Investigating Insurance Company Profits
Maine insurance adjusters, are generally honest and credible. NPR is broadcasting a shocking and informative investigation of gross malfeasance under the flood insurance program, which the U.S. taxpayer subsidizes if there are not enough funds to cover large scale catastrophic losses.
Sept. 20: Business of Disaster
Who profits when disaster strikes? FRONTLINE and NPR investigated the aftermath of Superstorm Sandy — revealing that private insurance companies working for the government have made hundreds of millions of dollars at the same time that thousands of homeowners are claiming they have been underpaid. “We found that disasters like Superstorm Sandy aren’t a disaster for everyone,” says NPR reporter Laura Sullivan, who along with FRONTLINE producer Rick Young and his investigative team spent a year digging into how Sandy recovery dollars were spent.
“In 2009, a Government Accountability Office audit told FEMA to figure out how much profit the flood insurance companies are making off the flood program and take that into account when it paid them.
But Wright, who took over the flood program for FEMA last year, says he doesn’t know how much money the insurance companies make from the program.
“I’ve never looked at the book of business to understand their profits,” he says. “So you’d need to go specifically to the companies to understand those numbers.”
The nation’s largest insurance firms declined to disclose their profit margins on the flood program.
However, every year the insurance companies report what it actually costs them to do their flood work to the National Association of Insurance Commissioners, an industry association of government regulators. And every year, FEMA reports what it pays insurers who participate in the flood program. With both numbers, you can do some math. Government auditors used a similar method in 2009.
Based on the latest figures, that analysis shows the insurance companies together made anywhere from $240 million to $406 million a year just on their flood work since 2011 — without having to pay any claims.”