CULTURAS Artículo 98.(88)

The authority of the State Insurance Commissioner is well defined in the Stafford Act, as the President shall not require greater types and extent of insurance than are certified to him as reasonable by the appropriate State Insurance Commissioner responsible for regulation for such insurance.216 _As

such, FEMA cannot require insurance beyond the type and extent of insurance that the State Insurance Commissioner certifies as reasonable. The complexity in law differs between other than flood and flood perils.

For a facility with disaster related damages in a declared event under Section 406 of the Stafford Act for other than flood, the State Insurance Commissioner, responsible for such regulation of insurance, may certify the types and extent of insurance that are reasonably available. States are responsible for the regulation of insurance and this responsibility is typically delegated to the State Insurance Commissioner. Consequently, the State Insurance Commissioner could certify that insurance is not reasonably available and, therefore, reduce the requirement to obtain and maintain insurance on the damaged facility in order to protect against a future loss to such property.

The Insurance Commissioner’s certification is applied differently for facilities damaged by flood perils. States do not regulate the National Flood Insurance Program (NFIP). Therefore, the State Insurance Commissioner is not “responsible for the regulation of” the NFIP and may not certify that NFIP is not reasonably available.217 _{Consequently, the authority granted the Commissioner}

in Section 311 of the Stafford Act does not apply to insurance available under the NFIP. This limitation would negate the Insurance Commissioner’s ability to certify, as reasonable, eligible damages less than the NFIP policy limit of $500,000 for the building and $500,000 for contents.

216 _{The Stafford Act, Section 311.}

217 _{Federal Emergency Management Agency, Disaster Operations Legal Reference, 5–78.}

The National Flood Insurance Act of 1968 (Public Law 90-448, August 1, 1968) was enacted to provide previously unavailable flood insurance protection to property owners in flood-prone areas.218 _{The Flood Disaster Protection Act of}

1973 (Public Law 93-234, December 31, 1973) requires the purchase of flood insurance, as a condition of receiving any form of federally-related financial assistance for acquisition or construction purposes with respect to insurable buildings and mobile homes within an identified Special Flood Hazard Area that is located within any community participating in the program.219

NFIP status as federal program is well defined in law. In West v. Harris, the U.S. Court of Appeals for the 5th Circuit has ruled that since the NFIP “…is a child of Congress, conceived to achieve policies which are national in scope, and since the federal government participates extensively in the program both in a supervisory capacity and financially, it is clear that the interest in uniformity of decision present in this case mandates the application of federal law.”220 In McGair v. American Bankers, the U.S. Court of Appeals for the 1st Circuit found that “insurance policies issued pursuant to the National Flood Insurance Program are a matter of federal law.”221 _{In Jacobson v. Metropolitan Property, the U.S.}

Court of Appeals for the 2nd Circuit found that all disputes arising from the handling of any claim under a NFIP policy are “governed exclusively by the flood insurance regulations issued by FEMA, the National Flood Insurance Act of 1968, as amended, and federal common law."222

NFIP policies, as a matter of federal law, have also been supported in second appeals by applicants to FEMA. The second appeal by Texas Parks and

218 _{44 CFR § 59.2(a).} 219 _{44 CFR § 59.2(a).}

220 _{United States Court of Appeals, Fifth Circuit, West vs. Harris, 573 F.2d 873 (1978), May}

26, 1978, Rehearing Denied July 28, 1978.

221

Wildlife Department pertained to the Texas Commissioner of Insurance’s certification that insurance is not reasonably available for a flood damaged facility. In denying the appeal, FEMA cited Section 311 of the Stafford Act, which requires applicants who receive assistance under section 406 of the Act to obtain and maintain insurance in the amount of eligible damage to the facilities.223

Therefore, an insurance commissioner cannot certify that flood insurance is not available at a reasonable cost.224

Two separate second appeals in California also pertained to the insurance commissioner’s certification. An analyst from California’s Department of Insurance, vice the Insurance Commissioner, had certified the reasonableness of insurance available from the NFIP. Both appeals were denied as the Insurance Commissioner did not provide the certification based on the grounds of availability, adequacy, or necessity under section 311. Additionally, FEMA’s response also stated, “affordability is not a viable argument if facilities are eligible for coverage under the federally-subsidized NFIP.”225

The State Insurance Commissioner, responsible for regulation of such insurance, could certify for facilities required to obtain and maintain insurance from eligible disaster assistance from flood. However, the application of the Insurance Commissioner’s certification would differ from the facilities location inside or outside of a SFHA. For facilities outside a SFHA, the requirement is for facility owners to obtain and maintain insurance for insurable damaged facilities that have been damaged by flood and have requirement to obtain and maintain insurance in the amount of eligible disaster assistance when it is reasonably available, adequate, and necessary. Reasonably available, adequate, and necessary could conceivably apply to the entire O&M requirement, other than the

223 _{Carlos Castillo, “Second Appeal—Texas Parks and Wildlife Department, PA ID 000-}

U00FB-00, Insurance Waiver, FEMA-1606-DR-TX,” Letter of February 21, 2008.

224_Ibid.

225 _{Carlos Castillo, “Second Appeal—City of Los Angeles, PA ID 037–44000-00, Insurance}

Waiver, FEMA-1577-DR-CA,” Letter of February 22, 2008; and Carlos Castillo, “Second Appeal— EPICC Ahmanson Senior Center, PA ID 037–44000-00, Insurance Waiver, FEMA-1585-DR-CA,” Letter of February 22, 2008.

NFIP policy limits for the building or its contents, although it is very unlikely that no insurance would be reasonably available. For facilities inside a SFHA, the requirement is for facility owners to obtain and maintain insurance for insurable damaged facilities that have been damaged by flood and have requirement to obtain and maintain insurance in the amount of eligible disaster assistance. Reasonably available, adequate, and necessary would only apply to the obtain and maintain requirement in excess of a Standard Flood Insurance Policy. As such, the State Insurance Commission could certify the reasonableness of insurance amounts in excess of a standard flood insurance policy, if such excess flood insurance was not reasonably available, adequate, and necessary.

The State Insurance Commissioner’s role and authority is well defined in the history of insurance in the United States both in practice and in law. With respect to disaster assistance, FEMA shall not require greater types and extent of insurance than are certified to him as reasonable by the appropriate State insurance commissioner responsible for regulation for such insurance. This authority does have limitations but the authority is broad in the ability to reduce a facility owner’s obtain and maintain insurance requirements depending on the type of peril and location in relation to a SFHA.

The Insurance Commissioner’s Certification, once acknowledged by the Regional Administrator, is effective until the next disaster declaration.226 _Should

the facility be damaged in a subsequent event, the certification would have to be resubmitted and the obtain and maintain requirement once again waived by the Regional Administrator.

D. BLANKET POLICIES, POOL INSURANCE OR SOME COMBINATION