NAII Praises U.S. Senate Action on Cerro Grande Fire Claims Funding

January 28, 2003

The National Association of Independent Insurers (NAII) has praised the U.S. Senate for passage of an omnibus spending package that provides additional funding for the Federal Emergency Management Agency’s (FEMA) Office of Cerro Grande Fire Claims.

“NAII is pleased the Senate has taken action and urges the House to follow suit as quickly as possible,” NAII senior vice president Carl Parks remarked. “While this funding represents a strong step in the right direction, NAII will continue our efforts to ensure all subrogation claims are fully paid.”

The initial fund was established because on May 4, 2000, the National Park Service lost control of a prescribed burn in the Bandelier National Monument in New Mexico. The fire raged out of control and destroyed more than 425 homes in the community of Los Alamos, New Mexico. The federal government assumed full responsibility for the catastrophe and the severe property damage caused by the fire. Shortly following the catastrophe, legislation was signed into law providing full compensation of property losses and personal injury caused by the fire, including subrogation of insurance claims paid to the fire victims.

Additional Cerro Grande Fire funds became necessary because of unexpected claims for smoke and flood damage resulting from the fires. The federal government assumed responsibility for the losses.

On Jan. 23, the U.S. Senate passed a Fiscal Year 2003 omnibus-spending package to provide monies for the Cerro Grande Fire Fund. Senator Pete Domenici (R-NM) has lead efforts to secure additionally needed funds. The bill provides for up to $100 million to meet unpaid claims, up to $5,000,000 million of which may be used to cover administrative costs.

FEMA currently estimates that it will cost $155 million to close the fund and estimates that it has approximately $33 million remaining from previous funding. The General Accounting Office (GAO) is conducting a comprehensive audit to verify what funds FEMA has and what additional monies are needed to close the program.

During Senate consideration of the spending bill across the board cuts were approved to pay for spending increases made in the measure. The current estimate of the cuts is 2.9 percent, which would reduce the $100 million allocated for the fire fund to approximately $97.1 million.

The House has not yet passed a fiscal year 2003 omnibus-spending package. As the legislative process continues, NAII said it will work with Senator Domenici and others to assure funding for all outstanding subrogation claims.

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