Actions Needed To Improve the Review of Insurance Coverage of Disaster Victims Receiving Federal Assistance
Highlights
GAO agreed to review procedures used by federal agencies to insure the proper collection of funds due the government under federal flood insurance policies or private insurance policies of victims whom these agencies assist. After the President has declared an area a total disaster, the Administrator of the Federal Disaster Assistance Administration (FDAA) appoints a coordinator for all federal assistance programs in the area to provide temporary housing, funds for state grants to disaster victims, and loans for the repair and replacement of homes and personal property. Allegations have been made that federal agencies providing disaster relief have failed to deduct moneys paid under victims' insurance policies. FDAA is responsible for verifying that federal insurance does not duplicate the proceeds from private insurance. The allegations charged that while federal law is designed to provide disaster assistance to victims when their losses surpass their entitlements from private insurance, federal agencies have relied on information furnished by adjusters employed to protect the economic interests of insurance companies. There is a logical inference of a conflict of interest in such a situation.