When Tropical Storm Isabel sent nearly 3 feet of water through Bob Valentin's bungalow at the mouth of the Bird River, he figured his insurance agency would send someone out to survey the damage and write him a check. Just as if he had been in a car crash.
But he was wrong.
Although he bought the insurance from a private company for his eastern Baltimore County home, it actually comes from the federal government. The adjuster who came to assess his claim worked for a subcontractor. The person who approved the claim worked for another company, and when he tried to appeal his settlement, he ended up talking to someone who works for yet another firm.
For all that, he says, he's still about $120,000 short of what it will cost to rebuild, and he and his wife and two children are still living in their garage.
"The paperwork just goes from this one to that one to that one," he said. "It's absolutely ridiculous."
What started out 36 years ago as a government program to provide insurance for flood-prone homes has evolved into a convoluted system of public agencies and private corporations seeking to administer policies that are like no other in the insurance industry.
Still struggling with their claims six months after Isabel, hundreds of policyholders like Valentin have yet to return to their homes. But instead of giving up, they have packed town hall meetings, complained to local, state and federal officials, and banded together to keep their cause in the public eye. Amid the continuing outcry, the federal insurance program plans to re-evaluate all 24,000 Isabel claims up and down the East Coast.
Nothing less than an overhaul of the system is under way.
"We just have to fix it," said Anthony S. Lowe, head of the National Flood Insurance Program.
Why the outcry?
Those involved in the Isabel saga offer theories why this storm has led to such an outcry and a move to reform. Some victims in North Carolina who have experienced floods before said the NFIP's response was much less effective this time. Others, particularly adjusters, say that the only difference was that Isabel hit communities near Washington in an election year.
The NFIP was born in 1968 after large-scale flooding of the Mississippi River. When private flood insurance carriers dropped out of the business, saying they were going broke, Congress stepped in.
The idea was that the federal government would offer the insurance in exchange for local governments' adopting strict regulations to mitigate the impact of flooding, such as requiring new buildings to be elevated above the flood plain.
Two changes in the 1980s contributed to the complexity that has been evident since Isabel. In 1983, the program authorized private insurance companies to sell and service the policies, on the theory that using the existing network of insurance agents and adjusters in private industry would help get more people to buy the policies.
It worked. The number of policyholders has more than doubled since the 1980s, according to NFIP documents. The program now has more than 4 million policyholders in nearly 20,000 communities nationwide.
At about the same time, the program stopped relying on tax dollars. Although the Treasury would back the program in the case of a massive disaster, all claims and administrative costs since then have been paid through premiums.
Robert Jackson, who owns a flood adjusting company in Florida, said that's when the policy started becoming more and more limited and, as a result, complicated.
The NFIP saved money by limiting claims for damaged basements, decks, walkways, indoor swimming pools and more.
Officials have issued more than 40 policy interpretations during the past 10 years alone -- and not all of them are incorporated into the policy itself, a fact that adjusters say makes it difficult to properly handle claims. The limitations can also come as a shock to people, like many of those flooded by Isabel in Maryland, who haven't ever had to rely on the program before.
"You have been witnessing what happens when flood policyholders flood for the first time in 20 years only to find out that the flood policy no longer covers much of the damage," Jackson wrote in an e-mail.
Most Isabel victims readily acknowledge that they didn't know what their policies covered before the storm. But, said Joanne Kraft, an Isabel victim from Bowleys Quarters, it wouldn't have made much difference if they had.
"Shame on me for not reading the thing," she said. "But you can't shop that like you can homeowners [insurance] and compare the merits. ... There's only one to buy."
On a fundamental level, Kraft said, something is wrong with the system. She had been paying for a $233,000 policy on her home. Nearly 3 feet of water coursed through it during Isabel, cracking and twisting the foundation, a total loss. The settlement offer from her adjuster: $85,000, not even half of what she says it will take to return her to her home.
If such severe damage is only worth $85,000, she said, there's no way she could ever collect the full amount she'd been paying premiums for.
Kraft, like many other Isabel victims, didn't settle. The grumbling began in fire hall meetings in eastern Baltimore County in the days after the storm. As weeks went by, she, like hundreds of others, wrote to the Maryland Insurance Administration and complained to her insurance company and the NFIP. Kraft still hasn't cashed the $85,000 check and is living in a trailer.
Amid dozens of stories like hers, Baltimore County Executive James T. Smith Jr. called a news conference on Millers Island in December to say that he had hired former Insurance Commissioner Steven B. Larsen to conduct a study on the failings of the flood insurance program. The current commissioner, Alfred W. Redmer Jr., wasn't doing enough, Smith said at the time.
Redmer held his own news conference the next day. He said that although he doesn't believe his agency has the right to regulate the NFIP, he had been working behind the scenes to help flood victims.
In February, Larsen released a report detailing widespread problems with the system, particularly that settlement offers were far below the costs to rebuild. Redmer came out with his own list of recommendations, similar to Larsen's, a few weeks later. He shared his with the state's congressional delegation and with Lowe.
Meanwhile, Isabel victims were getting organized and finding one another through the Internet.
NFIP officials initially said the reason for much of the outcry in Maryland might be that people were unfamiliar with the program and had unrealistic expectations. But since then, they've changed their tune.
After meeting with Redmer last month, Lowe acknowledged the need for reform -- mainly better education for consumers, agents and adjusters -- and met with a dozen of the most dissatisfied flood victims.
Lowe's reform plans became more ambitious after meeting with victims. He agreed to demands from Maryland's senators to review all Isabel claims to make sure they were adequate. NFIP officials will be meeting with Isabel victims in Bowleys Quarters tomorrow and later in other flood-damaged communities.