More Sandy victims accuse insurers of using doctored reports

by Insurance Business Wholesale10 Sep 2015
More homeowners who saw their homes damaged or destroyed in 2012’s Superstorm Sandy have come forward to level blame against their insurance companies.

Units of several prominent carriers, including Hartford Financial Services Group, Wright National Flood Insurance Co. and Travelers Cos., stand accused of using doctored engineering reports—which have falsely altered the cause of home damage from flooding to other, uncovered problems—in order to low-ball claims payments.

Denis Kelly, one attorney involved in the suits, now represents more than 40 Sandy victims in the accusation of racketeering. The suit claims engineering firms that were hired by insurers had an interest in falsifying the reports to reduce claims awards, and thus win more work from the insurance companies.

“They have sought every way imaginable to avoid paying these people their damages, and to put every obstacle in their way,” Kelly told CBS. “We are seeing a pattern of the intention to go out of their way to deny our clients’ claims.”

A federal judge overseeing more than 1,000 lawsuits related to Sandy previously ordered all drafts of the engineering reports to be turned over to homeowners, saying such practices on the part of engineering firms could be “widespread.”

Lawyers for interested homeowners have reviewed the documents and say they have identified more than 500 affected reports already.

Insurance companies continue to deny wrongdoing, and the Insurance Information Institute released a statement saying insurers have “no financial incentive to underpay these claims.”

“All flood losses are ultimately paid by the National Flood Insurance Program…through FEMA,” the III said.

At least one lawsuit has suggested the revisions in the report helped drive up claims handling time, however, which allows insurers to “charge and collect unnecessary claims handling expenses and attorneys’ fees” afforded by the National Flood Insurance Program.

At Touro Law Center’s Disaster Relief Clinic, Daniel Straffer says the doctored reports are suspect and could represent just a small portion of the illegal actions of insurance companies.

“If it is widespread, it would amount to a huge sum of money that policyholders are being robbed of,” Straffer told CBS.

Lawyers are continuing to review more of the reports, and FEMA and New York State Attorney General Eric Schneiderman are conducting investigations into the allegations.