Seen at Insurance Journal:
Officials for the Federal Emergency Management Agency (FEMA), which administers the NFIP, told GAO staffers the they do not have authority to collect wind damage claims data from [Write-Your-Own] insurers, even when the insurer services both the wind and flood policies on the same property.
“As a result, for hurricane-damaged properties, such as those damaged by Hurricanes Katrina and Rita, NFIP does not have all the information it needs to ensure that its claims payments were limited to damage caused by flooding,” the GAO found. “Concerns over the processing of these flood claims are heightened when the same insurance company serves as both NFIP’s WYO insurer and the property-casualty (wind) insurer for a given property. In such cases, the same company is responsible for determining damages and losses to itself and to NFIP, creating a potential conflict of interest.”
Even though most of the insurance industry folks I’ve had the pleasure of knowing and working with have been fine, upstanding folks who seem to do a pretty good job of balancing fairness with profit pressures, I think it might be understandable if some additional bureaucracy and recordkeeping were introduced here.