood consumer 
products. And your work in the committee is certainly to be 
complimented in having that good focus and targeting some of 
the major problem areas.
    Although training sessions have been well-attended in the 
State of Ohio, agents' knowledge is not necessarily improving. 
We have already heard this morning that some States have 
strategies to improve agents' knowledge, which includes 
requirements for continuing education and more flood insurance 
content in their licensing exam. We do need to improve agent 
knowledge concerning flood insurance products in the State of 
Ohio.
    The ICC or Increased Cost of Compliance is not well-
utilized. Our floodplain managers need more education about how 
and why it should be used. FEMA has to continue implementing 
changes to current NFIP mitigation programs that will recognize 
the ICC as non-Federal funds, expedite processing of the ICC 
claims and support local NFIP compliance as an effective 
mitigation tool.
    The CAP funding was intended and has been used to build 
State coordinator capacity to help implement the NFIP in over 
20,000 communities. This is important because FEMA does not and 
never will have the resources and the funding to carry out all 
the program responsibilities nationwide.
    Ohio currently has 12 staff supporting NFIP map mod and 
State floodplain management. CAP funds four of those positions. 
The bottom line is that effective State coordination of the 
National Flood Insurance Program means that State contributions 
go well beyond the required 25 percent non-Federal match.
    Flood hazard maps are critical to safe construction and 
good development decisions. That is the bottom line for map 
modernization. The test of currency should be focused on 
whether the flood hazard identified is accurate and if it is 
the correct level of detail related to what is at risk. Another 
element of currency is the use of efficient technology such as 
Geographic Information System and digital data to support 
making good maps the best way.
    The importance of quality flood hazard information cannot 
just focus on the date of a map. An inaccurate map, regardless 
of the date, can mean: somebody at risk will not know it; 
someone who is not at risk might have to purchase flood 
insurance and meet flood protection requirements; or someone in 
an area not yet identified might experience significant 
property damage and even loss of life.
    The Ohio vision for map modernization is that all 
communities will have accurate, quality flood maps. The detail 
of study should be commensurate with the level of risk. Our 
State business plan contains minimum criteria for production of 
quality modernized maps. FEMA, State coordinators and the 
mapping partners need more dialogue about how and who will 
maintain those updated maps.
    Following disasters, NFIP compliance is smart recovery. 
Local floodplain managers need support from both the Federal 
and State level as they enforce NFIP regulations. FEMA policies 
should allow reimbursement for substantial damage inspections 
as an eligible public assistance activity. Disaster victims who 
have available funds, volunteer manpower, and materials are 
anxious to repair and return to a ``normal'' life. To make the 
NFIP a successful mitigation tool, the enforcement and 
permitting process has to be as quick and efficient as disaster 
assistance and insurance claims processing.
    In conclusion, Ohio is better prepared and more able to 
respond to flooding through participation in the NFIP. Further 
risk reduction is expected and can result from accurate, 
quality maps and improved NFIP compliance. The NFIP is a well-
conceived mitigation strategy that provides for the 
collaborative management of the flood hazards in Ohio.
    Thank you.
    [The prepared statement of Ms. Crecelius can be found on 
page 61 of the appendix.]
    Chairman Ney. Thank you very much.
    Mr. Dozier.

STATEMENT OF DERRICK DOZIER, SUPERVISOR, PROPERTY AND CASUALTY 
UNIT, OFFICE OF CONSUMER SERVICES, OHIO DEPARTMENT OF INSURANCE

    Mr. Dozier. Thank you, Chairman Ney and your committee 
members, for the opportunity to testify on the National Flood 
Insurance Program. I am Derrick Dozier, the Supervisor of the 
Property and Casualty Unit of the Office of Consumer Services 
at the Ohio Department of Insurance.
    I am here today representing Ann Womer Benjamin, Director 
of the Ohio Department of Insurance. I have been with the 
Department for more than 22 years and have held my current 
position for the past 10 years. While I am not involved with 
every phone call, I do review every written complaint sent to 
the Department of Insurance involving flood insurance.
    My Division, the Office of Consumer Services, is the 
consumer protection arm of the Department. We assist consumers 
with all types of insurance related complaints and answer a 
variety of questions. Annually, my division handles more than 
90,000 consumer inquiries on all kinds of insurance issues. 
Some of these inquiries rise to the level of written complaints 
against an insurance company or agent and in 2004, we handled 
about 8000 written complaints from consumers; as a result, 
helped consumers recover over $6 million.
    In my invitation to come to testify before the committee 
today, I was asked to address a number of issues regarding the 
NFIP.
    The first issue I was asked to address was to comment on 
the responsiveness of the NFIP and private insurance companies 
participating in the NFIP to paying claims for recent floods 
and to describe the types of complaints we hear at the 
Department about payment of flood claims.
    The information the Department receives from the 
responsiveness of the NFIP and the NFIP insurers to flood 
claims generally comes in the form of calls and e-mails we get 
from consumers.
    The Department has a system of tracking consumer 
complaints. One category we track is flood claims relative to 
homeowners' insurance. Since 2000, the Department has tracked 
24 complaints relating to flood insurance. The majority of 
these complaints relate to delays in processing claims.
    Many of the calls the Department receives are not 
complaints, but inquiries where the consumer is seeking 
information. We regularly get calls from consumers about flood 
insurance, and the inquiries we get far outnumber the 
complaints. Some of the inquiries do involve flood claims. We 
work with the consumer even though no complaint is filed.
    When a consumer contacts us about flood insurance and the 
NFIP needs to be involved, we will call the NFIP directly for 
the consumer. In the case of a flood insurance claim, we 
contact an NFIP claims manager directly. In our experience, the 
NFIP claims managers get back to the Department promptly. We do 
not track all our referrals to the NFIP.
    The second issue you asked me to address was the steps the 
Department has taken to educate consumers and agents about 
flood insurance and what else can be done.
    As you know, neither the State of Ohio, nor the Department, 
regulates flood insurance products or rates. However, we do 
work to educate consumers and agents on the NFIP. We do this by 
publishing and distributing information about flood insurance, 
by answering consumer questions, by working with the NFIP on 
consumer issues, by speaking to consumer groups, and by sending 
representatives into the communities affected by floods. For 
example, during flood events, the Department sends personnel 
from my staff on site to Disaster Assistance Centers to help 
consumers with their questions, claims and complaints.
    Another way the Department educates consumers is through 
our shoppers' guide. I brought some of those here today. This 
is our homeowners' shoppers' guide, for your review. We publish 
and distribute the consumer guide on homeowners insurance that 
contains a section on flood insurance. This guide stresses that 
homeowners' insurance does not provide coverage for floods, and 
that consumers must contact their insurance agents or companies 
to find out whether they need flood insurance and how to buy 
it. The consumer guide also provides information about the 
NFIP, including NFIP's phone number. This consumer guide is 
available in print form and also on the Department's website, 
which is www.ohioinsurance.gov.
    The Department also has a dedicated staff of consumer 
analysts who can answer questions about flood insurance. 
Consumers can call the Department's toll-free consumer hotline, 
1-800-686-1526, and they can talk to a consumer analyst with 
experience in flood insurance. The analyst will work with the 
consumer until the consumer's questions are answered.
    The Department also has put together a ``Consumer Tips'' 
series of press releases, one of which deals with flood 
insurance. News organizations around the State can access the 
Consumer Tips for use in newspaper, radio, and television 
spots.
    In terms of doing more, the Department is constantly 
working to improve the information it provides to Ohio 
consumers, and flood insurance is one of the topics on which we 
have focused. We believe consumers should know that homeowner's 
insurance does not cover flood damage and that flood insurance 
must be purchased separately. To make sure more consumers know 
this, there is a cooperative effort between FEMA and the 
Department. The information the Department circulates is clear 
on this subject, but more can be done to get the information to 
the consumer. Our Department welcomes the opportunity to work 
to improve the distribution of this information.
    The third issue I was asked to address today deals with the 
training and licensure requirements that apply to insurance 
agents selling flood insurance in Ohio.
    There is no special flood insurance license in Ohio. All 
property and casualty insurance agents licensed by the State of 
Ohio are authorized to write flood insurance with the NFIP. 
This means that the licensure requirements that apply to 
insurance agents generally are the licensure requirements that 
apply to insurance agents selling flood insurance.
    An applicant for an agent's license must complete 40 hours 
of pre-licensing education that includes instruction on flood 
insurance, and is required to pass an exam, which includes 
questions on flood insurance.
    After obtaining a license, an agent must complete 20 hours 
of continuing education every 2 years. The Department has 
approved 4 hours of CE if the Ohio agent completes FEMA's flood 
insurance seminar, which was discussed earlier. The Department 
has approved other flood insurance courses for CE credit as 
well. Other agent education courses are also available through 
FEMA.
    Since 2000, the Department has received very few complaints 
against insurance agents involving flood insurance. We 
attribute this to the fact that a basic understanding of flood 
insurance is a requirement to obtaining an insurance agent's 
license in Ohio.
    In closing, I want to say that we agree that it is very 
important that consumers and agents are knowledgeable about 
flood insurance. The Department is committed to educating 
consumers on a variety of insurance issues and is always 
seeking a better way to communicate with consumers. We welcome 
a discussion on how to better educate consumers about flood 
insurance.
    Once again, thank you on behalf of Ann Womer Benjamin, our 
Director, and I would like to thank Chairman Ney and the 
committee members for inviting me today to testify.
    [The prepared statement of Mr. Dozier can be found on page 
71 of the appendix.]
    Chairman Ney. Thank you. Patty Levengood.

   STATEMENT OF PATTY LEVENGOOD, DIRECTOR, TUSCARAWAS COUNTY 
       HOMELAND SECURITY AND EMERGENCY MANAGEMENT AGENCY

    Ms. Levengood Thank you. I would like to thank Congressman 
Ney and the committee for inviting me to testify this morning.
    My experience in the National Flood Insurance Program stems 
from the aftermath of recent flooding incidents in Tuscarawas 
County. Most problems with insurance issues are unveiled days 
after the incident, and for our agency, coincide with the FEMA, 
State and local damage assessment that we are required to do. 
The damage assessment process is a verification of financial 
and situational hardships faced by the community in the 
progression toward a Presidential declaration. While 
interviewing affected residents, a common issue has arisen 
about the complexity and confusion of different insurances that 
impact claims. Lack of knowledge on the regular homeowners 
insurance, the NFIP, sewer backup, and earth movement riders 
often surface as residents feel they are at odds with their 
insurance company.
    Our course of action during these episodes is to give the 
resident the Ohio Department of Insurance hotline phone number 
established during these times. If a house experiences flooding 
at the same time the earth saturated grounds break a foundation 
and the sewage system can no longer hold the pressure back, 
thus completing the task of filling the entire basement, what 
insurance is to be used or are residents forced to carry all or 
none? County residents have stated during the damage assessment 
that claims have been denied because they carried sewer backup 
but not NFIP or vice versa, when it was clearly a combination 
of both.
    I understand their complaints, but have no other course of 
action besides the previous mentioned hotline. After many 
incidents of similar occurrences following the many recent 
floods, a lack of communication exists that delineates the 
purpose and coverage of the different insurances available.
    And again, I would like to thank the committee for allowing 
me to testify today. Thank you.
    [The prepared statement of Ms. Levengood can be found on 
page 75 of the appendix.]
    Chairman Ney. Thank you, Patty.
    Dick Quinlin.

STATEMENT OF RICHARD QUINLIN, COORDINATOR, BELMONT COUNTY, OHIO 
                  EMERGENCY MANAGEMENT AGENCY

    Mr. Quinlin. Thank you, Bob, for giving me the opportunity 
to testify here today. Actually though, my administrative 
assistant Becky should be the one sitting up here. She is the 
one that deals with all the complaints and prepared this 
information for me.
    But just briefly I have some comments on what she 
experienced when people come into our office.
    In September 2004 and January 2005, Belmont County 
residents suffered damage to their property due to flooding and 
mudslides. Regarding folks who carried flood insurance, some of 
the difficult things they had to deal with are as follows:
    At the time of loss, most homeowners who had flood 
insurance policies had them because their mortgagee forced them 
to carry the coverage in order to finance their homes. The 
National Flood Insurance Program needs to market their product 
more. In marketing their product, emphasis needs to be put on 
the fact that flood insurance may also cover for loss against 
mudflow/mudslides. We had several homes slide off their 
foundations. These homes sit far above floodplains and their 
residents, therefore, did not dream about buying flood 
protection. Tenants are not aware that they too can purchase 
flood insurance on their personal property. However, in order 
for contents to be insured on a homeowner or tenant policy, the 
property must be situated on the first floor or above. Also, if 
an insured is away from their residence due to work, vacation, 
etc., they are unable, therefore, to move their contents from 
the basement in the event of a flash flood. Emphasis needs put 
on this. In addition to verbally, this may be indicated by a 
notice or sticker placed on the declarations page. Becky has 
also seen coverage provided in the amount the bank demands to 
cover their loan; therefore, contents coverage is not offered 
to the homeowner.
    When suggesting flood insurance protection, people have 
told us it is not affordable. It might be a good idea to offer 
better deductibles or higher deductibles to help get the 
premiums down, but that would only, in my opinion, help the 
people that have the funding to buy the insurance. You get into 
our area where you have got a lot of limited income, maybe 
single family breadwinners, you know, workers and stuff, they 
just cannot afford the additional cost, whatever it be and 
there needs to be some kind of a subsidy put in to help those 
too if the program is going to work.
    Another area we got into in claims service, we heard at the 
time of loss, several homes are damaged or destroyed. In some 
instances, it has taken 30, 60, or even 90 days before an 
insured is contacted by an independent adjuster assigned by the 
NFIP. At the time of an NFIP sale, the potential insured should 
be made aware that there are numerous companies now selling 
flood insurance. These carriers may have a larger selection or 
availability of claim adjusters that can contact the insureds 
within 24 to 48 hours after the notice of loss.
    Increased cost of compliance procedures are difficult to 
follow. It seems a claimant is forced to foot the cost of 
elevating their home before the policy will pay or reimburse 
the policy holder. We have not had much dealings with this, but 
there seems to be problems with ICC adjusting. The insured's 
dwelling flood claim is adjusted before they are contacted by 
an ICC adjuster. I think it should be the other way around if 
not taken care of by the same adjuster.
    We did deal a lot with the mudslides and the issues there. 
I was not even aware until Becky researched this--and to give a 
little background on Becky's experience, she had been involved 
in the insurance industry for several years before I had and 
that was one of the things we wanted to get her on board for.
    The question ``Is Ohio ready?'' I do not know. I can 
honestly say not only through some of the dealings we have had 
with people trying to get claims, with the exception of the 
loss of life in 1998 and again in 1998 and we lost a life this 
time too, take the loss of life factor out of this stress, 
these last years in dealing with a lot of the regulations and 
stuff has probably been the toughest of my career to deal with. 
I think probably a lot of the other EMA directors too.
    I want to thank you for letting me come up and testify and 
hopefully these comments will help.
    [The prepared statement of Mr. Quinlin can be found on page 
88 of the appendix.]
    Chairman Ney. Thank you, Dick.
    Rev. Upson.

STATEMENT OF REVEREND KAREN UPSON, DIRECTOR, OHIO VALLEY RELIEF 
      CENTER AND DONATION MANAGEMENT, BELMONT COUNTY, OHIO

    Rev. Upson. I also want to echo that I speak on behalf of 
others and their concerns.
    I also am using my experiences from tornadoes, winter 
storms, blizzards, and the 1998 disasters that hit our 
community, along with my education as a fireman, a paramedic, 
and a minister. I have worked with Belmont County EMA since 
1998 to construct a disaster plan for relief and donations to 
service each community. The program was put into action on 
September 9th, after the first of three floods hit our area. 
Since September of 2004, we at the Ohio Valley Relief Center 
have been assisting almost 1,500 families and that is probably 
only approximately part of the 2,500 we feel may have been 
affected by flood from the 23 communities in Belmont County.
    Persons from Jefferson, Noble, Harrison, and Munroe 
Counties have also sought our assistance, along with people 
from West Virginia. Every week, someone new comes in to seek 
assistance who may have fallen through the cracks or just needs 
someone to help them.
    We have seen and heard many issues and many concerns in 
relation to the Federal assistance programs and ``Is Ohio 
ready''.
    I would like at this point to offer some input about the 
concerns of delay of services, but at this time I will limit my 
comments to the subject before us. And this is my testimony 
based on what others have listed as issues and concerns about 
the flood insurance and their situation.
    Some of the statements we have heard throughout our area of 
volunteering and working with those in need:
    Some still are paying off loans from the floods of 1998 and 
some from 1990.
    After the 3 years of paid flood insurance is done:
    Some say they did not have clear notification that their 3 
years is up that FEMA paid for their flood insurance, and that 
it is done. And at that time, it is their responsibility to 
pick up and continue coverage.
    Some say that their loans were increased after the 3 years 
and the cost is now too high for them to be able to afford 
flood insurance.
    Some say that each time the loan is sold to another agency, 
another bank, another mortgage company, their loan seems to go 
higher and higher and they have no control over the increases 
in their payments.
    Some have told us that when their loans or mortgages have 
been sold or bought by other funding sources, their flood 
insurance coverage was not included and it was dropped without 
their knowledge.
    Some say the bank and funding agencies told them that they 
did not need coverage and were not required to have it, or that 
they were not in a floodplain, even though they live next to a 
road. Eight families on one street were told they did not need 
it and they were right next to a creek.
    The next issue I looked up is the cost:
    Some say that it is $3,000 or more a year on top of the 
cost of their loans for their insurance and some have said it 
has been as high as $1,000 a month for them to continue their 
flood insurance.
    Some say their award from FEMA was deducted as a part of 
the coverage for their insurance based on lack of knowledge or 
poor education of getting the information to them.
    Coverage of flood insurance:
    Some say that the fast rising floodwater damages are not 
covered, only slow rising waters.
    Some say their contents are not covered, only structure is 
covered by their flood insurance.
    Some have damage from the disaster caused by land slippage 
and it is not covered by the flood insurance because it was not 
a floodwater.
    Some have had damage to their home with family rooms or 
what we consider, as has been said before, what is typically 
called a basement or living area. When we live on hillsides, it 
is a big controversy as to what level is living area and what 
is basement.
    Some have damages from sewers and runoff waters and that is 
not covered.
    Some have damage of flooding with the orange runoff water 
from mine slippages and the insurance will not cover that. And 
then we have issues with the Division of Mines verifying that 
it is a mine damage and who is going to cover that or not. That 
is verified by looking in our streams at this time and seeing 
the orange water.
    Another issue is that now with more flooding and some who 
are not free from their past loans, they cannot even apply for 
more loans and some say they cannot afford the additional 
insurance that would go along with that loan had they been able 
to get it.
    Some had their flood insurance dropped. Some say their 
insurance has been dropped when they filed a claim, their 
company came back and told them that they had been dropped as a 
carrier for them. Some say they were even dropped without their 
knowledge.
    One issue I did not put on my statement I would also like 
to re-address is the processing time for claim insurance 
processing. We still--to this date I know one person in 
particular, but there are others out there, it has been 11 
months since the flood and they have not received any money 
from their insurance, they have a private insurance carrier.
    I also looked up suggestions that came from our staff and 
volunteers:
    One is keep the information details simple and clear for 
understanding, even to the point of one or two pages, 12 font, 
and on a fourth grade reading level for the people to fully 
understand the information.
    Bank loans and companies, mortgage companies could not 
increase the cost of insurance once that 3-year period is up 
for future first or second years. Some of the families are 
still getting back on their feet and if they do increase it, 
then they get a very low percentage cost of living or something 
of that percentage. Or the increase of flood insurance is based 
maybe on their income or their property value and not based on 
a company value of how much the insurance should cost.
    The second--third thing I want to continue to share is also 
that the bank loan or mortgage companies contact the floodplain 
inspectors of the county where that residence sits and they 
have a written verification that flood insurance is needed. All 
the local officials such as floodplain inspectors have direct 
input to the insurance program and administration of those 
programs and understand clearly what is floodplain and what is 
not.
    When loans are being sold to another mortgage company, the 
clients need to be notified very clearly as to the selling of 
their loan and to make the increased cost and services offered 
rather than being dropped.
    Insurance companies cannot drop their clients based on a 
nationally declared disaster.
    And that a cap should be set for the cost of the insurance 
policies. Just as there is a cap on what insurance will pay for 
damages, there should be a cap on what the client can afford to 
pay.
    And then the last thing is that there should be a set 
deadline for those who are clients to receive renotification 
from the insurance companies, a call back, within 24 hours as 
has been stated. Or that a deadline date from a disaster, that 
they would receive those funds by that deadline date and not 
wait until a year later to receive them.
    I also thank you for your time, your consideration to my 
sharing of this information.
    [The prepared statement of Rev. Upson can be found on page 
91 of the appendix.]
    Chairman Ney. I want to thank all the witnesses for their 
testimony.
    I wanted to just ask a few questions if I could, of Ms. 
Roskovich. What year did you buy the house?
    Ms. Roskovich. In 1989.
    Chairman Ney. In 1989.
    Ms. Roskovich. We purchased the land in the summer, late 
summer of 1989. He was going to put condominiums in there and I 
guess there were objections and he just platted it out into 
half acre lots.
    Chairman Ney. And now you say you have been notified by 
FEMA that you have insurance?
    Ms. Roskovich. Oh, yes.
    Chairman Ney. But the house is gone, correct?
    Ms. Roskovich. It is gone, but they sent me a letter. I 
have it somewhere because I was staying with a friend of mine 
until the end of March and it's put away in one of the file 
boxes, but I got all these sheets, all kinds of papers. I 
called them and I asked them, I said why do I have flood 
insurance now, the house is gone. And they said well, we have 
to do this. And they said they took $600 out of the money that 
would have been allocated to me to buy me flood insurance and I 
have it now until November 19, 2007, on an empty piece of 
ground.
    Chairman Ney. Onto the issue of when you purchased the home 
and the title search was done.
    Ms. Roskovich. Yes.
    Chairman Ney. You say that Chase is the one that--or that 
did the refinancing.
    Ms. Roskovich. No, Chase is the one who refinanced it in 
1999.
    Chairman Ney. In 1999.
    Ms. Roskovich. Bank of America was the first mortgage and 
they did all whatever they had to do.
    Chairman Ney. Well, yes, when you refinance, you get a 
title search automatically. Do you have a copy of that title 
search? Have you looked--been able to look at that or what it 
said?
    Ms. Roskovich. I lost all my papers, but I went to the 
courthouse and they made up what I had in the mortgage papers. 
There was a little one there, I did not really know what I was 
looking for. There was an extra little thin sheet of paper that 
gave a short definition, like frame house, you know, had 
different indexes all the way down, but I did not see a flood 
determination paper on it.
    Chairman Ney. So the paperwork states nothing either way?
    Ms. Roskovich. It explains where the pins are in the yard 
and everything else.
    Chairman Ney. But it does not say anything about flood.
    Ms. Roskovich. Not one word.
    Mr. Riley.  Mr. Chairman, if I may, I know that as a 
standard part of purchasing a home and getting a mortgage, you 
have to pay a flood search fee. Did you pay that flood search 
fee?
    Ms. Roskovich. Well, I do not know, closing costs were like 
$4,000, so I am sure whatever they did, they were supposed to 
look through it. I have no idea what they have to do, all I 
know is they charge a lot.
    Mr. Riley. Perhaps somebody else on the panel can respond 
to that, but I know that as a part of getting a mortgage, you 
pay a flood search fee, which is a nominal amount, a third 
party fee, that is passed on to you, the consumer.
    Ms. Roskovich. I paid for the appraisal, I mean that was a 
separate fee I paid. If there was anything that I would have 
needed, if they would have said stand on your head and kick a 
ball around with your feet, I would have done that, because it 
is the mortgage company, you do what they tell you to do, 
whatever the cost would be. You know, you do not argue with 
them, they say you need an appraisal, okay, $300, pay for the 
appraisal. It is their place to tell you. I am not experienced 
in their field and so they are the ones--but you pay all this 
money and closing costs, should they not know about that?
    Chairman Ney. We can work with you afterwards to look at 
some of the paperwork to see what was done at that time or not, 
what paperwork we can recover off of that, I mean if you would 
like that. I would be very curious to see, as Mr. Riley 
mentioned, I would be curious to see what was there at the time 
of the refinancing or the original purchase and what they did 
in that title search.
    Ms. Roskovich. Well, I will get all the papers together, I 
have an appointment with Mr. Thomas, one of the Commissioners, 
he deals in real estate and I would like to have him look at 
that.
    Chairman Ney. Yes, and we can follow up with the 
Commissioner.
    Ms. Roskovich. I would like that.
    Chairman Ney. Absolutely.
    Ms. Roskovich. I have all the papers that I got from the 
courthouse. The original ones that we had, my file cabinets 
were turned upside down, everything was under mud. I mean I had 
no titles to cars, mortgage papers, income tax returns, 
nothing.
    Chairman Ney. We will follow up as you wish with 
Commissioner Thomas afterwards.
    Ms. Roskovich. Yes, that is what I am going to do, to see 
what he can find out.
    Chairman Ney. He is also an attorney.
    Ms. Roskovich. Yes.
    Chairman Ney. Do you have any comment, anybody?
    Mr. Watkins.  I wanted to say one thing about her 
situation.
    Chairman Ney. Just for the record, please identify 
yourself.
    Mr. Watkins. I am sorry. My name is Ed Watkins, I am with 
the Ohio Valley Relief Center in Belmont County.
    In Lansing, they were declared, that area that they live in 
that is under question, was declared in the floodplain in 1987, 
and she bought her home in 1988.
    Chairman Ney. 1989.
    Mr. Watkins. 1989. I just wanted to clarify that for the 
record.
    Chairman Ney. Thank you.
    Mr. Berginnis. Chairman Ney, maybe I am relating a more 
personal experience having just refinanced my house last year, 
in terms of the flood insurance; you know, at the closing, the 
closing agent is supposed to go through everything with you, 
explain line by line and also even show you the flood zone 
determination and spell that out. Now saying that, that was my 
experience there. I have in my professional experience before 
even talked to a banker who said it has not flooded here in 70 
years, we are not going to make people go through that stuff.
    Chairman Ney. Can I ask, if there a checkoff box of flood 
insurance or no flood insurance, whether you decline it or not? 
Is there a checkoff box? I don't recall that. What I was 
wondering, you know how when you refinance or you get a bank 
loan, you check whether you want credit life, you say yes or 
no, you have to initial it. I just wonder on policies--because 
I have not dealt with--where I live there was no--St. 
Clairsville, Noah's Ark would be there if it was flooded, but I 
do not ever recall a checkoff box for a yes or a no.
    Ms. Crecelius. Chairman Ney, if I may. What probably went 
on is in the first financing back in the 1980's, there was not 
the Standard Hazard Determination Form and there was no 
requirement for the flood certification that Representative 
Riley referred to. However, I do not believe you can deny, you 
know, whether or not you want flood insurance because it is a 
mandatory purchase that kicks in and that is why they are using 
the Standard Hazard Determination Form. So that should be part 
of the closing package and that either does or does not justify 
the amount of fee that you pay, but that should be part of the 
closing from 1999 because it has been required since 1987.
    Chairman Ney. Okay.
    Ms. Roskovich. I was told that it should be included in it, 
but I do not have the original papers, you know. And everything 
that they have at the courthouse, they have given me. I talked 
to several mortgage companies also in the area and one of them 
told me that they do 95 percent of their business with Chase 
Manhattan Mortgage and I said could you tell me from Blaine to 
Bridgeport, is it considered a flood area, and she said every 
loan that Chase Manhattan Mortgage does in that area is 
considered a floodplain. She said anything that is down by 40 
is considered a floodplain and you have to get flood insurance 
before they will give you a mortgage.
    So what happened? Did I fall through the cracks or what? 
You know, I want to know what happened.
    Chairman Ney. Well, like I say, after you talk to Mark, if 
you want, we would like to communicate with you further, for 
the benefit of the committee in Washington, to be able to get 
to know what happened, because there will be different policies 
I am sure in different States also--I mean different practices.
    I also wanted to mention, Mr. Dozier, in the legislation 
that we passed is consumer protection. And if you would like to 
get the details, we would like to follow up with you on the 
details of what is in there nationally and what consumer 
protection and the information. What I am hearing a lot today 
is about information, clarification, communication, education. 
We would be glad to follow up, if you would like, we can get 
you the details of what was in the law.
    Mr. Dozier. Thank you, I look forward to receiving that.
    Chairman Ney. I wanted to ask a question, just to jump 
around a little bit, an issue, Rev. Upson, that you raised. You 
had mentioned you dealt with someone whose policy was, you say, 
the loan was refinanced and that it did not move--the insurance 
did not move along with them?
    Rev. Upson. Yes, we have had clients that have come in and 
I wish I would have documented the complaints through this time 
period, and this came right after the first of our floods, they 
came right up and said that when their home was refinanced or 
remortgaged, their insurance did not carry with them, the flood 
insurance. And they had no idea that it was not part of that 
policy.
    Chairman Ney. Because that raises an issue that we could 
look at about what requirements go along with the policy. I 
think we could definitely take a look at that.
    The other question, the processing time. I think both of 
the directors, EMA and you, mentioned the processing time. And 
this is the processing time, is it due to the National Flood 
Insurance Program, was it due to private insurance companies? 
Anybody want to elaborate on that 11-month processing time?
    Rev. Upson. The one client I know in particular that I 
still know as of today still has not received any, his was a 
private insurance that he had. And he lives in the community of 
Quincy, and he has not been able to start doing any repairs or 
any work on his home due to the fact that he has not received 
any insurance. I refer back to the EMA's office, speaking with 
Becky Horn, who I thank him too, because she has worked with 
insurance and she has been working with him in the ICC trying 
to get this process in a manner, but as of today, Becky, I 
still do not think he has received any money yet.
    Ms. Horn. No.
    Chairman Ney. Do you have any comments, Patty or Dick, on 
that?
    Mr. Quinlin. Becky, what did you see was the best response, 
private or the NFIP?
    Ms. Horn. I was referring to--
    Chairman Ney. Just go ahead and give your name for the 
record, for the stenographer.
    Ms. Horn. My name is Becky Horn, I'm with Belmont County, 
I'm the administrative assistant to Dick Quinlin. And what I 
want to say is that I think we are talking about two different 
things. Karen is talking about the payment from the insurance 
company, NFIP, and what we experienced was we have got the 
Write Your Own companies that have a huge bank of adjusters. A 
volunteer of ours, of EMA, within 48 hours, he had a check for 
his policy value, $58,000 from Allstate. I think that is the 
company that writes their own flood policies. However, on 
National Flood Insurance, I believe they assign independent 
adjusters and I talked to a couple of my independent agent 
friends in Shady Side and Martin's Ferry and they were bringing 
adjusters from Tennessee--I do not have my notes in order here. 
We were not allowed to use Gideon Irvin, a local independent 
adjuster over in Wheeling, and therefore, turnaround time 
just--I lost my house, I have not heard from my adjuster, it 
has been 30, 45, 60, even 90 days before I heard from an NFIP 
independent adjuster or assigned adjuster. So the lack of 
adjusters is what the problem is with NFIP.
    Chairman Ney. So you think the lack of adjusters has caused 
a lot of the delay time?
    Ms. Horn. Yes, just because when you have this massive 
flooding, it is not like say you have a fire in a house here or 
there, the adjuster is right there even while the house is 
burning. Here you have hundreds of homes and it is overwhelming 
and we just need to get some qualified persons that are able to 
adjust NFIP claims and be on the spot within, you know, hours, 
if not a couple days.
    Chairman Ney. Another question that I had, a question for 
Ms. Crecelius, is there a national number available or does 
ODNR have a number when it deals with flood insurance, or do 
you have anything to do with that?
    Ms. Crecelius. Yes, there are both national numbers and the 
Department of Natural Resources has technical assistance 
available. We do not have an 800 number at the State level, 
which FEMA does, but we do provide through a general program 
number, any type of assistance that we can.
    Chairman Ney. Okay. Somebody else have a comment?
    Mr. Quinlin. Yes. The one thing too we mentioned, 
Congressman, about the coverage available for mudslides and 
stuff on the hillsides that happened, I think that there needs 
to be--if there is in fact coverage available, customers could 
be made aware of that and local officials because historically 
once you move the people up out of the floodplains and put them 
up on hillsides, I see that is going to be the next major thing 
in a few years we are going to be dealing with, especially in 
our terrain, you know, loss due to hill slides, mudslides. And 
it slows down whether it is a subsidence issue or whether--
there is just a lot of confusion, which I am probably as 
confused as anybody is when we get calls at the office, to tell 
them where to go to.
    Chairman Ney. That raises a question that I would like to 
ask Mr. Dozier that maybe he will not be able to answer now, 
but possibly could look into.
    The witnesses basically have mentioned that you could have 
a sewage backup problem, you could have a hillside or you could 
have direct flood, slow-moving or fast-moving. Has anybody 
looked at basically one policy that says if the following 
happens, you are covered, so that you do not have the dilemma 
of was it the sewage that came in and caused the damage to the 
foundation or was it slow-moving or fast-moving water. I wonder 
if anybody has looked at that and if there is a price 
difference on it.
    Mr. Dozier. Well, our shoppers' guide identifies mine 
subsidence and earthquake coverage on page 7. Mine subsidence 
is one issue that is totally different from flood insurance and 
the State of Ohio does have a mine subsidence coverage 
available.
    Chairman Ney. I created that when I was a State senator. I 
still get a letter to the editor about every year complaining 
about me and Jerry Krupinski, who is not even in office any 
more. We created that, and as you know, we could not get the 
mine subsidence in Belmont County and Munroe and several other 
places. Homes literally were cracking in half and we could not 
get anything to help them. But we did have controversy on that 
issue, and as you know, we spread the risk by assessing the 
policy holders in those areas, whether you had mine subsidence 
or not, although 75 percent of Belmont County has got some kind 
of mine under it, but we had to assess and spread that risk.
    People complained about that but they were not in the areas 
that had problems, but if you look at the community as a whole, 
when some houses in Martin's Ferry, you know, or Blair, to 
split in half, it hurts obviously the families, but it hurts 
the whole community and its valuation, so we spread the risk on 
that. I do not know if that is an idea we could look at for 
flooding. It was controversial, you know, amongst some, but it 
was a spread of risk and that is how we actually could get the 
insurance.
    So I just wanted to clarify how that worked.
    Mr. Dozier. With the sewer backup, which is the homeowner 
policy, as they mentioned earlier, sometimes it is simultaneous 
with the flood and the language of the policy sometimes 
specifically says we will not pay if it is simultaneous with 
the flood. So it is really somewhat policy-specific as to 
whether or not there is coverage or not. And you are right, 
there could be three things going on at the same time--
erosions, foundations are not covered by homeowners insurance 
generally, when they are knocked off anyway. So there are some 
areas of insurance where there just is not anyone out there who 
is willing to accept the risk because of the nature of the 
risk, foundations being one of them. There is just no one that 
wants to cover foundations when they get swept off and they are 
not covered under the NFIP, as far as I know.
    Chairman Ney. I am assuming that if that was to happen, it 
would have to be a spreading of the risk around, which caused 
the controversy of assessing people that may not ever use it.
    Mr. Dozier. Right.
    Chairman Ney. But again, you never know if your hillside is 
going to slide.
    Yes, Cindy.
    Ms. Crecelius. Chairman Ney, if I might, we did not look at 
it in terms of single insurance coverage or coverage of all the 
collateral damage, but that idea and modeling off of the Fair 
Housing Plan and subsidence insurance was discussed following 
the 1998 flood and again following the 2000 flood at the State 
level. Trying to come up with a similar risk pool, that would 
collect a reasonable fee across the board because we have 
flooding in all 88 counties and 700 communities, plus; in order 
to provide some type of mechanism that would either leverage 
mitigation dollars at the Federal level or provide a State pool 
that would help manage that. But it did not get a lot of 
attention at the State level.
    Chairman Ney. Okay. A question I had for Mr. Berginnis. You 
mentioned in previous hearings a problem with State and 
community caps on spending for mitigation. Do you want to 
elaborate on that a little bit about the mitigation part and 
the caps on the spending?
    Mr. Berginnis. Yes, at least on the caps, it is very 
specific to the flood mitigation assistance program, the FMA 
program. Prior to the 2004 Reform Act, the FMA program I think 
was funded annually $20 million nationwide, and so there were 
first State and first community caps on the FMA assistance. 
With the Reform Act and the fact that the pilot program that 
FMA has essentially doubled--the pilot program is out there and 
the individual program is out there, and a possibility of up to 
$90 million in additional funding for mitigation, those caps 
could be problematic in areas that are the high repetitive loss 
areas. And again, maybe not such a big issue here in Ohio 
because we do not have, proportionate to other States, a large 
number of repetitive loss properties. However, in those States 
and communities that do, those caps could be very problematic, 
because the objective is to address those repetitive loss 
properties, and therefore, reduce the burden on the funds to 
increase premiums every year.
    Chairman Ney. Another question I had, FEMA had stated 
earlier that some of the new information that is out there on 
consumer education and policies has went to the States through 
the emergency management. Has that filtered to you?
    Ms. Levengood Not to our county, I do not know if it has 
been to other counties or not, but not to us.
    Mr. Quinlin. I have not seen much of anything on it.
    Chairman Ney. We can find out with the State EMA because 
FEMA has direct contact with them and that information is 
there. Of course, it is new, so we can see about running that 
down.
    Ms. Roskovich. I have a question. I just remembered when 
FEMA was coming in, they needed to have a paper stating I did 
not have flood insurance and M.C. Thomas was my independent 
insurance agent, and I called him, he said everything was 
touched by water, it was not covered. So I said FEMA wanted a 
letter stating I did not have flood insurance. Well, he wrote 
that my policy would expire like in a month or 60 days or 
something at 12:00 midnight and that they wouldn't even be able 
to sell me flood insurance.
    Chairman Ney. Because?
    Ms. Roskovich. That was stated on that letter.
    Mr. Riley. That is a private insurance company.
    Ms. Roskovich. Well, Westfield Insurance Company is the 
same insurance company I had flood insurance with on Wheeling 
Island when I lived there. And I lived there for 6 years and I 
had insurance with them. But it was not through M.C. Thomas, it 
was through another independent agent in I think Roseberg. And 
I had flood insurance with them through them. But I still have 
the letter, I kept it, I made two or three copies so that I did 
not lose it. But it states that they could not even sell me 
with flood insurance if I had needed it, which I thought was 
real odd.
    Chairman Ney. Did it state why, do you remember?
    Ms. Roskovich. No, it was a two sentence letter. And you 
was asking me about the time I bought that property. My 1980's 
get mixed up a little bit, bought the property in 1989, the 
summer of 1989, and move into the house around Christmas time 
of 1990.
    Chairman Ney. And refinanced in 1999.
    Ms. Roskovich. And refinanced in 1999. I get my 1980's 
mixed up. Just to clarify that, thank you.
    Mr. Riley. I think that is why we have the National Flood 
Insurance Program, I do not think--it is very difficult to get 
private insurance for homes when it comes to flooding. Mr. 
Maurstad? Yes, that is not uncommon that you would get a letter 
saying you would not be covered.
    Ms. Roskovich. But I had it through the same company on the 
island.
    Chairman Ney. The island she is referring to floods easily 
and many times.
    Ms. Roskovich. Water comes up.
    Chairman Ney. Wheeling Island.
    Mr. Riley. I understand. Private insurance companies give 
insurance on Wheeling Island?
    Mr. Maurstad. The company she may be referring to may not 
be one of the Write Your Own companies, that has arrangements 
with the National Flood Insurance Program.
    Ms. Roskovich. But I had flood insurance with them when I 
lived on the island.
    Chairman Ney. The National Flood Insurance Program, as Mr. 
Riley points out, was created because if you did not have it, 
there would be many, many cases where you have no form of 
relief.
    We can again check.
    Ms. Roskovich. It just dawned on me that they said they 
could not even sell it to me.
    Chairman Ney. A question I had, Mr. Dozier, there was a 
statement by Rev. Upson that some people had their policies 
canceled without their knowledge, which there was also the 
issue of passing on the coverage or not and they did not know, 
but also policies canceled without their knowledge. What about 
the State insurance, do you know the laws on that?
    Mr. Dozier. I can only address the laws that deal with 
State regulated issues. Every policy in the State has to have a 
cancellation provision and they have to be notified. But I 
cannot speak to the NFIP policy as to whether or not there is a 
notification procedure and as to what they have to be told when 
the policy is canceled.
    Mr. Riley. I believe that was in our legislation, that is 
part of our legislation, part of the consumer protection 
division, which may not have trickled down yet, but I think 
there is a notice provision in there. Mr. Maurstad?
    Mr. Maurstad. Yes, the requirement or the arrangement with 
the Write Your Own companies is that they have the same 
notification provisions for their flood policies that they do 
have on the balance of their portfolio. The requirement is that 
they mirror the private sector as much as possible. This issue 
has come up before and when we have looked into it, some of the 
difficulty has been in tenant situations where the notice for 
cancellation of the policy goes to the owner of the property 
that may live somewhere else other than the community of that 
property. The notice goes to the policy holder and not 
necessarily to the tenant. And sometimes they just get 
misplaced.
    But the point is that they are supposed to be the same 
notification of cancellation of a policy or nonrenewal of a 
policy for nonpayment or whatever the circumstances may be that 
they would have under their other portfolio.
    Chairman Ney. Yes, Reverend?
    Rev. Upson. My question, the point being, and I may direct 
that to you also, if a Write Your Own company would go ahead 
and, because they felt they paid too much out after a natural 
disaster, say that they are dropping those, and that was what 
the client came back to explain.
    Mr. Maurstad. I have not heard of that circumstance. Again, 
I am not disputing whatsoever the information that you have 
been provided.
    Rev. Upson. Sure.
    Mr. Maurstad. There really would be no reason or incentive 
for the Write Your Own company to stop writing insurance 
policies because of losses, because they do not pay for the 
losses, the National Flood Insurance Program pays and 
reimburses the company for the losses that they have as a 
result of whether it be a natural disaster or loss on the 
policy whatsoever. So that is one of the benefits associated 
again with the program, is that the coverage is available 
because of the Federal program backing the losses through that 
program. By the collection of premiums from all the 4.7 million 
policy holders that are part of the program, it spreads the 
risk among the 4.7, but the Federal Government backs it.
    Chairman Ney. Any other comments?
    Ms. Crecelius. Yes, Chairman Ney. One other point I would 
like to clarify a little bit or maybe shed a different 
perspective on that I believe Rev. Upson was speaking about; 
that is the transition from a group flood insurance policy to a 
standard flood insurance policy. As part of the Reform Act 
provisions of the Stafford Act, in trying to do a better job 
with mitigation amendments kicked in the requirement for group 
policies if a client receives Federal assistance. That rate is 
set basically to cover the Federal assistance, so it is a lower 
amount, or if you will, a false premium idea to a homeowner. 
Then when they become the party that is responsible for 
maintaining insurance and they go to the local agent, it is 
either a subsidized policy or an actuarially rated standard 
flood insurance policy, and the cost generally does increase. 
We have had complaints from the agent sector saying they are in 
a ``no-win'' situation because homeowners and policy holders do 
not believe them when they tell them the $200 premium that you 
got as part of the disaster now goes to the average premium of 
$600 for a homeowner's policy.
    Chairman Ney. I see.
    Ms. Crecelius. So that might help clarify I think what Rev. 
Upson was trying to convey, a perceived increase in cost.
    Chairman Ney. Okay. I want to thank everybody today for 
your time. I also want to introduce Leslie Applegart, our field 
rep who also has worked with many of you constituents when they 
called in with flooding issues.
    I want to thank both panels and especially this panel 
because I think this is very productive for us. It will allow 
us to put this in the record for Washington. Also to compare 
across the Nation as we hear things. The visibility we have had 
from the hearings that we have had in Washington has brought 
people out of the woodwork that now call to the House, U.S. 
House, and tell their story and what went wrong. In order to 
help other people, we need to know what went wrong, what we can 
do to try to always correct it.
    I also gathered from here today that it deals a lot also 
with education and information and how to get it out there so 
people know where they are standing and not standing and are at 
least better able to prepare for such terrible trauma that hits 
them.
    And also, I would just like to note that some Members of 
the House who are not here today may have additional questions 
for the panel and they may want to submit them in writing. So 
without objection, the hearing record, this record of the 
hearing, will remain open for 30 days and members can submit 
additional questions. And if you have additional information 
you would like to submit, you may do that.
    Also, beyond the record, I would also like to note that we 
will be communicating with all of you to follow up on some 
things that we have heard today. And again, I think this helps 
nationally what you have done today, to give of your time and 
your stories and we look forward to following back up so that 
hopefully we can, during this trauma at least take some of the 
problems out of it so people have a clear understanding of 
where they stand with it.
    With that, I want to thank you and the hearing is 
concluded. Thank you.
    [Whereupon at 12:20 p.m., the subcommittee was adjourned.]

                            A P P E N D I X



                            August 17, 2005


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