Background

From September 4 – October 18, 2017, strong winds and heavy rainfall from Hurricane Irma damaged properties owned by the Indian River Community College (Applicant). The Applicant contracted all repairs, with actual costs totaling $129,211.92. FEMA prepared Project Worksheets (PW) 3663 and 5563 to document permanent work to repair the damages. However, FEMA reduced Public Assistance (PA) funding after accounting for anticipated insurance proceeds. FEMA found that the Applicant’s insurance policy provided full coverage for the loss, less a $10,000.00 deductible, which FEMA reimbursed under PW 3663 as an uninsured loss.1 FEMA notified the Florida Division of Emergency Management (Grantee) and the Applicant via correspondence dated March 22, 2019 (PW 5563) and April 1, 2019 (PW 3663).

First Appeal

The Applicant submitted first appeals in May 2019, requesting FEMA approve PA funding in the amount of $126,200.94.2 The Applicant argued that insurance proceeds were not available to cover the losses at issue; what FEMA classified as an insurance policy was in fact a self-insured retention fund maintained by the Florida College System Risk Management Consortium (FCSRMC). Any payments received from FCSRMC for the damage at issue were “self-funded” from the premiums the Applicant previously paid into the fund.

Further, the Applicant stated that FCSRMC allows it and twenty-six other participating colleges to combine risk and financial resources in order to purchase commercial insurance through the Westport Insurance Corporation (Westport) at lower costs. In this case, the insurance deductible under the Westport policy, equal to 3 percent of the total insured value of its properties, had not been met. The Applicant asserted that the costs at issue thus constituted part of its insurance policy deductible and were eligible for PA funding. To support the eligibility of its claim, the Applicant cited an example wherein FEMA reimbursed costs for insurance policy deductibles.

In its transmittal letter, the Grantee expressed support for the appeal.

In a letter dated August 26, 2019, the FEMA Region IV Regional Administrator denied the appeal. FEMA determined that FCSRMC functioned as an insurer “by collecting premiums and paying claims,” and was obligated to reimburse the Applicant for any disaster-related repairs exceeding the $10,000.00 deductible. Therefore, providing additional PA funding under PWs 3663 and 5563 would represent a duplication of benefits. Finally, FEMA determined that the 3 percent deductible referenced in the Applicant’s appeal was associated with FCSRMC’s insurance policy with Westport, not the Applicant’s insurance policy.

1 In total, FEMA approved $11,726.30 in costs for PW 3663, which represent the $10,000.00 reimbursement for uninsured losses and direct administrative costs of $1,726.30 that are not reduced by anticipated insurance proceeds. 2 The Applicant claims the correct anticipated insurance for PW 3663 is $1,564.98, resulting in an appealed amount value of $49,460.40, and that anticipated insurance reductions for PW 5663 should have been $40,580.44, resulting in an uninsured deductible amount of $76,740.54.

Second Appeal

The Applicant submits its second appeal via letter dated October 15, 2019. The Applicant notes that it is one of twenty-seven member colleges along with FCSRMC listed as the “named

insured” on the Westport policy, and thus the Westport policy is the Applicant’s insurance policy. In contrast, the Applicant argues that the agreement between it and FCSRMC is not an insurance policy, but a means for member colleges to pool funds. The Applicant asserts that the money it and the other member colleges pay into the FCSRMC fund comes from the State of Florida, and is returned when losses are paid below the Westport policy insurance deductible.

Therefore, any funding it receives from FCSRMC is the Applicant’s own money; this does not constitute a duplication of benefits since it is not money from an outside source. The Applicant again offers examples wherein FEMA reimbursed commercial insurance deductibles, and states that each case involved risk management programs similar to FCSRMC. In its transmittal letter, the Grantee again expresses support for the appeal.

Discussion

Duplication of Benefits

Per Section 312 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act, no entity will receive financial assistance for any loss for which financial assistance has already been received from any other program, from insurance, or from any other source. FEMA is legally prohibited from duplicating benefits from other sources.3 Specifically, it cannot provide assistance for disaster-related losses that duplicate benefits available to an applicant from another source, including insurance.4 Therefore, FEMA reduces assistance to an applicant by the amount of its actual or anticipated insurance proceeds.5

FEMA defines an insurance pool as two or more entities that agree to share risk under a contractual agreement.6 An insurance pool is not under the control of a single pool member and is governed by a board or similar organizational entity comprised of participating members.7 Self-insured retention is a type of retained risk whereby the insured retains responsibility for paying covered claims up to a set threshold; upon meeting the threshold, the insurer offering the additional layer(s) (i.e., the excess insurer) assumes liability.8 FEMA will not reduce assistance for any retained risk, such as a deductible, where there is no insurance purchase requirement.9

FEMA examined the Applicant’s agreement with FCSRMC, which is detailed in Policy No. RMC 2017-0301, referred to on appeal as the “Plan Document.”10 FEMA finds that the Plan Document is a contractual agreement between the Applicant, twenty-six other colleges, and

3 Public Assistance Program and Policy Guide, FP 104-009-2, at 40 (Apr. 1, 2017).

4 FEMA Recovery Policy FP 206-086-1, Public Assistance Policy on Insurance, at 8 (June 29, 2015).

5 Title 44 Code of Federal Regulations § 206.250(c) (2016); FP 206-086-1, at 8.

6 FP 206-086-1, at 2.

7 Id.

8 Id.

9 FP 206-086-1, at 2, 9.

10 Fla. Coll. Risk Mgmt. Consortium, Policy No. RMC 2017-0301 (Mar. 1, 2017).