Elmont Online

ALBANY — Tropical Storm Irene has triggered a behind-the-scenes turf battle between the Cuomo administration and the Federal Emergency Management Agency over who should police the insurers that sell flood insurance to New Yorkers.

As Irene's floodwaters were receding in September, Cuomo's Department of Financial Services Superintendent Benjamin Lawsky urged insurance firms to pay up as promptly as possible.

"We will continue to ensure that insurers do not abuse those they insure," Lawsky said in a release as he traveled to flood-ravaged areas. Through September and early October, Lawsky's office began calling insurance companies if homeowners had problems collecting their payments.

The activism prompted pushback from FEMA, which administers flood insurance on the federal level.

In early October, a top FEMA official contacted insurance firms around the state saying the federal agency, not state government, regulated flood insurance — including the way in which claims were handled.

Lawsky then received a letter from Edward Connor, FEMA's deputy associate administrator for federal insurance, reiterating that stance.

"Because the (Standard Flood Insurance Policy) is a federal statute, administered by the federal government and funded with federal dollars, only federal law regulates the SFIP," Connor wrote in the Oct. 13 letter, which was obtained by the Times Union.

"State law-based claims handling requirements and other insurance regulations do not apply," added Connor.

Flood insurance is underwritten by the federal government, although private firms sell flood policies and are responsible for servicing claims.

Despite FEMA's letter, Lawsky believes the state has regulatory authority over insurance firms, and he'll continue to monitor claims.

"We're going to continue to enforce New York regulations and make sure the industry continues to be responsive to the needs of homeowners and small businesses," Lawsky told the Times Union.

To buttress his stance, Lawsky on Monday sent a memorandum to insurance companies operating in New York State.

"The fact that the (National Flood Insurance Program) is a federal program administered by a federal agency ... does not alter the applicability of Insurance Law," Lawsky wrote in a "circular letter."

Insurers, he wrote, cannot use the federal aspects of NFIP "as a shield against discipline for violating New York law," he added.

It wasn't immediately clear what prompted FEMA to try to assert its authority. FEMA officials didn't respond to questions Tuesday.

Lawsky's office had been calling executives from major insurance companies in the rare instances in which there were serious problems.

Many of the firms have long-standing relationships with FEMA when it comes to the federally backed flood program.

Insurance industry representatives were aware of the governmental skirmish, but were hesitant to take sides. One official noted flood insurance has long been a federally funded program.

Companies "are trying to do the best they can to administer the federal program," said Ellen Melchionni, president of the state Insurance Association.

"It's unfortunate that there's been this little battle going on," she added.

So far, Irene and Tropical Storm Lee have resulted in some 90,000 insurance claims, although that includes both flood and homeowners insurance policies.

And while there have been numerous stories about flood victims still waiting to collect on claims, there have only been 46 formal complaints lodged with the Department of Financial Services. About two-thirds are for slow payments, and the rest question how much the policies paid out.

Still, residents of flooded communities say they were glad to see Lawsky riding herd on insurance companies.

"When Benjamin Lawsky was out here, there were a lot of complaints about insurance," noted John Borst, mayor of Schoharie village, one of the hardest-hit communities. Borst noted Lawsky sent teams of people back to follow up on insurance problems.

Despite the efforts, payments are still slow in many cases, due in part to the sheer volume of claims to be processed.

"I'm still waiting," said Barbara Monsees, who said she is battling her insurance company over how much she will be paid.

"I don't think anybody -— I think just one person — has gotten an actual check," she said.

Bryan Fitzgerald and Sarah Hinman contributed. Reach Karlin at 454-5758 or This e-mail address is being protected from spambots. You need JavaScript enabled to view it .