The Integration of FEMA The Integration of FEMA Public Assistance and Public Assistance and

InsuranceInsurance

The Integration of FEMA The Integration of FEMA Public Assistance and Public Assistance and

InsuranceInsurance

Jim SicilianoJim Siciliano

2

AgendaAgenda

Who’s InvolvedWho’s Involved The FEMA ProcessThe FEMA Process EligibilityEligibility Cost DocumentationCost Documentation

Integration of FEMA & Integration of FEMA & InsuranceInsurance

How Do you Prepare?How Do you Prepare? ConcludeConclude

You must be in a position to be able to DRIVE your own

recovery efforts

You must be in a position to be able to DRIVE your own

recovery efforts

Your insurance claim and FEMA

reimbursement represent the

foundation for your financial recovery

Your insurance claim and FEMA

reimbursement represent the

foundation for your financial recovery

FEMA Public Assistance

•Program- Parameters

•Process

•People

President of the United States

GovernorUnder Secretary, Homeland Security

State Coordinating Officer (SCO);Governor’s 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

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

Projectcloseout and Audit10.

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Applicant

Facility

Work

General Program EligibilityGeneral Program Eligibility

Cost

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State government agencies or State government agencies or departmentsdepartments

Local governments & authoritiesLocal governments & authorities Indian tribal governments and Indian tribal governments and

Alaskan native villagesAlaskan native villagesCertain Private Non-Profit Certain Private Non-Profit

organizationsorganizations

ApplicantFacilityWorkCost

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What is a Facility?What is a Facility?•BuildingsBuildings

•Furniture & equipmentFurniture & equipment

•VehiclesVehicles

•ContentsContents

•ParksParks

•RoadsRoads

•CulvertsCulverts

•DamsDams

•Library booksLibrary books

•Sewer & water linesSewer & water lines

ApplicantFacilityWorkCost

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ApplicantFacilityWorkCost

• 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 CriteriaEligibility Criteria

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Must be required as a direct result Must be required as a direct result of the declared eventof the declared event

Must be within the designated Must be within the designated disaster areadisaster area

Must be the legal responsibility of Must be the legal responsibility of an eligible Applicantan eligible Applicant

ApplicantFacilityWorkCost

Eligibility CriteriaEligibility Criteria

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Categories of WorkCategories of WorkCategories of WorkCategories of Work

Category ACategory A Debris RemovalDebris Removal Category BCategory B Emergency Protective Emergency Protective

MeasuresMeasures Category CCategory C Road System RepairsRoad System Repairs Category DCategory D Water Control FacilitiesWater Control Facilities Category ECategory E Buildings and Buildings and

EquipmentEquipment Category FCategory F Public Utility SystemsPublic Utility Systems Category GCategory G Parks, Recreation & Parks, Recreation &

OtherOther

Category ACategory A Debris RemovalDebris Removal Category BCategory B Emergency Protective Emergency Protective

MeasuresMeasures Category CCategory C Road System RepairsRoad System Repairs Category DCategory D Water Control FacilitiesWater Control Facilities Category ECategory E Buildings and Buildings and

EquipmentEquipment Category FCategory F Public Utility SystemsPublic Utility Systems Category GCategory G Parks, Recreation & Parks, Recreation &

OtherOther

ApplicantFacilityWorkCost

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ConsiderationsConsiderationsApplicantFacilityWorkCost

• 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

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ApplicantFacilityWorkCost

Cost EligibilityCost Eligibility

• Reasonable and necessary to accomplish workReasonable and necessary to accomplish work

• Compliant with Federal, State and local Compliant with Federal, State and local requirements for procurementrequirements for procurement

• Reduced by all applicable credits, such as Reduced by all applicable credits, such as insurance proceeds and salvage valuesinsurance proceeds and salvage values

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What’s Reasonable?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

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

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Summary of Summary of Eligible CostsEligible CostsSummary of Summary of Eligible CostsEligible Costs

Force account laborForce account labor Force account equipmentForce account equipment Force account materialsForce account materials Purchase orders and Purchase orders and

contractscontractsRented equipmentRented equipmentPurchased materialsPurchased materialsA&E consultantsA&E consultantsContractorsContractors

Force account laborForce account labor Force account equipmentForce account equipment Force account materialsForce account materials Purchase orders and Purchase orders and

contractscontractsRented equipmentRented equipmentPurchased materialsPurchased materialsA&E consultantsA&E consultantsContractorsContractors

ApplicantFacilityWorkCost

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PProcurementrocurementPProcurementrocurement

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 bids3. Competitive proposals, which are

based more on unique qualifications

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 bids3. Competitive proposals, which are

based more on unique qualifications

ApplicantFacilityWorkCost

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4. Noncompetitive proposals Inadequate number of available

contractors and to the extent that exhaustive methods to find competitors would be cost-prohibitive

4. Noncompetitive proposals Inadequate number of available

contractors and to the extent that exhaustive methods to find competitors would be cost-prohibitive

PProcurementrocurementPProcurementrocurementApplicantFacilityWorkCost

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DocumentationDocumentationDocumentationDocumentation

Create a filing systemCreate a filing system Designate a specific person to Designate a specific person to

coordinate the accumulation of recordscoordinate the accumulation of records Separate disaster related activities from Separate disaster related activities from

normal activities – do not commingle normal activities – do not commingle disastersdisasters

Summarize costs by category by PW by Summarize costs by category by PW by departmentdepartment

Create a filing systemCreate a filing system Designate a specific person to Designate a specific person to

coordinate the accumulation of recordscoordinate the accumulation of records Separate disaster related activities from Separate disaster related activities from

normal activities – do not commingle normal activities – do not commingle disastersdisasters

Summarize costs by category by PW by Summarize costs by category by PW by departmentdepartment

ApplicantFacilityWorkCost

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Audit trail tracking costs to the PWAudit trail tracking costs to the PW Cost summaries to source documentsCost summaries to source documents Reconciliation to Reconciliation to

accounting systemaccounting system

Audit trail tracking costs to the PWAudit trail tracking costs to the PW Cost summaries to source documentsCost summaries to source documents Reconciliation to Reconciliation to

accounting systemaccounting system

DocumentationDocumentationDocumentationDocumentationApplicantFacilityWorkCost

Facilities PW No.12345

Force Account Labor

Force AccountEquipment

Force AccountMaterials

Purchasesand Contracts

A&EConsultants

Contractors

PW-LevelSummaries

Department- Level

Summaries

Cost Category

Summaries

Cost Tracking Flow Cost Tracking Flow DiagramDiagram

StraightTime

Overtime

PW No 67890

RentedEquipment

PurchasedMaterials

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Audit FindingsAudit FindingsResulting in Loss of FundingResulting in Loss of Funding

Audit FindingsAudit FindingsResulting in Loss of FundingResulting in Loss of Funding

Failure to adequately describe work Failure to adequately describe work performedperformed

Claiming indirect costsClaiming indirect costs Lack of documentation for fringe benefitsLack of documentation for fringe benefits Leave timeLeave time Inability to reconcile equipment hoursInability to reconcile equipment hours Failure to provide clear audit trail Failure to provide clear audit trail Failure to segregate ineligible workFailure to segregate ineligible work Applicant fails to gain permission for Applicant fails to gain permission for

Alternate or Improved projectsAlternate or Improved projects

Failure to adequately describe work Failure to adequately describe work performedperformed

Claiming indirect costsClaiming indirect costs Lack of documentation for fringe benefitsLack of documentation for fringe benefits Leave timeLeave time Inability to reconcile equipment hoursInability to reconcile equipment hours Failure to provide clear audit trail Failure to provide clear audit trail Failure to segregate ineligible workFailure to segregate ineligible work Applicant fails to gain permission for Applicant fails to gain permission for

Alternate or Improved projectsAlternate or Improved projects

ApplicantFacilityWorkCost

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Questions?Questions?

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The Integration The Integration of Insuranceof Insurance

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Stafford Act, Section 312Stafford 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.

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Insurance ConsiderationsInsurance Considerations

No insuranceDeductiblesSelf-Insured Retention (SIR)Mandatory reductions

(NFIP/SFHA) Insurance apportionment

No insuranceDeductiblesSelf-Insured Retention (SIR)Mandatory reductions

(NFIP/SFHA) Insurance apportionment

Insurance ApportionmentInsurance Apportionment

InsuredInsuredFEMA-eligibleFEMA-eligible

Insured Insured FEMA-ineligibleFEMA-ineligible

UninsuredUninsuredFEMA-eligibleFEMA-eligible

UninsuredUninsuredFEMA-ineligibleFEMA-ineligible

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Insurance Settlement Documentation

Insurance Settlement Documentation

Detailed By damaged facilityBy coverageDirect & indirect lossesBy agent of loss (peril)

Detailed By damaged facilityBy coverageDirect & indirect lossesBy agent of loss (peril)

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Flood InsuranceFlood InsuranceFlood InsuranceFlood Insurance

In a Special Flood Hazard Area (SFHA), In a Special Flood Hazard Area (SFHA), amount of eligible funding for damages amount of eligible funding for damages caused by flood is reduced by the caused by flood is reduced by the maximum amount of coverage available maximum amount of coverage available under NFIP “standard” flood insurance under NFIP “standard” flood insurance policy: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 Damaged facilities are valuated on an Actual Cash Value (ACV) basisActual Cash Value (ACV) basis

In a Special Flood Hazard Area (SFHA), In a Special Flood Hazard Area (SFHA), amount of eligible funding for damages amount of eligible funding for damages caused by flood is reduced by the caused by flood is reduced by the maximum amount of coverage available maximum amount of coverage available under NFIP “standard” flood insurance under NFIP “standard” flood insurance policy: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 Damaged facilities are valuated on an Actual Cash Value (ACV) basisActual Cash Value (ACV) basis

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Stafford Act, Section 311Stafford 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….

…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….

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Accounting & Audit Requirements

Accounting & Audit Requirements

Documentation from Day OneFiling systemAbility to reconcile/track all

costs associated with PWsClose-out vs. FEMA Office of

the Inspector General (OIG) audit

Documentation from Day OneFiling systemAbility to reconcile/track all

costs associated with PWsClose-out vs. FEMA Office of

the Inspector General (OIG) audit

How Do You Prepare?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

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

Who in your organization can navigate all phases of both the FEMA program and your insurance claim?

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

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

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 StrikesWhen Disaster Strikes

The Insurance CompanyThe Insurance Company

Adjusters and Inspectors“Not covered”“Didn’t hit your deductible”“Here is our offer”

An offer is madeIs the settlement right?How do you know?Where are your experts?

Adjusters and Inspectors“Not covered”“Didn’t hit your deductible”“Here is our offer”

An offer is madeIs the settlement right?How do you know?Where are your experts?

FEMAFEMA

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?

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?

Proactive or Reactive?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

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

The Big Questions Are: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?

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?

More Detailed Questions: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?

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?

How Does Your Team Anticipate FEMA?

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

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

How Does Your Insurance Team:How Does Your Insurance Team:

Complete a thorough evaluation of losses Coordinate claims Secure advance payments Support claim preparation & settlement

to expedite & maximize recovery

Complete a thorough evaluation of losses Coordinate claims Secure advance payments Support claim preparation & settlement

to expedite & maximize recovery

Disaster Recovery Process

1. Get Organized2. Determine Losses3. Categorize Losses4. Determine Eligibility5. Develop a Rebuilding Plan6. Identify Funding Sources7. Implement the Plan8. Final Inspection and “Close-out”9. Complete the Audit Requirements

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QUESTIONSQUESTIONS

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Adjusters International

www.adjustersinternational.com800-382-2468

Adjusters International

www.adjustersinternational.com800-382-2468