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The Integration of FEMA Public Assistance and Insurance Jim Siciliano.

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Presentation on theme: "The Integration of FEMA Public Assistance and Insurance Jim Siciliano."— Presentation transcript:

1 The Integration of FEMA Public Assistance and Insurance Jim Siciliano

2 2 AgendaAgenda Whos Involved Whos Involved The FEMA Process The FEMA Process Eligibility Eligibility Cost Documentation Cost Documentation Whos Involved Whos Involved The FEMA Process The FEMA Process Eligibility Eligibility Cost Documentation Cost Documentation Integration of FEMA & Insurance Integration of FEMA & Insurance How Do you Prepare? How Do you Prepare? Conclude 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 Governor Under Secretary, Homeland Security State Coordinating Officer (SCO); Governors Authorized Representative (GAR) State Public Assistance Officer (SPAO) Federal Coordinating Officer (FCO) Public Assistance Officer (PAO) Public Assistance Coordinator (PAC) Project Officers (PO) & Specialists Public Assistance Coordinator (PAC) Project Officers & Specialists Direct Services To Applicants Disaster Management State & Regional Policy & Management Additional Stakeholders: Regional Managers & Local Emergency Managers Disaster Administrative Officer (DAO) Regional Director

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

8 8 Applicant Facility Work General Program Eligibility Cost

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

10 10 What is a Facility? BuildingsBuildings Furniture & equipmentFurniture & equipment VehiclesVehicles ContentsContents ParksParks RoadsRoads CulvertsCulverts DamsDams Library booksLibrary books Sewer & water linesSewer & water lines Applicant Facility Work Cost

11 11 Applicant Facility Work Cost Legal responsibilityLegal responsibility Other Federal Agencies (OFAs)Other Federal Agencies (OFAs) Facility useFacility use Active useActive use Alternate useAlternate use Under constructionUnder construction Repair vs. ReplacementRepair vs. Replacement Eligibility Criteria

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

13 13 Categories of Work Category ADebris Removal Category ADebris Removal Category BEmergency Protective Measures Category BEmergency Protective Measures Category CRoad System Repairs Category CRoad System Repairs Category DWater Control Facilities Category DWater Control Facilities Category EBuildings and Equipment Category EBuildings and Equipment Category FPublic Utility Systems Category FPublic Utility Systems Category GParks, Recreation & Other Category GParks, Recreation & Other Applicant Facility Work Cost

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

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

16 16 Whats 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

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

18 18 P rocurement Contracts must be reasonable FEMA finds 4 methods of contracting acceptable: 1. Small purchase procedures. $100,000 or below by obtaining price quotes from several vendors 2. Sealed bids 3. Competitive proposals, which are based more on unique qualifications Applicant Facility Work Cost

19 19 4. Noncompetitive proposals Inadequate number of available contractors and to the extent that exhaustive methods to find competitors would be cost-prohibitive P rocurement Applicant Facility Work Cost

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

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

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

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

24 24 Questions?

25 25 The Integration of Insurance

26 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. 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 27 Insurance Considerations No insurance Deductibles Self-Insured Retention (SIR) Mandatory reductions (NFIP/SFHA) Insurance apportionment No insurance Deductibles Self-Insured Retention (SIR) Mandatory reductions (NFIP/SFHA) Insurance apportionment

28 Insurance Apportionment Insured FEMA-eligible InsuredFEMA-ineligible UninsuredFEMA-eligibleUninsuredFEMA-ineligible

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

30 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: 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 Building $500,000 Contents $500,000 Contents $5,000 deductible $5,000 deductible Damaged facilities are valuated on an Actual Cash Value (ACV) basis Damaged facilities are valuated on an Actual Cash Value (ACV) basis 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: 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 Building $500,000 Contents $500,000 Contents $5,000 deductible $5,000 deductible Damaged facilities are valuated on an Actual Cash Value (ACV) basis Damaged facilities are valuated on an Actual Cash Value (ACV) basis

31 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 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 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

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 Didnt 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 Whats 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 1.Get Organized 2.Determine Losses 3.Categorize Losses 4.Determine Eligibility 5.Develop a Rebuilding Plan 6.Identify Funding Sources 7.Implement the Plan 8.Final Inspection and Close-out 9.Complete the Audit Requirements

45 45 QUESTIONS

46 46 Adjusters International Adjusters International


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