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

2. Agenda Who’s Involved Integration of FEMA & Insurance 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 efforts3

4. Your insurance claim and FEMA reimbursement represent the foundation for your financial recovery4

5. FEMA Public Assistance
Program- Parameters
Process
People

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

8. General Program Eligibility
Cost
Work
Facility
Applicant 8

9. State government agencies or departments
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. What is a Facility? Buildings Furniture & equipment Vehicles Contents
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 Legal responsibility
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
Cost
Categories of Work
Work
Facility
Applicant
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 13

14. Considerations Negligence – Failure to Act to Protect
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 Reasonable and necessary to accomplish 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
Work
Facility
Applicant
Force account labor
Force account equipment
Force account materials
Purchase orders and contracts
Rented equipment
Purchased materials
A&E consultants
Contractors 17

18. Procurement Contracts must be reasonable
Cost
Procurement
Work
Facility
Applicant
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 18

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

20. Documentation Create a filing system
Cost
Documentation
Work
Facility
Applicant
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 20

21. Documentation Audit trail tracking costs to the PW
Work
Facility
Applicant
Audit trail tracking costs to the PW
Cost summaries to source documents
Reconciliation to accounting system 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 Findings Resulting in Loss of Funding
Cost
Audit Findings Resulting in Loss of Funding
Work
Facility
Applicant
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 23

24. Questions? 24

25. The Integration of Insurance25

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
Insured FEMA-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 33

34. Complicated 34

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 35

36. When Disaster Strikes
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 36

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? 37

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? 38

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 39

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? 40

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? 41

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 42

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 43

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