NOTE: The format of the AAIS Advisory has changed, starting in June 2012. Notices are now posted individually as they arise, then combined in a periodic email message.
A new law extending the National Flood Insurance Program (NFIP) includes a provision for establishing a formula for allocating payments for wind and water damage claims arising from named storms and hurricanes. (See pages 576-585 of the bill.)
The provision, proposed by U.S. Sen. Roger Wicker (R-MS), authorizes the US. Secretary of Homeland Security to collect data and establish a formula for allocating wind and water losses for "indeterminate claims."
Indeterminate claims are defined as those where "no material remnant of physical buildings or man-made structures remain except building foundations" and where "there is insufficient or no tangible evidence created, yielded, or otherwise left behind" for loss adjustment purposes.
In cases where above-ground structures were completely destroyed during a named storm, the formula would allocate loss payments between the NFIP and other property insurance policies according to information about the storm and the insured properties.
The bill calls for the National Academy of Sciences to evaluate the validity of the scientific associations behind any formula developed, and the impact of a formula developed on NFIP finances.
In statements supporting the measure, Wicker and others have said that the provision is intended to reduce costly "wind vs. water" disputes over claims where a structure has been demolished and leaves no evidence for determining the cause of loss.
AAIS Advisory notices are posted periodically to announce AAIS product developments, and to provide news items that are relevant to our program users. Advisory notices are news summaries that paraphrase documents which should be consulted directly for complete, authoritative information.