Rex Supporting Statement-01-24-07

January 24,2007
Supporting Statement for Paperwork Reduction Act Submissions

OMB Control Number: 1660-0095
Title: National Flood Insurance Program Appeals Process
Form Number(s): None
A. Justification
1. Explain the circumstances that make the collection of information necessary
(give details as to why this information is being collected). Identify any legal or
administrative requirements that necessitate the collection. Attach a copy of the
appropriate section of each statute and regulation mandating or authorizing the
collection of information. Provide a detailed description of the nature and source of
the information to be collected.
Section 205 of The Bunning-Bereuter-BlumenauerFlood Insurance Reform Act (FIRA) of
2004, Public Law 108-264,42 U.S.C. 4102A, requires the Federal Emergency Management
Agency (FEMA) to establish by regulation an additional process for the appeal of decisions
of flood insurance claims issued through the National Flood Insurance Program (NFIP).
Consequently, FEMA issued an interim final rule codifying into regulation what was
previously an existing informal process to handle appeals regarding decisions related to
coverage or claims under the NFIP.
Therefore, this appeal process establishes a formal mechanism to allow policyholders to
appeal the decisions of any insurance agent, adjuster, insurance company, or any FEMA
employee or contractor in cases of unsatisfactory decisions on claims, proof of loss, and loss
estimates. Under this process, FEMA will acknowledge receipt of a policyholder's appeal
in writing and will advise such policyholder if additional information is required in order to
fully consider the appeal. FEMA will review the documentation submitted by the
policyholder, will conduct any necessary additional investigation, and will advise, both the
policyholder and the appropriate flood insurance carrier, of its decision regarding the appeal.
The process requires policyholders to submit a written appeal to the Federal Emergency
Management Agency (Mitigation Division'Risk Insurance Branch), in the form of a signed
letter, explaining the nature of their claim appeal, names and titles of persons contacted,
dates of contact, contact information, and details of the contact relevant to their claim
appeal. The policyholders are also required to submit documentation supporting their
appeal and basis for the appeal, a list of items in.dispute, with the price to repair or replace
the items, proof of loss which is already required in the policy provisions, policy number,
name of policyholder, property address, mailing address if property address is different,

phone numbers and contact information for the policyholder and supporting photographs if
appropriate.
The NFIP Claims Process (FEMA Forms 8 1-40; 8 1-41/8 1141A; 8 1-42/8 1-42A; 8 1-43; 8 144; 81-57; 8 1-58; 81-59; 81-63; 8 1-96; 8 1-98; 8 1-109; and 81- 110) approved under OMB
Control Number 1660-0005, only covers information collected for claims from
policyholders who bought policies directly from FEMA. NFIP policyholders' claims made
directly to WYO companies are not included in this information collection since FEMA
does not collect this information as WYO companies are free to use their own claim forms.
This explains the difference between the typical number of annual NFIP claims (i.e. 68,000)
stated in the interim final rule and the number of annual responses (i.e. 27,970) submitted
and approved by OMB under 1660-0005.
The appeals process as an information collection is better served independently under its
own OMB Control Number given that the appeals process applies to all policyholders with
no distinction as to whether their flood insurance policy was purchased directly from FEMA
or through an insurance company (WYO)
2. Indicate how, by whom, and for what purpose the information is to be used.
Except for a new collection, indicate the actual use the agency has made of the
information received from the current collection. Provide a detailed description of:
a) how the information will be shared, if applicable, and for what programmatic
purpose.
This information will be reviewed by the Director of Claims and claims examiners and
will be used to determine if the policyholder/claimant is entitled to additional remedies
for the loss. Currently when policyholders are not satisfied with their claims settlement,
they write to their Congressperson, company or directly to FEMA. The claims section of
the Risk Insurance Branch responds to these complaints and determines if the
policyholder's claim was properly adjusted and settled. The policy, proof of loss, loss
estimates, photographs, and any supporting documentation the policyholder has sent with
the letter, is reviewed to determine if the policyholder's claim was properly adjusted and
settled. If the claim was not settled properly, a determination is made as to what
additional monies or remedies the policyholder is entitled to and should receive.
The policyholders policy number, property address, mailing address and claims has
already been recorded in the NFIP's database prior to the policyholder sending this
information with their written appeal to FEMA. The bureau net was established to keep
files and statistics on NFIP policyholders when the NFIP program was instituted.
3. Describe whether, and to what extent, the collection of information involves
the use of automated, electronic, mechanical, or other technological collection
techniques or other forms of information technology, e.g., permitting electronic
submission of responses, and the basis for the decision for adopting this means of
collection. Also describe any consideration of using information technology to
reduce burden.

This is a paper-based information collection and electronic response is not permitted.
The appeals request letter must be signed by the requestor and accompanied by relevant
supporting documentation. Therefore, electronic responses are not permitted at this time.
However, information featuring the steps in appealing claims, together with the Flood
Insurance Claims Handbook (copy attached) which also explains the appeals process is
posted in the NFIP website located at:

http://www.floodsmart.~ov/floodsmart/static/Ap~ealin~r,
Your Flood Insurance C1aim.p
df

4. Describe efforts to identify duplication. Show specifically why any similar
information already available cannot be used or modified for use for the purposes
described in Item 2 above.
This information collection constitutes the only mechanism available to policyholders to
request an appeal; therefore, there is no duplication. The information that can be
obtained from the insurance company, if necessary, does not include the appeal letter
from the insured.
5. If the collection of information impacts small businesses or other small
entities (Item 5 of OMB Form 83-I), describe any methods used to minimize.
No burden is placed on small businesses or entities.
6. Describe the consequence to FederaVFEMA program or policy activities if
the collection of information is not conducted, or is conducted less frequently, as
well as any technical or legal obstacles to reducing burden.

Failure to collect this information will result in non-compliance with Pub. L. 108-264,
42 U.S.C. 4102A, which requires FEMA to establish by regulation a process for
policyholders to appeal decisions they consider unsatisfactory. Without this initial letter
of appeal, FEMA will not be able to formally initiate, evaluate, and process the appeal, but
rather will continue to rely on the current informal process, which the FIRA of 2004 seeks to
formalize.
7. Explain any special circumstances that would cause an information collection
to be conducted in a manner:
(a) Requiring respondents to report information to the agency more
often than quarterly.

There are no requirements for respondents to report information to the agency more often
than quarterly.
(b) Requiring respondents to prepare a written response to a
collection of information in fewer than 30 days after receipt of it.

There are no requirements for respondents to prepare a written response to this collection
of information in fewer than 30 days.
(c) Requiring respondents to submit more than an original and two
copies of any document.

There are no requirements for respondents to submit more than an original and two
copies of any document.
(d) Requiring respondents to retain records, other than health,
medical, government contract, grant-in-aid, o r tax records for more than three
years.

There are no requirements for respondents to retain records for more than three years.
(e) I n connection with a statistical survey, that is not designed to
produce valid and reliable results that can be generalized to the universe of study.

There is not a statistical survey involved with this collection.
(f) Requiring the use of a statistical data classification that has not
been reviewed and approved by OMB.
This collection is intended for internal program use only and not for dissemination to the
public.
(g) That includes a pledge of confidentiality that is not supported by
authority established in statute o r regulation, that is not supported by disclosure
and data security policies that are consistent with the pledge, o r which unnecessarily
impedes sharing of data with other agencies for compatible confidential use.

There is no pledge of confidentiality that is not supported by authority established in
statute or regulation involved with this collection that would hamper the ability of the
NFIP to share this information with other agencies andlor stakeholders for compatible
confidential use. FEMA conducted a Privacy Impact Assessment (PIA) and published a
System of Records Notice to accommodate the appeals process in the existing System of
Records (See copies included in this PRA package).
(h) Requiring respondents to submit proprietary trade secret, o r other
confidential information unless the agency can demonstrate that it has instituted

procedures to protect the information's confidentiality to the extent permitted by
law.
There is no requirement for respondents to submit proprietary trade secret, or other
confidential information for this collection.

8. Federal Register Notice:
a. Provide a copy and identify the date and page number of publication in
the Federal Register of the agency's notice soliciting comments on the information
collection prior to submission to OMB. Summarize public comments received in
response to that notice and describe actions taken by the agency in response to these
comments. Specifically address comments received on cost and hour burden.
The Interim Final Rule RIN 1660-AA4 1, was published in the Federal Register on May
26,2006, volume 71, number 102, pages 30294-30298. A System of Records Notice
(SORN) was published on June 2,2006, volume 71, number 106, pages 321 15-32117.
A 60-day Federal Register Notice was published for this information collection on
September 7,2006, volume 71, number 173, Page 52813. There were no comments
received for this information collection.
b. Describe efforts to consult with persons outside the agency to obtain their
views on the availability of data, frequency of collection, the clarity of instructions
and recordkeeping, disclosure, or reporting format (if any), and on the data
elements to be recorded, disclosed, or reported.
A contractor has been retained to assist the NFIP with the appeals process. It has
provided considerable consulting services in developing and implementing the process,
and will play a critical role in reviewing appeal requests and reaching resolution.

c. Describe consultations with representatives of those from whom information
is to be obtained or those who must compile records. Consultation should occur at
least once every three years, even if the collection of information activities is the
same as in prior periods. There may be circumstances that may preclude
consultation in a specific situation. These circumstances should be explained.
There was no consultation with policyholders given that the formal establishment of an
appeal process was required by Congress in Section 205 of the Bunning-BereuterBlumenauer Flood Insurance Reform Act (FIRA) of 2004.
9. Explain any decision to provide any payment or gift to respondents, other
than remuneration of contractors or grantees.

There is no payment or gift to respondents in this collection.

10. Describe any assurance of confidentiality provided to respondents and the
basis for the assurance in statute, regulation, or agency policy. Provide details on:
a. Whether respondents are informed on the mandatory o r voluntary nature
of providing the information,
The appeal process is voluntarily initiated by the policyholder. However, once the
policyholder files an appeal the rule states that certain and specific information is
required for the appeal to proceed. Failure to provide the requested information or to
request an extension by the due date will result in a dismissal of the appeal.
b. Opportunities to decline participation or to consent to particular uses in
the information, and
The appeals process is voluntary and requestors can stop the appeal process at any time.
The policyholders are granting consent to a review of their National Flood Insurance
Program (NFIP) policy claim file when they initiate the appeal via a letter requesting a
review of their claim along with the required information needed to review the claim.
c. How can respondents grant such consent?
The consent is granted when the policyholder sends in their written appeal requesting
review of their NFIP policy claim decision. .
d. State any administrative and/or technological control to secure the
information.
Exclusively authorized personnel from FEMA or its contractors on a "need-to-know
basis" can access the National Flood Insurance Program (NFIP) database. The
information on policyholders, used to review claims, is contained in a secured database
and access is password-protected. The appeal letter as well as the required
documentation is maintained in a scanned document file. The hard copies are stored in a
work area that is in a secure area when it is not staffed. The doors to the workspace are
kept closed.
e. Will data findings be analyzed and reported in a way that protects
respondents' anonymity?
The information collected will be used exclusively to review a disputed claim on a caseby-case basis per applicant's voluntary request for an appeal. No further analysis other
than general statistics (i.e. percentage of successfid appeals) for internal program
management will be conducted and no publication or other release of the information is
planned.
f. For electronic information coIIections (web-based): In addition to the
above information, provide a detailed description of the use of any agency-

authorized tracking of respondents (due to a compelling need), and whether there is
an intent to identify individual respondents in conjunction with other data elements
(i.e., gender, race, age, geography, and other descriptors).
There is no electronic or web-based capability available for this information collection.

11. Provide additional justification for any questions of a sensitive nature, such as
sexual behavior and attitudes, religious beliefs, and other matters that are
commonly considered private. This justification should include the reasons why the
agency considers the questions necessary, the specific uses to be made of the
information, the explanation to be given to persons from whom the information is
requested, and any steps to be taken to obtain their consent.
There are no questions of a sensitive nature requested from respondents.

12. Provide estimates of the hour burden of the collection of information. The
statement should:
a. Indicate the number of respondents, frequency of response, annual hour
burden, and an explanation of how the burden was estimated. Unless directed to do
so, agencies should not conduct special surveys to obtain information on which to
base hour burden estimates. Consultation with a sample (fewer than 10) of potential
respondents is desired. If the hour burden on respondents is expected to vary
widely because of differences in activity, size, o r complexity, show the range of
estimated hour burden, and explain the reasons for the variance. Generally,
estimates should not include burden hours for customary and usual business
practices.

( I ) Estimated time each respondent will spend compiling the required supporting documentation and

drafting the appeal request letter.

There is no new information is being collected as the appeals process relies mostly on
existing information, although it carries a burden hours as a result of having to compile
information and write a formal letter requesting the appeal. Conservatively, it is anticipated,
assuming no catastrophic flood-related disasters, FEMA will receive approximately 360 and
the highest 1,200 appeals averaging approximately 780 appeals annually.

An extraordinary event can increase the number of claims, and consequently, the number of
appeals. FEMA has noted that during the event of an overwhelming impact of disasters,
the total number of claims received could be as high as 240,000 (3.3 times greater) than

an average year and more than triple the number of claims. Based on this scenario the
estimated number of appeals could expected to total 1,200 ( 3.3 times greater). FEMA
estimates that the number of appeals could be as high as 2,000, but absent of a disaster of
such magnitude, are expected to decrease to typical levels in the future.
b. If this request for approval covers more than one form, provide separate
hour burden estimates for each form and aggregate the hour burdens in Item 13 of
OMB Form 83-1.
c. Provide estimates of annualized cost to respondents for the hour burdens
for collections of information identifying and using appropriate wage rate
categories. The cost of contracting out or paying outside parties for information
collection activities should not be included here. Instead this cost should be
included in Item 14.

Individuals

Total

1560

$13.83

$28.00

21,574.80

1560

$13.83

$28.00

$2 1,574.80

2004 National Median Hourly Rate for All Occupations per Bureau
of Labor Statistics.

13. Provide an estimate of the total annual cost burden to respondents or
recordkeepers resulting from the collection of information. The cost of purchasing
or contracting out information collection services should be a part of this cost
burden estimate. Do not include the cost of any hour burden shown in Items 12 and
14. The cost estimates should be split into two components:
There is no start-up, capital or maintenance/operational costs to respondents involved in
this collection. However, there is a nominal cost of $3.00 per policyholder ($6,000 for all
respondents combined) for copying and mailing the documentation in addition to the cost
associated with compiling the documentation and drafting the appeals request letter stated
under Q 12c above.
14. Provide estimates of annualized cost to the Federal Government. Also,
provide a description of the method used to estimate cost, which should include
quantification of hours, operational expenses (such as equipment, overhead,
printing and support staff), and any other expense that would have been incurred
without this collection of information. You may also aggregate cost estimates for
Items 12,13, and 14 in a single table.

Staff Salaries (3 GS 13, 1 GS 14 and 1 GS 15)
Storage and Maintenance
Postage
Total

119,907.00

3,000.00
3,400.00

%361,30700

The estimated annual cost to the Federal government, performance by the contractor, to
process, analyze and maintain this information is approximately $235,000 (2000 x 4.70
hours per file = 9400 x $25.00 per hour= $235,000). This amount includes the review
and validation of documentation of claims appeals. The approximate cost is determined
as follows:
Total estimated number of claim appeals processed per year =2000
Number of hours to review on file = 4.70
Claims Specialist Rate per hour = $25.00
The Federal government will also spend approximately $3000 a year to maintain and
store the claims appeals files. In addition approximately four FEMA employees will
review 10 files a week, each spending one hour on a file for a total of 40 hours. The
Chief will spend '/z hour reviewing each file for a review of 40 files a week. The
approximate annual cost of $1 19,906.80 is determined as follows:
1 Claims Section Chief GS 15 level may spend approximately 20 hours a
Week (1/2 hour for each 40 files). The rate per hour is $64.97. The total
annual cost for the GS 15 is $33,789.60.
1 Senior Claims Examiner GS 14 level may spend approximately 10 hours a
Week (1 hour per file). The rate per hour is $48.15. The total annual cost
for the GS 14 is $25,038.00.
3 Claims Examiners GS 13 level may spend approximately 30 hours a
week (1 hour per file, 10 files each). The rate per hour is $40.75 and $35.96,
respectively. The total annual cost for the GS13's is $61,079.20.
The Federal government will spend an estimated $740.00 per year for postage to mail the
appeal determination to the policyholder (2000X.37 =$740.00).

15. Explain the reasons for any program changes or adjustments reported in
Items 13 or 14 of the OMB Form 83-1. Changes in hour burden, i.e., program
changes or adjustments made to annual reporting and recordkeeping hour and cost
burden. A program change is the result of deliberate Federal government action.
All new collections and any subsequent revisions of existing collections (e.g., the
addition or deletion of questions) are recorded as program changes. An adjustment
is a change that is not the result of a deliberate Federal government action. These
changes that result from new estimates or actions not controllable by the Federal
government are recorded as adjustments.
The number of appeals estimated for the last OMB submission was 2,000 responses and
4,000 burden hours, categorized as a program change due to statutory action to establish a

formal claims appeals process for the National Flood Insurance Program (NFIP) policy
holders. The overwhelming impact of Hurricane Katrina, Rita and Wilma increased the
number of claims received for FY 2006. The total number expected claims received from
FY 2006 was approximately 240,000 approximately 3.3 times greater than an average
year. The estimated number of appeals for FY 2006 was expected total 2,000 x 2 hours
estimated time for respondents to compile the required supporting documentation and
drafting an appeals letter.
There is an adjustment of - 1220 responses and -2440 total annual burden hours for this
information collection. FEMA has estimated that, assuming no catastrophic flood related
disasters, FEMA will receive approximately 780 claims appeals annually x 2 hours time
for each respondent to compile the required supporting documentation and drafting the
appeal request letter.
16. For collections of information whose results will be published, outline plans
for tabulation and publication. Address any complex analytical techniques that will
be used. Provide the time schedule for the entire project, including beginning and
ending dates of the collection of information, completion of report, publication
dates, and other actions.

There are no plans for tabulation or publication involved with this collection since it is
intended for internal program use only.

17. If seeking approval to not display the expiration date for OMB approval of
the information collection, explain reasons that display would be inappropriate.
Although there are no forms or structured instruments used in this information collection,
policyholders will be advised of OMB's approval of this collection. A valid OMB
number and expiration date will be displayed in the Floodsmart website and in all other
material referencing the appeals process.
18. Explain each exception to the certification statement identified in Item 19
"Certification for Paperwork Reduction Act Submissions," of OMB Form 83-1.
No exceptions are being sought by this collection. .

B. Collections of Information Employing Statistical Methods.
When Item 17 on the Form OMB 83-1 is checked "Yes", the following documentation
should be included in the Supporting Statement to the extent it applies to the methods
proposed:

There are no statistical methods involved with this collection.