[Congressional Record (Bound Edition), Volume 150 (2004), Part 10]
[Senate]
[Pages 12705-12706]
[From the U.S. Government Publishing Office, www.gpo.gov]




                  NATIONAL FLOOD INSURANCE ACT OF 1968

  Ms. MIKULSKI. Mr. President, I rise to support S. 2238, the Flood 
Insurance Reform Act of 2004. I want to thank Senator Sarbanes, my 
colleague from Maryland and a member of the Banking Committee that 
pushed this legislation through. Senator Sarbanes and I worked together 
as ``Team Maryland'' to ensure that this legislation addressed many of 
the lessons learned in the aftermath of Hurricane Isabel.
  In September 2003, my State of Maryland was devastated by Hurricane 
Isabel. This was the worst natural disaster in Maryland history. The 
people who live on the Chesapeake Bay and the many rivers leading into 
the Bay lost their homes, their possessions, and many lost their 
livelihoods.
  The flooded communities have names like Bowleys Quarters and Millers 
Island, Bayside and North Beach, Kent Islands and Hoopers Island. The 
people who live in these communities are hard-working people. Many are 
retirees who scrimped and saved to buy these homes. Some are people I 
went to school with. Many of these communities are still struggling 
with the legacy of Isabel. Some Marylanders are still living in 
trailers which are really glorified campers.
  Right after Hurricane Isabel swept through Maryland, Senator Sarbanes 
and I went with Secretary Tom Ridge and Governor Ehrlich to see the 
damage, to talk to people, and to find out how we could work together 
with Marylanders to put their lives back together. When disaster 
strikes, we are Team Maryland and Team America, Federal and State 
officials, Democrats and Republicans. We saw houses moved off their 
foundations in North Beach. We walked the streets of Bowleys Quarters 
where children's toys and personal items were pushed into yards by 
three feet of flood waters. We saw mud more than a foot deep three 
blocks away from the water. We talked to a business owner on Kent 
Island who lost her restaurant only 6 months after she bought it.
  I was incredibly moved by what I saw, not only the devastation, but 
the way these communities were pulling together. I heard about daring 
rescues from our intrepid first responders. Churches opened their doors 
to provide food and shelter. Neighbor was helping neighbor. I promised 
these communities that their Federal Government would help.
  Unfortunately, the National Flood Insurance Program wasn't there the 
way it should have been. Today, nearly 9 months after Isabel hit, my 
constituents are still struggling to get the money that is owed to 
them. They are frustrated, confused, and frankly, many are just plain 
fed up. They feel like the insurance they paid for wasn't there when 
they needed it the most.
  From Calvert County to Baltimore County to Anne Arundel County to 
Maryland's Eastern Shore, people told me they didn't understand what 
their flood insurance covered. Though their homes were damaged, they 
thought between homeowners insurance and flood insurance they would be 
covered. Nothing was explained to them when they bought these policies. 
They didn't know, for example, that the contents of their home wasn't 
covered without a separate policy. People thought if they had $200,000 
worth of coverage on a home they bought for $50,000 that flood 
insurance would pay to replace the home. But when they put in their 
claims they found out they would only get a portion of what it costs to 
make repairs or rebuild.
  Another serious problem was the way insurance agents handled people's 
individual claims. When people asked their insurance agents to explain 
things to them, they couldn't get a straight answer. That's because 
some of the insurance agents don't really know what these policies 
cover or how they really

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work. In Southern Maryland, some homeowners were able to get emergency 
advances on their claims. Others were told there was no way to get 
advances on their claims. Different agents gave different answers. In 
some cases, the same agent would give a different answer depending on 
the day. That is unacceptable.
  When I heard these stories about claims being denied or shortchanged, 
I asked my constituents if they could appeal. They told me they didn't 
know. When they filed their claims, no one told them how to appeal, or 
even if an appeal was possible. My office became a clearinghouse for 
appeals. We asked the National Flood Insurance Program for instructions 
on filing an appeal; there wasn't one. So, I organized community 
meetings and appeals hearings. I brought FEMA and representatives from 
the National Flood Insurance Program to Maryland communities to explain 
to people what they needed to do to get a fair hearing.
  Once Marylanders figured out their policies and filed their 
paperwork, the payments they were getting were not adequate to repair 
the damage. The flood insurance adjusters weren't using real world 
estimates for what it took to repair damages. In Bowley's Quarters, the 
adjuster gave people real low-ball estimates for their repairs. So the 
community association asked a local contractor to come in for a second 
opinion. When his estimate was significantly higher, the community 
leaders went back to the adjuster. They told the adjuster what was 
needed to do the job. But people shouldn't have to go through all of 
this to get a fair appraisal and a fair reimbursement from insurance 
they paid for.
  These experiences led to four recommendations that I submitted when I 
testified before the Banking Committee earlier this year. Senator 
Sarbanes was instrumental in developing these recommendations and 
worked with the committee to make them part of this legislation. 
Helpful to this process were two reports that outlined the myriad of 
problems that surfaced after Hurricane Isabel struck Maryland. The 
first report was prepared by Maryland's former Insurance Commissioner, 
Steve Larsen, at the request of Baltimore County Executive, Jim Smith. 
The second report was prepared by Maryland's current Insurance 
Commissioner, Alfred Redmer. Many of the findings in those reports were 
similar to what I heard directly from constituents and were helpful in 
developing the following recommendations:
  One, the National Flood Insurance Program must provide a clear and 
understandable outline of policies so policyholders understand what is 
covered and what is not. Two, the agents who sell flood insurance must 
understand what they are selling and how claims are processed so 
consumers don't get the runaround instead of answers. Three, there must 
be a clear way for policyholders to appeal their claims awards or 
appraisals of loss. Four, consumers need to know that the insurance 
they purchase will pay the real world cost of repairing damages or 
replacing their losses.
  I support this bill because it addressed four key reforms that I 
believe will improve the National Flood Insurance Program. First, the 
bill directs FEMA/NFIP to develop supplemental forms to the flood 
insurance policy. These supplemental forms will explain in simple terms 
the exact coverages being purchased by a policyholder, any exclusions 
from coverage that apply to coverages purchased, and an explanation, 
including illustrations, of how lost items and damages will be valued 
under the policy at the time of loss. Second, the bill directs FEMA/
NFIP, in cooperation with the insurance industry to establish minimum 
training and education requirements for all insurance agents who sell 
flood insurance policies, publish these requirements in the Federal 
Register, and inform insurance companies and agents of the 
requirements. Third, the bill directs FEMA/NFIP to establish a formal 
appeals process with respect to claims, proofs of loss, and loss 
estimates relating to flood policies. Fourth, the bill directs the 
Comptroller General of the United States to conduct a study of the 
adequacy of the scope of coverage provided under flood insurance 
policies, the adequacy of payments to flood victims under flood 
insurance policies, and the practices of FEMA/NFIP and insurance 
adjusters in estimating losses incurred during a flood.
  As the one year anniversary of Hurricane Isabel approaches, I believe 
we need to take aggressive steps to address the inadequacies of a flood 
insurance program that clearly wasn't there for people in their 
greatest time of need. This bill goes a long way in making the flood 
insurance program fairer, more transparent, and reliable.

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