Senators seek probe of possible Sandy insurer fraud

New Jersey Senators Robert Menendez and Cory Booker have asked the state attorney general’s office to investigate potential fraud by insurance companies that may have reduced flood damage payouts in the wake of Hurricane Sandy. This request follows an order made by a Long Island federal judge in November that required insurers to produce additional information in order to determine whether engineering contractors adjusted damage reports to improperly minimize payouts to potentially thousands of storm victims. The senators point to a probe recently opened by New York’s attorney general, and state that “very similar circumstances” warrant further investigation into the issue in New Jersey as well. The senators also acknowledged that the Federal Emergency Management Agency’s penalty structure offers much harsher punishments for insurers that make overpayments than it does for insurers who underpay.