Role of Insurance in a Disaster
Insurance is an important
– and in fact primary
for damaged-impacted communities. In fact, insurance may be the only
resource. If the disaster is Presidentially declared
, FEMA Public Assistance (PA)
, Individual Assistance (IA)
and other recovery resources
may be available. However, FEMA PA, IA and other Federal assistance is generally supplemental
In either case – whether the disaster is declared or not – insurance is the first line of defense.
Obtain & Maintain (O & M) Requirement
To protect the investment of Federal resources invested in the restoration of disaster-damaged facilities and to prevent against future loss, FEMA requires – as a condition of receiving FEMA Public Assistance (PA) funding – those receiving subgrants (called Subrecipients or Applicants) must obtain and maintain insurance. Coverage must at least equal the amount of the eligible damage to the facility receiving Federal assistance.
This is often called the obtain and maintain (O&M) requirement. If a Subrecipient (Applicant) does not obtain AND maintain insurance, FEMA will not provide assistance for that facility in future disasters.
While the purpose of the O&M requirement is to protect against future loss
from the same type of peril, it has implications for a current
disaster. Title 44 of the Code of Federal Regulations (44 CFR) 206.253 (f)
indicates that IF the requirement to purchase (obtain
) insurance is not met
, FEMA may de-obligate (take back) funds
provided for damage sustained in the current
There are some circumstances when a Subrecipient (Applicant) is exempt from the O&M requirement:
- Where eligible damage is less than $5,000, OR
- The facility is a temporary facility.
Failure to understand and follow FEMA insurance requirements may result in deobligation of funds already received . . .
As well as loss of eligibility for future disaster funds.
Insurance Commissioner’s Certification (ICC)
Insurance market conditions sometimes prevent a Subrecipient (Applicant) from reasonably meeting the O&M requirement. Insurance may not be affordable. OR insurance may not be available. Under the authority of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act), if insurance is not reasonably available Subrecipients (Applicants) can apply for an Insurance Commissioner’s Certification (ICC).
An ICC acts as a declaration that some portion of the O&M requirement is not reasonably available to the FEMA PA Subrecipient (Applicant).
ICC’s certify that Subrecipients (Applicants) for FEMA PA funding have met their O&M insurance requirements using reduced coverage when full-coverage requirements are not reasonably available. If the required levels of insurance are not obtained and maintained on a previously damaged facility, that facility will receive no FEMA PA funding in a future event of the same type unless the Applicant has both applied for and received an ICC.
How it works
An ICC applies only to the O + M requirements applicable to the storm or hazard specified in the application. Once an Subrecipient (Applicant) provides evidence that the type and extent of insurance required by the FEMA PA Program is not reasonably available, the Insurance Commissioner can issue an ICC.
It is important to know:
If granted an ICC, a Subrecipient (Applicant) must maintain insurance coverage consistent with that in place at the time of the initial certification.
Should another major disaster strike, resulting in the Subrecipient's (Applicant's) need for additional Stafford Act assistance, a NEW application for an ICC applicable to the NEW disaster is required.
An ICC is the best way to ensure continued eligibility for Public Assistance.
Criteria for receiving an ICC
The Louisiana Commissioner of Insurance
, working with GOHSEP
, has established criteria a Subrecipient (Applicant) must meet to be eligible
for an ICC. These are explained in detail
and can be found at the GOHSEP
page and summarized
in the column to the right.
ICC is not an exemption + not a guarantee
Demonstrating you have met the criteria set by the Insurance Commissioner and followed the process is not a guarantee that an ICC will be granted.
It is also important to know that an ICC does not exempt an Applicant from procuring insurance coverage. Applicants must still carry insurance to the extent that it is reasonably available.
Minimum budget required for insurance is expressed as a percentage of annual operatingbudget in this chart.
ICCs are disaster-specific. Should another disaster strike, resulting in a need for additional Stafford Act assistance, a new application for an ICC applicable to the new disaster is required.
Check with your risk manager and/or insurance professionals to see if an ICC is right for you. If you believe you qualify for an ICC, please submit your application and required documentation to GOHSEP.