The Integration of FEMA Public Assistance and Insurance

1. Jim Siciliano The Integration of FEMA Public Assistance and Insurance

2. Agenda • Who’s Involved • The FEMA Process • Eligibility • Cost Documentation • Integration of FEMA & Insurance • How Do you Prepare? • Conclude

3. You must be in a position to be able to DRIVE your own recovery efforts

4. Your insurance claim and FEMA reimbursement represent the foundation for your financial recovery

5. FEMA Public Assistance • Program- Parameters • Process • People

6. President of the United States Federal-FEMA Federal-FEMA Federal-FEMA State Under Secretary, Homeland Security Governor Regional Director State & Regional Policy & Management State Coordinating Officer (SCO); Governor’s Authorized Representative (GAR) Federal Coordinating Officer (FCO) State Public Assistance Officer (SPAO) Public Assistance Officer (PAO) Disaster Management Disaster Administrative Officer (DAO) Public Assistance Coordinator (PAC) Public Assistance Coordinator (PAC) Direct Services To Applicants Project Officers (PO) & Specialists Project Officers & Specialists Additional Stakeholders: Regional Managers & Local Emergency Managers

7. 1. 2. 3. Disaster strikes PDA Declaration 6. 5. 4. Req. FEMA Kickoff Meeting RPA Applicants’ Briefing 7. 10. 9. 8. Site Visit/Project Formulation Projects funded Projectcloseout and Audit Project Worksheets

8. General Program Eligibility Cost Work Facility Applicant 8

9. Cost Work Facility Applicant • State government agencies or departments • Local governments & authorities • Indian tribal governments and Alaskan native villages • Certain Private Non-Profit organizations 9

10. Cost Work Facility Applicant What is a Facility? • Buildings • Furniture & equipment • Vehicles • Contents • Parks • Roads • Culverts • Dams • Library books • Sewer & water lines 10

11. Eligibility Criteria Cost Work Facility Applicant • Legal responsibility • Other Federal Agencies (OFAs) • Facility use • Active use • Alternate use • Under construction • Repair vs. Replacement 11

12. Eligibility Criteria Cost Work Facility Applicant • Must be required as a direct result of the declared event • Must be within the designated disaster area • Must be the legal responsibility of an eligible Applicant 12

13. Categories of Work Category A Debris Removal Category B Emergency Protective Measures Category C Road System Repairs Category D Water Control Facilities Category E Buildings and Equipment Category F Public Utility Systems Category G Parks, Recreation & Other Cost Work Facility Applicant 13

14. Cost Considerations Work Facility Applicant • Negligence – Failure to Act to Protect • Maintenance – Lack Thereof • Pre-existing Damage • Hazard Mitigation • Codes & Standards • 50% Rule (Repair vs. Replacement) • Relocation 14

15. Cost Eligibility Cost Work Facility Applicant • Reasonable and necessary to accomplish work • Compliant with Federal, State and local requirements for procurement • Reduced by all applicable credits, such as insurance proceeds and salvage values 15

16. What’s Reasonable? Reasonable costs. A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost. – OMB Circular A-87 16

17. Summary of Eligible Costs Force account labor Force account equipment Force account materials Purchase orders and contracts Rented equipment Purchased materials A&E consultants Contractors Cost Work Facility Applicant 17

18. Procurement Contracts must be reasonable FEMA finds 4 methods of contracting acceptable: Small purchase procedures. $100,000 or below by obtaining price quotes from several vendors Sealed bids Competitive proposals, which are based more on unique qualifications Cost Work Facility Applicant 18

19. Noncompetitive proposals Inadequate number of available contractors and to the extent that exhaustive methods to find competitors would be cost-prohibitive Procurement Cost Work Facility Applicant 19

20. Documentation Create a filing system Designate a specific person to coordinate the accumulation of records Separate disaster related activities from normal activities – do not commingle disasters Summarize costs by category by PW by department Cost Work Facility Applicant 20

21. Audit trail tracking costs to the PW Cost summaries to source documents Reconciliation to accounting system Documentation Cost Work Facility Applicant 21

22. Cost Tracking Flow Diagram Department- Level Summaries Cost Category Summaries Straight Time PW-Level Summaries Facilities PW No. 12345 Force Account Labor Overtime Purchased Materials Force Account Equipment PW No 67890 Rented Equipment Force Account Materials Purchases and Contracts A&E Consultants Contractors

23. Audit FindingsResulting in Loss of Funding Failure to adequately describe work performed Claiming indirect costs Lack of documentation for fringe benefits Leave time Inability to reconcile equipment hours Failure to provide clear audit trail Failure to segregate ineligible work Applicant fails to gain permission for Alternate or Improved projects Cost Work Facility Applicant 23

24. Questions? 24

25. The Integration of Insurance 25

26. Stafford Act, Section 312 • Disaster assistance will not be provided for damages or losses covered by insurance. • Disaster assistance provided by FEMA is intended to supplement financial assistance from other sources.

27. Insurance Considerations • No insurance • Deductibles • Self-Insured Retention (SIR) • Mandatory reductions (NFIP/SFHA) • Insurance apportionment

28. Insurance Apportionment InsuredFEMA-eligible Insured FEMA-ineligible Uninsured FEMA-eligible Uninsured FEMA-ineligible

29. Insurance Settlement Documentation • Detailed • By damaged facility • By coverage • Direct & indirect losses • By agent of loss (peril)

30. Flood Insurance • In a Special Flood Hazard Area (SFHA), amount of eligible funding for damages caused by flood is reduced by the maximum amount of coverage available under NFIP “standard” flood insurance policy: • $500,000 Building • $500,000 Contents • $5,000 deductible • Damaged facilities are valuated on an Actual Cash Value (ACV) basis

31. Stafford Act, Section 311 • …with respect to any property to be replaced, restored, repaired, or constructed with such assistance, such types and extent of insurance will be obtained and maintained as may be reasonably available, adequate, and necessary, to protect against future loss to such property….

32. Accounting & Audit Requirements • Documentation from Day One • Filing system • Ability to reconcile/track all costs associated with PWs • Close-out vs. FEMA Office of the Inspector General (OIG) audit

33. How Do You Prepare? Providing a coordinated claim management strategy that enables you to maximize and expedite your financial recovery through your insurance and the FEMA Public Assistance Program

34. Complicated

35. Who in your organization can navigate all phases of both the FEMA program and your insurance claim? • Typically two people • Finance/EM for FEMA • Risk Management for Insurance • Typically do not communicate • Disaster Recovery Team Needed • Disaster Recovery Manager

36. Buildings, Vehicles, and Infrastructure are damaged or destroyed Communications and Information systems are damaged or destroyed Your staff has been personally impacted by this disaster You have NO cash flow When Disaster Strikes

37. The Insurance Company Adjusters and Inspectors “Not covered” “Didn’t hit your deductible” “Here is our offer” An offer is made Is the settlement right? How do you know? Where are your experts?

38. FEMA FEMA Project Officers “Not Eligible” “Not Reasonable” “This Contract is no good” “You have 60 days to write your projects” “This is what we are going to do…” “You HAVE to do it this way…” FEMA will give you “How Much”? Is it right? How do you know? Where are your experts?

39. Proactive or Reactive? You must be in a position to be able to DRIVE your own recovery efforts The only way to survive these obstacles is to Proactively implement a Recovery Strategy Once implemented you are driving your recovery

40. The Big Questions Are: How are we going to pay for this disaster? How much can we reasonably expect from our insurance company? How much can we reasonably expect from FEMA?

41. More Detailed Questions: Do we have an Integrated Financial Recovery Strategy or plan? Do we have the dedicated personnel to implement a Plan? Do we have the resources to develop a plan while we are trying to respond to this disaster? Are we in control?

42. How Does Your Team Anticipate FEMA? Eligibility issues & interpreting differences of opinion Gray areas and policy shift from disaster to disaster and region to region Rotating FEMA staff Lack of depth in FEMA staff training and experience Quota-driven approach Multiple requests for duplicate information What’s covered? Insurance vs. FEMA

43. How Does Your Insurance Team: Complete a thorough evaluation of losses Coordinate claims Secure advance payments Support claim preparation & settlement to expedite & maximize recovery

44. Disaster Recovery Process Get Organized Determine Losses Categorize Losses Determine Eligibility Develop a Rebuilding Plan Identify Funding Sources Implement the Plan Final Inspection and “Close-out” Complete the Audit Requirements

45. QUESTIONS 45

46. Adjusters International www.adjustersinternational.com 800-382-2468