42 U.S.C. § 4057 — Alternative loss allocation system for indeterminate claims
submitted 14 years ago by Pub. L. 90-448 to r/title-42-THE-PUBLIC-HEALTH-AND-WELFARE · 1,855 words · no verdicts yet
This section creates the COASTAL Formula for allocating flood and wind losses when a named storm leaves an indeterminate loss. It sets formula requirements, scientific and financial review, disclosure, consultation, recordkeeping, penalties, limits, and an effective date.
(a) Definitions. (1) “Administrator” means the Federal Emergency Management Agency Administrator. (2) “COASTAL Formula” means the formula established under subsection (b). (3) “Coastal State” has the meaning of “coastal state” in section 1453 of title 16, except it excludes a State or territory with an operating wind-and-flood loss-allocation system; this section does not define that outside term. (4) “Indeterminate loss” means, as determined by a certified National Flood Insurance Program* adjuster, consulting an engineer when appropriate, physical damage to or loss of property in a coastal State from the combined flood and wind dangers of a named storm. The adjuster may make that determination only if no material building or man-made-structure remnant remains except the foundation, and there is insufficient or no tangible evidence left by the storm about the specific property. (5) “Named storm” means an organized weather system with surface circulation and maximum sustained winds of at least 39 miles per hour that the National Hurricane Center names a tropical storm or hurricane. (6) “Post-storm assessment” means the assessment developed under section 3611(b) of title 33; this section does not define it further. (7) “State” includes a United States State, the District of Columbia, Puerto Rico, and any other United States territory or possession. (8) “Secretary” means the Homeland Security Secretary. (9) “Standard insurance policy” means a National Flood Insurance Program policy covering property loss or damage from water. (10) “Property” means insured real or personal property covering structure or contents loss or damage under such a policy. (11) “Under Secretary” means the Commerce Under Secretary for Oceans and Atmosphere acting as NOAA Administrator.
(b) Formula. (1) Within 180 days after the section 3611(c)(1) protocol is established, the Secretary, through the Administrator and consulting the Under Secretary, must publish a standard formula for comment in the Federal Register to determine and allocate wind and flood losses in indeterminate-loss claims. (2) The formula must: (A) use available Coastal Wind and Water Event Database data; (B) use relevant elevation-certificate or other current-flood-risk information for each claim; (C) consider Administrator-approved, sufficient, credible evidence of the property's pre-event condition, including policyholder or adjuster findings; (D) include other measures the Administrator considers appropriate to allocate by mathematical formula damage from flood or storm surge; and (E), subject to paragraph (3), use the post-storm assessment to allocate water damage for each claim. (3) The formula must say that the Administrator may use an assessment only if the Under Secretary certifies at least 90-percent accuracy for that claim.
(c) Use. (1) Subject to paragraph (3), the Administrator may use the assessment and formula to review flood-loss payments, including FEMA quality-assurance reinspections and other approved validation processes, and to help the program cover qualified flood loss while avoiding payment for damage caused by an uncovered peril such as wind. (2) After a President-declared major disaster under section 5170 relating to a named storm in a coastal State, the Administrator may use the formula to determine and pay covered flood loss for an indeterminate claim, to speed claims and lower program costs. (3) When the formula is published or modified, the National Academy of Sciences must evaluate its expected financial effect and whether its scientific assumptions can achieve at least 90-percent accuracy. The Academy must report each evaluation to the Administrator and the named Senate and House committees. Paragraphs (1) and (2) cannot take effect for the original formula unless the report finds no adverse financial impact and valid assumptions supporting at least 90-percent accuracy. The Administrator cannot use a modified formula unless its report reaches the same conclusions. Up to $750,000 of unobligated National Flood Insurance Fund money may be used for these evaluations, without further appropriation and despite section 4017.
(d) Disclosure. Within 30 days after the post-storm assessment is submitted, for each claim paid using the formula under subsection (c)(2), the Administrator must tell the policyholder that the formula was used and provide a summary of its results.
(e) Consultation. In subsections (b) and (c), the Secretary must consult the Under Secretary, the NIST Director*, the Corps of Engineers Chief, the USGS Director, the Office of the Federal Coordinator for Meteorology, coastal-State insurance regulators, and appropriate public, private, and academic entities.
(f) Records. With advance Administrator approval, each consideration and measure the Administrator finds necessary for subsection (b) may be placed on the National Flood Insurance Program Elevation Certificate or kept in another approved record for property qualifying under subsection (c).
(g) Civil penalty. (1) After notice and an opportunity for a hearing, the Administrator may fine an adjuster up to $1,000 for knowingly and willfully making a false or inaccurate indeterminate-loss determination. (2) The money must be deposited in the National Flood Insurance Fund, remain available until spent, and be available for authorized Fund purposes without another appropriation.
(h) Rule of construction. This subsection does not require the Administrator or an insurer issuing a standard flood policy to pay for an indeterminate loss based on an assessment, the formula, or any State-law loss allocation or assessment.
(i) Applicability. Subsection (c) applies to an indeterminate loss from a named storm occurring 60 days after the formula is published as required by subsection (b)(1).
(j) Rule of construction. This subsection does not cancel, change, or invalidate a policy limit, including a loss limit, in a standard policy.
(k) Rule of construction. Nothing in this section creates a cause of action under this chapter.
In this section:
The term “Administrator” means the Administrator of the Federal Emergency Management Agency.
The term “COASTAL Formula” means the formula established under subsection (b).
The term “coastal State” has the meaning given the term “coastal state” in section 1453 of title 16, except that the term shall not apply with respect to a State or territory that has an operational wind and flood loss allocation system.
The term “indeterminate loss” means, as determined by an insurance claims adjuster certified under the national flood insurance program* and in consultation with an engineer as appropriate, a loss resulting from physical damage to, or loss of, property located in any coastal State arising from the combined perils of flood and wind associated with a named storm.
An insurance claims adjuster certified under the national flood insurance program shall only determine that a loss is an indeterminate loss if the claims adjuster determines that—
no material remnant of physical buildings or man-made structures remain except building foundations for the specific property for which the claim is made; and
there is insufficient or no tangible evidence created, yielded, or otherwise left behind of the specific property for which the claim is made as a result of the named storm.
The term “named storm” means any organized weather system with a defined surface circulation and maximum sustained winds of not less than 39 miles per hour which the National Hurricane Center of the United States National Weather Service names as a tropical storm or a hurricane.
The term “post-storm assessment” means the post-storm assessment developed under section 3611(b) of title 33.
The term “State” means a State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, and any other territory or possession of the United States.
The term “Secretary” means the Secretary of Homeland Security.
The term “standard insurance policy” means any insurance policy issued under the national flood insurance program that covers loss or damage to property resulting from water peril.
The term “property” means real or personal property that is insured under a standard insurance policy for loss or damage to structure or contents.
The term “Under Secretary” means the Under Secretary of Commerce for Oceans and Atmosphere, in the Under Secretary’s capacity as Administrator of the National Oceanic and Atmospheric Administration.
Not later than 180 days after the date on which the protocol is established under section 3611(c)(1) of title 33, the Secretary, acting through the Administrator and in consultation with the Under Secretary, shall publish for comment in the Federal Register a standard formula to determine and allocate wind losses and flood losses for claims involving indeterminate losses.
The standard formula established under paragraph (1) shall—
incorporate data available from the Coastal Wind and Water Event Database established under section 3611(f) of title 33;
use relevant data provided on the National Flood Insurance Program Elevation Certificate, or other data or information used to determine a property’s current risk of flood, as determined by the Administrator, for each indeterminate loss for which the formula is used;
consider any sufficient and credible evidence, approved by the Administrator, of the pre-event condition of a specific property, including the findings of any policyholder or insurance claims adjuster in connection with the indeterminate loss to that specific property;
include other measures, as the Administrator considers appropriate, required to determine and allocate by mathematical formula the property damage caused by flood or storm surge associated with a named storm; and
subject to paragraph (3), for each indeterminate loss, use the post-storm assessment to allocate water damage (flood or storm surge) associated with a named storm.
The standard formula established under paragraph (1) shall specify that the Administrator may only use the post-storm assessment for purposes of the formula if the Under Secretary certifies that the post-storm assessment has a degree of accuracy of not less than 90 percent in connection with the specific indeterminate loss for which the assessment and formula are used.
Subject to paragraph (3), the Administrator may use the post-storm assessment and the COASTAL Formula to—
review flood loss payments for indeterminate losses, including as part of the quality assurance reinspection program of the Federal Emergency Management Agency for claims under the national flood insurance program and any other process approved by the Administrator to review and validate payments under the national flood insurance program for indeterminate losses following a named storm; and
assist the national flood insurance program to—
properly cover qualified flood loss for claims for indeterminate losses; and
avoid paying for any loss or damage to property caused by any peril (including wind), other than flood or storm surge, that is not covered under a standard policy under the national flood insurance program.
Subject to paragraph (3), in order to expedite claims and reduce costs to the national flood insurance program, following any major disaster declared by the President under section 5170 of this title relating to a named storm in a coastal State, the Administrator may use the COASTAL Formula to determine and pay for any flood loss covered under a standard insurance policy under the national flood insurance program, if the loss is an indeterminate loss.
Upon publication of the COASTAL Formula in the Federal Register as required by subsection (b)(1), and each time the Administrator modifies the COASTAL Formula, the National Academy of Sciences shall—
evaluate the expected financial impact on the national flood insurance program of the use of the COASTAL Formula as so established or modified; and
evaluate the validity of the scientific assumptions upon which the formula is based and determine whether the COASTAL formula 1 can achieve a degree of accuracy of not less than 90 percent in allocating flood losses for indeterminate losses.
The National Academy of Sciences shall submit a report containing the results of each evaluation under clause (i) to the Administrator, the Committee on Banking, Housing, and Urban Affairs and the Committee on Commerce, Science, and Transportation of the Senate, and the Committee on Financial Services and the Committee on Science, Space, and Technology of the House of Representatives.
Paragraphs (1) and (2) of this subsection shall not take effect unless the report under subparagraph (A) relating to the establishment of the COASTAL Formula concludes that the use of the COASTAL Formula for purposes of paragraph 2 (1) and (2) would not have an adverse financial impact on the national flood insurance program and that the COASTAL Formula is based on valid scientific assumptions that would allow a degree of accuracy of not less than 90 percent to be achieved in allocating flood losses for indeterminate losses.
Unless the report under subparagraph (A) relating to a modification of the COASTAL Formula concludes that the use of the COASTAL Formula, as so modified, for purposes of paragraphs (1) and (2) would not have an adverse financial impact on the national flood insurance program and that the COASTAL Formula is based on valid scientific assumptions that would allow a degree of accuracy of not less than 90 percent to be achieved in allocating flood losses for indeterminate losses the Administrator may not use the COASTAL Formula, as so modified, for purposes of paragraphs (1) and (2).
Notwithstanding section 4017 of this title, there shall be available to the Administrator from the National Flood Insurance Fund, of amounts not otherwise obligated, not more than $750,000 to carry out this paragraph.
Not later than 30 days after the date on which a post-storm assessment is submitted to the Secretary under section 3611(b)(2)(E) of title 33, for each indeterminate loss for which the COASTAL Formula is used pursuant to subsection (c)(2), the Administrator shall disclose to the policyholder that makes a claim relating to the indeterminate loss—
that the Administrator used the COASTAL Formula with respect to the indeterminate loss; and
a summary of the results of the use of the COASTAL Formula.
In carrying out subsections (b) and (c), the Secretary shall consult with—
the Under Secretary for Oceans and Atmosphere;
the Director* of the National Institute of Standards and Technology;
the Chief of Engineers of the Corps of Engineers;
the Director of the United States Geological Survey;
the Office of the Federal Coordinator for Meteorology;
State insurance regulators of coastal States; and
such public, private, and academic sector entities as the Secretary considers appropriate for purposes of carrying out such subsections.
Each consideration and measure the Administrator determines necessary to carry out subsection (b) may be required, with advanced approval of the Administrator, to be provided for on the National Flood Insurance Program Elevation Certificate, or maintained otherwise on record if approved by the Administrator, for any property that qualifies for the COASTAL Formula under subsection (c).
If an insurance claims adjuster knowingly and willfully makes a false or inaccurate determination relating to an indeterminate loss, the Administrator may, after notice and opportunity for hearing, impose on the insurance claims adjuster a civil penalty of not more than $1,000.
Notwithstanding section 3302 of title 31 or any other law relating to the crediting of money, the Administrator shall deposit in the National Flood Insurance Fund any amounts received under this subsection, which shall remain available until expended and be available to the Administrator for purposes authorized for the National Flood Insurance Fund without further appropriation.
Nothing in this subsection 3 shall be construed to require the Administrator to make any payment under the national flood insurance program, or an insurance company* that issues a standard flood insurance policy under the national flood insurance program to make any payment, for an indeterminate loss based upon post-storm assessment, the COASTAL Formula, or any other loss allocation or post-storm assessment arising under the laws or ordinances of any State.
Subsection (c) shall apply with respect to an indeterminate loss associated with a named storm that occurs 60 days after publication of the COASTAL Formula in the Federal Register as required by subsection (b)(1).
Nothing in this subsection 3 shall be construed to negate, set aside, or void any policy limit, including any loss limitation, set forth in a standard insurance policy.
Nothing in this section shall be construed to create a cause of action under this chapter.
Source credit: (Pub. L. 90–448, title XIII, § 1337, as added Pub. L. 112–141, div. F, title II, § 100253, July 6, 2012, 126 Stat. 974; amended Pub. L. 116–271, title II, § 201(b), Dec. 31, 2020, 134 Stat. 3346.)
- 2012Enacted · Pub. L. 90-448 · 126 Stat. 974
- 2020Amended · Pub. L. 116-271 · 134 Stat. 3346
A history note hasn’t been published yet. The record shows enactment by Pub. L. 90-448 on 2012-07-06.
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