Duplication of Benefits – Insurance
|PW ID#||Multiple Project Worksheets|
Conclusion: FEMA correctly deducted insurance proceeds Christus Health (Applicant) received under its Deductible Buy Back Policy to prevent the Applicant from receiving a duplication of benefits. Accordingly, the appeal is denied.
In September 2008, Hurricane Ike damaged several medical facilities owned by the Applicant. FEMA prepared 16 Project Worksheets (PWs) to address the damage to five of the Applicant’s facilities. Prior to its initial obligation, FEMA reduced funding for anticipated insurance proceeds. In 2014, the Texas Division of Emergency Management informed FEMA that the Applicant received its final settlement from its insurance carriers. The insurance proceeds included a commercial all risk, property and casualty policy with a $10 million deductible. In addition, the Applicant also received a Deductible Buy Back loss protection, which covered the commercial policy deductible, less a $250,000.00 deductible. FEMA examined the insurance proceeds and amended the PWs to reflect the actual insurance proceeds received. The Applicant appealed, arguing that the Deductible Buy Back was not an insurance policy, but rather a self-financing vehicle and the amount adjusted should be reinstated. FEMA Region VI Regional Administrator denied the appeal, finding that the Deductible Buy Back coverage was an insurance policy and the reductions in the PWs were appropriate to avoid a duplication of benefits. On second appeal, the Applicant argues that any eligible losses incurred by the Applicant and indirectly financed by it through its risk management mechanism, provided by the Applicant’s wholly owned captive, is eligible.
Authorities and Second Appeals
- Stafford Act § 312.
- 44 C.F.R. § 206.250.
- PA Guide, at 41, 119.
- Roman Catholic Diocese of Brooklyn, FEMA-4020-DR-NY.
- Stafford Act § 312 prohibits an applicant from receiving public assistance where it has received financial assistance under its insurance or any other source.
- The Applicant’s Deductible Buy Back protection was an insurance policy held by the Applicant’s wholly owned subsidiary, its captive insurance company. As such, it would constitute a duplication of benefits.
- Pursuant to FEMA policy, if the Applicant receives insurance proceeds for both eligible and insured ineligible damages, such as property and business income losses, without specifying limits for each type of loss, FEMA will apportion eligible costs between the two based on the ratio of insured eligible to insured ineligible damages, similarly, deductibles are apportioned in the same manner.
- The Applicant received proceeds for both eligible property damage and ineligible business interruption loss and FEMA appropriately apportioned the proceeds.
- Pursuant to 44 C.F.R. § 206.250(c), FEMA is required to deduct actual and anticipated insurance recoveries from otherwise eligible costs.
The costs for water cleanup on PW 12171 were covered by the Applicant’s insurance policy and the corresponding insurance deduction was correct.
W. Nim Kidd
Texas Department of Public Safety
Division of Emergency Management
P.O. Box 4087
Austin, TX 78773-0220
Re: Second Appeal – Christus Health, PA ID: 000-UW4X1-00, FEMA-1791-DR-TX,
Multiple Project Worksheets (PWs) – Duplication of Benefits – Insurance
Dear Chief Kidd:
This is in response to a letter from your office dated November 10, 2017, which transmitted the referenced second appeal on behalf of Christus Health (Applicant). The Applicant is appealing the Department of Homeland Security’s Federal Emergency Management Agency’s (FEMA) reductions for insurance proceeds on 16 PWs.
As explained in the enclosed analysis, I have determined that the Applicant’s Deductible Buy Back is an insurance policy and the proceeds the Applicant received from it were correctly deducted by FEMA. In addition, FEMA’s apportionment of the insurance deductible among the facilities covered by the PWs was correct. Accordingly, I am denying this appeal.
Please inform the Applicant of my decision. This determination is the final decision on this matter pursuant to 44 C.F.R. § 206.206, Appeals.
Public Assistance Division
cc: George A. Robinson
FEMA Region VI
In September 2008, several medical facilities owned and operated by Christus Health (Applicant) were damaged by Hurricane Ike. The Applicant, a Private Nonprofit, requested Public Assistance (PA) from FEMA to address damage to five of its facilities. FEMA captured the damage in 16 Project Worksheets (PWs), and reduced estimated costs for anticipated insurance proceeds. After receiving closeout requests for four of the PWs in 2013, FEMA placed the requests on hold, pending receipt of documentation showing the Applicant’s final insurance settlement. In December 2014, the Texas Division of Emergency Management (Grantee) notified FEMA that the Applicant received the final insurance proceeds and submitted all settlement documentation to the Agency.
At the time of the disaster, the Applicant carried a $500 million all-risk property and casualty insurance policy subject to a named storm limit of $100 million. This coverage was provided by a consortium of commercial property insurers, and is referred to as the Applicant’s Insurance Policy. The policy coverage also included damages related to flood, time element losses such as business interruption, and extra expense that included expenses to reduce loss. The deductible for a named storm was calculated at 3 percent of the total insured value of the property affected, and 3 percent for the 12 month period following the occurrence for business interruption, subject to a $5 million minimum and $10 million maximum.
The Applicant’s Attestation of Affiliation states that the Applicant restructured its self-funded insurance program to include a wholly owned captive company domiciled in the Cayman Islands. This captive, Emerald Assurance Cayman, LTD (Emerald), is one of the insurance companies that makes up the Applicant’s $500 million all-risk property and casualty coverage. The first Emerald policy, known as Emerald Quota-Share Policy, participated in the indemnification of the Applicant insured losses. The Applicant’s second policy through Emerald, a Deductible Buy Back policy, covered the primary insurance policy’s deductible depending on the type of covered loss, so that no affiliate paid more than a $250,000.00 deductible (Policy EAC0068-01). The policy lists the Applicant as the named insured as well as affiliated or subsidiary companies, corporations, doing business as (d/b/a), joint ventures and any owned or controlled companies where it maintains interest. The Applicant’s affiliates are required to contribute a portion of the total assessed deductible contribution from the entity’s individual operating account. The annual policy premium is $500,000.00 and it indemnifies the Applicant for all losses up to the maximum limit of $10 million in any one occurrence and provides a schedule of deductibles applied for each affiliate location based on its Total Insured Value.
The Applicant submitted the amounts of insurance proceeds received for the five facilities under the 16 PWs to FEMA, including $43,866,090.81 from its commercial policy (reflecting the $10 million deductible subtracted), and $8,663,223.19 from Emerald’s Deductible Buy Back. FEMA amended the PWs to reflect the actual insurance proceeds received, decreasing the total obligated amount by $1,742,139.25 (reflecting FEMA’s apportionment of the property damage deductible, versus ineligible business interruption and other unrelated claims, at the five facilities under the Deductible Buy Back). FEMA notified the Grantee in a February 11, 2016 letter of the adjustments. The Grantee transmitted the notification to the Applicant in a July 28, 2016 letter.
The Applicant appealed FEMA’s adjustments in a letter dated September 30, 2016, requesting $1,742,139.25 in funding. The Applicant claimed that FEMA did not correctly interpret the claim settlement agreement (CSA). The Applicant noted its deductible is capped at $1 million per event, and the deductible for a named storm or related flood is calculated as 3% of the total insurance value of the property affected by the storm, subject to a $5 million minimum and a $10 million maximum. Accordingly, to fund the deductible, the Applicant established a self-funded coverage mechanism administered by Emerald, a wholly-owned captive. The Applicant argued that because Emerald is not licensed as an insurer in any of the United States of America and could not conduct insurance activities in any such jurisdiction (and is a controlled foreign corporation for federal income tax purposes), that it should not be considered an insurance company for purposes of this appeal.
Instead, the Applicant claimed that Emerald is the primary risk finance vehicle for the Applicant and provides a structure for self-funding various types of financial exposures for it and its affiliates, subsidiaries, members, joint ventures, and managed entities. The Applicant encouraged FEMA to apply generally accepted accounting principles when assessing Emerald’s relationship to the Applicant. It highlighted that Emerald provides deductible buy back property loss protection within the deductible or retention amount that the Applicant is required to carry by its commercial property insurers and accordingly, serves as the financial vehicle from which money is paid to cover any shortfall. In addition, the Applicant believed that FEMA headquarters has previously and consistently found in second appeal decisions that insurance deductibles incurred and paid in a manner analogous to those in this instance were eligible, and urged FEMA to find no duplication of benefits here. The Grantee concurred in a September 30, 2016 letter.
FEMA sent the Applicant, through the Grantee, a Final Request for Information (RFI) on February 16, 2017. FEMA stated that its review of the documentation showed the policy in question constituted insurance because the issuer of the policy indemnified the Applicant against loss. FEMA also noted that while the Applicant argued the adjustment of deductibles for business interruption coverage was not appropriate, the CSA between the Applicant and insurers included both property loss and business interruption claims. Accordingly, when insurance covers both, FEMA policy requires the proceeds be apportioned and deductibles will likewise be apportioned in the same manner. FEMA requested any information the Applicant believed should be considered in light of the Agency’s review.
The Grantee and Applicant both responded on May 5, 2017. The Applicant argued that FEMA misunderstood the agreement it has with Emerald, which is a system of retained risk or self-insured retention. The Applicant contended that the crux of FEMA’s 2015 Recovery Policy, Public Assistance Policy on Insurance, is whether an applicant receives benefits from another source, but the policy did not apply to funds that the applicant provided back to itself. The Applicant explained that although entities can maintain an account to reserve money for deductible payments, a common method of financing risk retention is to establish a wholly-owned subsidiary, known as a captive. A captive serves as a vehicle to collect and hold reserve funding for use to pay the deductible obligations of its parent company. And, the Applicant claimed that while captives use insurance terminology and have the appearance and formalities analogous to insurance, the retention of risk through a captive is not insurance. The Applicant also pointed to FEMA’s Public Assistance Policy on Insurance to demonstrate that its captive was equivalent to a rainy day fund or a self-insured retention fund.
The Applicant also cited to the U.S. Supreme Court case, Helvering v. LeGierse, which holds that for a transaction to constitute insurance, it must include risk, shifting of risk, and distribution of risk. The Applicant explained that in LeGierse, the Court needed to examine the economic consequences of a captive arrangement with the insured to see if the risk had shifted. In applying the same standard here, the Applicant found there was no shifting of risk present because the effect of the loss on the Applicant was not negated by the transaction with Emerald – the funds were internally designated as assets of Emerald on the Applicant’s consolidated balance sheet.
In addition, the Applicant claimed FEMA’s adjustments based on the Applicant’s insurance settlement were incorrect, in that FEMA reduced the funding based on applying more insurance proceeds than originally listed in order to allocate the recognized deductibles between eligible and ineligible losses. As such, the Applicant submitted information to reinstate funding. Finally, the Applicant requested reimbursement for costs captured as emergency work on PW 12171, which it argued was not covered by its insurance. The Applicant therefore revised its appeal amount in dispute to $5,791,118.21.
The FEMA Region VI Regional Administrator (RA) denied the appeal on September 4, 2017. The RA determined that the Deductible Buy Back coverage involved the issuer (Emerald) indemnifying the Applicant against loss, which constituted insurance. The RA found that the policy with Emerald met the ordinary meaning of insurance, and in addition to indemnifying the Applicant for all losses up to $10 million, it also designated an annual premium and a specific deductible schedule. The RA referred to FEMA’s 2015 Second Appeal Analysis, Roman Catholic Diocese of Brooklyn, which also involved an insurer wholly owned by an applicant. In Roman Catholic Diocese of Brooklyn, FEMA found that the proceeds paid by the applicant’s wholly-owned subsidiary, under an agreement to indemnify the applicant for losses, was insurance and constituted a duplication of benefits. The RA also noted that Roman Catholic Diocese of Brooklyn addressed the Applicant’s argument that the case of LeGierse excluded the Emerald policy from amounting to insurance because of how the case defined insurance. The RA cited to FEMA’s conclusion in Roman Catholic Diocese of Brooklyn to determine that LeGierse was specific to federal income tax collected by the Internal Revenue Service and instead looked at the specific facts of the appeal to determine if a duplication of benefits existed.
The RA also determined that FEMA correctly apportioned the deductibles because the insurance proceeds covered both eligible property damage and ineligible business interruption losses and the deductible was apportioned based on the ratio of the Applicant’s eligible actual losses. The RA found that the insurance reductions on the 16 PWs totaled $30,676,146.32, which was less than the $33,573,486.00 amount of proceeds attributable to the property damage at the five locations associated with the PWs. Last, the RA determined that the Applicant’s insurance policy covered the emergency work costs documented in PW 12171.
In its second appeal dated November 8, 2017, the Applicant requests FEMA grant the appeal and reiterates its prior arguments from its first appeal and its response to FEMA’s RFI. In sum, the Applicant argues that any eligible losses incurred by the Applicant and indirectly financed by its risk management mechanism, the wholly-owned entity, Emerald, is eligible, because Emerald and the Applicant are considered the same source under The Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act) (which prohibits funding that would duplicate benefits received from another source). The Applicant distinguishes its risk management structure from that in Roman Catholic Diocese of Brooklyn, in that Emerald is not considered an insurance company and is not state regulated, since Emerald is expressly excepted from the definition of insurance carrier as promulgated by the Texas Legislature and Texas State Insurance Code (which does not find that captives that insure solely the risks of the parent or affiliated companies amount to the business of insurance). Rather, Emerald is classified as a Class B(i) entity under Cayman Islands’ law, which means that at least 95 percent of the net premiums written by Emerald will originate from the Applicant. The Applicant equates its arrangement with Emerald with a rainy day fund (which is not considered a duplication of benefits under FEMA’s Public Assistance Policy on Insurance), as the Applicant’s annual deductible reserve is an accounting designation by the Applicant. It argues that FEMA must look beyond the face of a document (referring to the RA’s reliance on the terms of insurance in the Emerald policy), and consider the intent of the parties, which was to create a risk retention. In support thereof, the Applicant pointed to several second appeal decisions issued by FEMA, in which the Agency found such arrangements not to be a duplication of benefits.
The Applicant directs FEMA to other court cases it cites that came both before and after LeGierse to show that the Supreme Court has reviewed arrangements in other contexts to determine if they constitute insurance, specifically deciding on what risks were present and if the risks were transferred. The Applicant again argues that FEMA miscalculated the amount of the apportioned deductibles and requests apportionment of the full deductible and that FEMA applied more in actual insurance proceed deductions than actual proceeds received for several facilities. The Grantee concurs in a November 10, 2017 letter.
Deductible Buy Back
Pursuant to Stafford Act § 312, “… no such person, business concern, or other entity will receive such assistance with respect to any part of such loss as to which he has received financial assistance under any other program or from insurance or any other source.” Section 312 prohibits FEMA funding for items of work covered by insurance. In addition, Title 44 of the Code of Federal Regulations (44 C.F.R.) § 206.250 states “actual and anticipated insurance recoveries shall be deducted from otherwise eligible costs.”
At the time of the disaster, the Stafford Act did not define insurance. However, when a term goes undefined in a statute, courts give the term its ordinary meaning. Black’s Law Dictionary defines “insurance” as “a contract whereby, for a stipulated consideration, one party undertakes to compensate the other for loss on a specified subject by specified perils.” In addition, Merriam-Webster dictionary defines “insurance” as “coverage by contract whereby one party undertakes to indemnify or guarantee another against loss by a specified contingency or peril.” In 2015, FEMA issued a Recovery Policy on Insurance, which defined insurance as a “risk transfer from the insured to an insurer, where the insured agrees to pay a premium to the insurer, and in return the insurer agrees to reimburse the insured for covered losses to a property or properties if the losses are caused by designated hazards or perils. Insurance may also generally refer to this system of risk transfer.”
A captive is generally defined as an insurance company that is wholly owned and controlled by its insureds with a primary purpose to insure the risks of its owners. Its insureds benefit from the insurer’s underwriting benefits. The use of captives as an “insurance vehicle” is used throughout the risk management and insurance industry, including the International Risk Management Institute, Inc. By definition, a captive is an “insurance company” formed to insure the risks of an affiliated business. As described by the insurance industry, there are many advantages in a business forming a captive that includes financial benefits such as: tax benefits; underwriting discounts and profits; secured loans to affiliates; with investment income and dividends going back to its affiliates.
The Applicant states it reserves $5 million in operating funds on its consolidated balance sheet to be designated to Emerald as funding for payment of the deductibles. The Applicant equates this reserve as a rainy day fund and argues that it does not constitute insurance because the retained deductible does not shift risk or distribute the risk of loss. FEMA’s review finds that the Applicant’s Consolidated Financial Statement does not specifically identify where the claimed $5 million reserve account is located, nor does it account for the $10 million benefit received. Of note, included in the financial statement are assets of the captive insurance company, internally designated funds, and investment income. The Applicant’s Consolidated Financial Statement also notes that Emerald was incorporated in the Cayman Islands and is licensed as an insurer and regulated by the Cayman Island Monetary Authority. Accordingly, FEMA finds that Emerald operates as an insurance company and enjoys the benefits of an insurance company, as evidenced by its membership as an insurance company with the Captive Insurance Companies Members in Insurance Managers Association of Cayman (IMAC).
The Applicant asserts that the Deductible Buy Back policy is equivalent to setting aside a reserve account or a rainy day fund. However, the formalized creation of a captive insurance company to acquire a deductible buy back policy would not be considered a rainy day fund, which is defined as funds set aside to be used during a time of revenue or revenue shortfalls or budget deficits and is to be used in unforeseen emergencies and implies there is no established or specified use of the funds. The Applicant’s Deductible Buy Back policy is a formal insurance policy as a captive transaction written by the captive insurer that indemnifies its insureds (affiliates). The insureds or affiliates contribute to the premium from their individual operating funds and receive a benefit of a reduced deductible obligation. FEMA finds that receiving proceeds from this captive insurance created by the Applicant, wholly owned or not, is receiving funds from another source.
The Applicant also tries to distinguish itself from the applicant in Roman Catholic Diocese of Brooklyn, in which FEMA found that the Applicant’s secondary policy covering the primary policy’s deductible was insurance, not a rainy day fund, and thus a duplication of benefits existed. Here, like in Brooklyn, the proceeds paid by the applicant’s wholly-owned subsidiary, under an agreement to indemnify the applicant for losses, is insurance and FEMA is prohibited from providing assistance that would be duplicative. The Applicant also cites to several other FEMA second appeal decisions. However, the Applicant equates its Deductible Buy Back to arrangements in other appeals, which were retention funds or self-insured retention funds. As noted previously, the policy in this instance is a captive insurance policy and not a retention fund.
In addition, the definition of insurance used in LeGierse is specific to federal income tax collected by the IRS. As the RA noted, the LeGierse decision is limited to interpreting the Revenue Act of 1926 and not explicitly applicable to other statutory authority. However, the Applicant argues that beyond LeGierse, other Supreme Court cases find that where no transfer of risk occurs, an arrangement is not insurance. In support thereof, the Applicant also cited to FEMA’s Public Assistance Policy on Insurance definitions. However, as noted previously, where the Emerald insurance policy is one that a net income is drawn from, both from net premiums earned and investment income, and it indemnifies and compensates the Applicant for losses incurred if certain conditions were met, the risk is transferred.
Even if, arguendo, FEMA were to determine that the Emerald Deductible Buy Back policy is not “insurance,” Section 312 of the Stafford Act still applies because it clearly states financial assistance from “any other source” duplicates benefits if it is used for the same project funded by FEMA funds. “Any other source” includes any source from which a financial benefit covering the same purpose would derive, including a private contract, such as the one at issue in this appeal. Accordingly, the proceeds from the captive Buy Back Policy would be considered another source of funding.
Apportionment of Insurance Proceeds
Pursuant to FEMA policy, if the Applicant receives insurance proceeds for both eligible and insured ineligible damages such as property and business income losses, without specifying limits for each type of loss, FEMA will apportion eligible costs between the two based on the ratio of insured eligible to insured ineligible damages.  Similarly, deductibles are apportioned in the same manner. The Applicant received insurance proceeds for both eligible property damage and ineligible business interruption losses as documented in its insurance settlement. FEMA’s Closeout Insurance Review Narrative shows FEMA considered proceeds received for eligible property damage and ineligible business interruption losses in its adjustments for insurance reductions. FEMA identifies two issues with the Applicant’s insurance settlement that FEMA was required to consider in determining the appropriate apportionment calculation. First, FEMA notes that the insurance settlement received was allocated by locations (that included multiple buildings) and not by building as FEMA requires for PW project formulation. Second, the Deductible Buy Back policy specified it applied to both property damage and business interruption losses. Accordingly, FEMA was correct in its determination of the apportionment ratio considering both eligible property damage and ineligible business interruption losses, both with the proceeds received and also deductible received.
PW 12171 – Damage Description and Dimension and Scope of Work
Pursuant to 44 C.F.R. § 206.250(c), FEMA is required to deduct actual and anticipated insurance recoveries from otherwise eligible costs. Under PW 12171, the Applicant performed emergency protective measures at one of its facilities, St John Hospital. The work performed by the hospital staff included moving equipment, relocating essential materials and assisting in immediate cleanup. The work was for water damage cleanup to prevent further damage to the facility. During FEMA’s closeout insurance review, it was determined the costs were covered by insurance and deducted the amount of $469,734.96 as actual insurance proceeds. The Applicant maintains that it did not receive insurance proceeds from this cost. However, the Applicant’s Insurance Policy indicates this type of work is covered by the policy under “Expenses to Reduce Loss” and under “Extra Expense.” In response to the Applicant requesting FEMA consider the deductible for this cost, review of the Closeout Review shows that the deductible was awarded under another PW (14879) for that location. As such, the insurance reduction was appropriate.
The Applicant has not demonstrated that the Deductible Buy Back policy is not insurance. Emerald is a captive insurance company and proceeds received from the Deductible Buy Back policy would be considered a duplication of benefits. FEMA’s determination of the apportionment ratio considered both eligible property damage and ineligible business interruption losses, and also deductibles, as required by FEMA policy. And, as the Applicant has not demonstrated that its all-risk policy for property and business losses did not cover the work performed in the PW 12171 for water cleanup, the insurance reduction is appropriate. Consequently, the Applicant’s second appeal is denied.
 The Facilities and Project Worksheets (PWs) associated are: St Mary Hospital – PWs 14876, 14880, 14887; St. Elizabeth Hospital – PWs 14865, 14866, 14871, 14878, 14888, 14889; St. John Hospital – PWs 12171, 14867, 14879, 14898, 14900; Bridgestone Building – PW 14836; and, Dubuis Hospital – PW 10331.
 The proceeds from the Deductible Buy Back included costs for damage to other facilities where the Applicant did not request PA from FEMA, as well as for business interruption losses, which are ineligible for funding.
 Letter from V.P., Risk Finance, Christus Health, to Recovery Div. Dir., FEMA Reg. VI, at 7 (May 5, 2017) (citing Helvering v. LeGierse, 312 US 531, 539 (1941)).
 The RA justified this lesser insurance reduction amount because the 16 PWs estimated the total eligible repair costs at the five hospitals as $31,225,482.32 in aggregate. Rather than reduce the full amount of proceeds which would result in zero-dollar PWs, FEMA reduced to a lesser amount to fund the anticipated remaining deductibles. However, the Grantee had not yet completed and submitted its financial compliance reviews.
 Letter from V.P., Risk Finance, Christus Health, to Asst. Adm’r, FEMA, at 15 (Nov. 8, 2017).
 FEMA Recovery Policy, Public Assistance Policy on Insurance, FP-206-086-1, at 2 (June 29, 2015).
 The Robert T. Stafford Disaster Relief and Emergency Assistance Act of 1988, Pub. L. No. 93-288, § 312, 42 U.S.C. § 5155 (2007) (emphasis added).
 44 C.F.R. § 206.250(c) (2007).
 FEMA Second Appeal Analysis, Roman Catholic Diocese of Brooklyn, FEMA-4020-DR-NY, at 3 (Mar. 31, 2015) (citing Taniguchi v. Kan Pacific Saipan, Ltd., 132 S. Ct. 1997, 2002 (2012) (in turn, citing Asgrow Seed Co. v. Winterboer, 513 U.S. 179, 187 (1995))).
 Black’s Law Dictionary 10th ed., at 920 (May 9, 2014).
 FEMA Recovery Policy FP 206-086-1, Public Assistance Policy on Insurance, at 2 (June 29, 2015).
 Principles of Risk Management and Insurance, American Institute for Property and Liability Underwriters, Inc. 1981, at 139; Black’s Law Dictionary, at 921 (defining a “captive” as “captive insurance – 1. [i]nsurance that provides for the group or business that established it. 2. [i]nsurance that a subsidiary provides to its parent company, usu. So that the parent company can deduct the premiums set aside as loss reserves.”).
 Consolidated Financial Statements (Oct. 20, 2009).
 Id. at §12. Self-Funded Liabilities, at 37.
 Merriam-Webster (Mar. 22, 2018, 11:57 AM), www.merriam-webster.com/dictionary/rainy%20day%20fund.
 Physical Loss or Damage Insurance, Emerald Assurance Cayman, Ltd. Policy No. EAC006B-01, Deductible Buy Back, at 7 (Sept. 30, 2008) [hereinafter Deductible Buy Back] (stating, “[w]e will not indemnify more than $5,000,000.00 in any one occurrence subject to any applicable sub-limits of insurance…the total liability for all occurrences and coverages combined is subject to a policy aggregate of $10,000.000,00…[w]e will not indemnify more than the difference between the applicable Deductible and [$1,000,000.00] combined for all coverages in any one occurrence, except…[w]e will not indemnify more than 40% (pro rata portion of 100%) of the difference between the applicable Deductible and 3% of the property insured at the location where the physical damage occurred and 3% of the full 12 months Time Element values that would have been earned in the 12 month period following the occurrence by use of the facilities at the location where the physical damage occurred.”).
 Id. at 3 (stating that the annual premium is $500,000.00).
 Roman Catholic Diocese of Brooklyn, FEMA-4020-DR-NY, at 3 (stating “At the time of the disaster, the Applicant’s policy with PTIC [the Applicant’s wholly owned insurance], entitled Contractual Indemnification Policy Declarations, stated that PTIC would indemnify the Applicant for all losses attributable to its obligations under deductibles and self-insured retentions with respect to primary commercial property. Based on the ordinary meaning of ‘insurance,’ the policy between the Applicant and PTIC does constitute insurance because it is a contract whereby PTIC agreed to indemnify and compensate the Applicant for losses incurred if certain conditions were met. In addition, the Applicant’s assertion that the PTIC policy is equivalent to self-insurance or a ‘rainy day fund’ because PTIC is wholly owned by the Applicant is not supported by the facts. PTIC was incorporated on August 31, 2004 under the laws of the State of New York as a stock company. As such, PTIC issues 100,000 shares of $1 par value per share common stock. PTIC was formed to insure the Applicant (the parent) and its affiliates for various risks as a means to fund such potential losses. PTIC was formed under Articles of Incorporation and must comply with set by-laws. PTIC’s net income is drawn from, both, net premiums earned and investment income. Finally, although the Applicant argues PTIC is not an insurance company, it is subject to the insurance laws of New York State. For example, in 2012, PTIC was examined by a New York State Senior Insurance Examiner who issued a Report of Examination. It must be noted that throughout the Report, the examiner refers to PTIC’s operations as “insurance.” Accordingly, the Acting RA correctly concluded that PTIC is an insurance company that provided an insurance policy to the Applicant.”).
 See Roman Catholic Diocese of Brooklyn, FEMA-4020-DR-NY, at 2.
 See Public Assistance Guide, FEMA 322 at 41 (June 2007) [hereinafter PA Guide] (stating “An applicant may not receive funding from two sources for the same item of work”; see also, City of Chicago v. FEMA, No. 08 CV 4234, 2013 U.S. Dist. LEXIS 41633, at *17-19 (N.D. Ill. Mar. 21, 2013) (holding that FEMA’s determination that a contract for snow removal services constituted duplicate benefits was a reasonable interpretation of the Stafford Act).
 See Roman Catholic Diocese of Brooklyn, FEMA-4020-DR-NY, at 3 (citing City of Chicago, 2013 U.S. Dist. LEXIS at *21).
 PA Guide, at 119 (June 2007).
 FEMA’s Closeout Insurance Review Narrative (June 26, 2014).
 See Supra FN 21.
 The Applicant also asserts that FEMA applied more in actual insurance proceeds than received and provides two examples, St John (Multiple PWs) and Bridgestone (PW 14836). Regarding Bridgestone, the Applicant refers to the CSA accepted by FEMA that shows a $583,797.00 insurance settlement for property damage (and asserts that it received claim preparation fees and clinical engineering costs, but was not allocable to the property damage). This document shows the $583,797.00 and a reallocated amount of $1,040,645.00. The total amount of insurance proceeds received for Bridgestone (less a $50,000 deductible) is listed as $1,574,441.00. The applicant asserts the total property insurance proceeds received was $475,417.69. FEMA has taken a total insurance reduction in the amount of $1,095,256.36. FEMA’s February 11, 2016 insurance review letter includes the “Adjustments to Insurance Reductions Closeout Insurance Review,” in which the Agency states that the PW was originally obligated with the assumption that a $150,000.00 deductible was an eligible cost. The insurance settlement documentation submitted by the applicant showed the deductible for this affiliate was actually $50,000.00. Both the anticipated insurance proceeds and actual insurance proceeds reduction taken was for $995,256.36. An additional reduction of $100,000.00 was applied to correct the deductible amount. This supports FEMA’s reduction of $1,095,256.36. In the Applicant’s Attestation for Duplication of Benefits, dated July, 10, 2013, the Applicant signed for the amount of $995,256.30. In addition a PW Change Request Amendment (June 27, 2014) states the direct administrative costs of $5,000.00 was not properly documented, and thus not eligible. The Applicant submitted a signed document stating it collected insurance proceeds from various commercial insurance policies and the amount of the anticipated insurance proceeds on the original project cost was the amount received. These documents are dated after the initial settlement agreement. In addition, the Applicant asserts with regard to the St John Locations, (PWSs 14867; 14879; 14898; 14900) that the property insurance proceeds received totaled $18,982,814.80 and the insurance reductions applied totaled $21,925,564.42, with an overage of $2,942,949.62. As with Bridgestone, the Applicant signed the “Attestation for Duplication of Benefits” on July 10, 2013 for two of the PWs at issue confirming amount of insurance proceeds received for project cost. For example, for PW 14867 the Applicant signed and confirmed an amount received of $1,441,271.87. With regard to PW 14879, the Applicant signed and confirmed an amount received of $18,532,319.86. The facility deductible of $250,000 was applied to this PW. The pro rata deductible allocation of $164,618.00 adjusted the amount to $18,532,319.86. FEMA’s reductions in these two examples are supported in the Insurance Closeout Review and the Closeout Insurance Review – Adjustments to Deductibles: (1) PW 14898 $285,202.84 (2) PW 14900 $1,666,769.85. The actual insurance reductions for the four PWs totaled $21,925,564.42 (there are five additional PWs under this St. John location that were not identified at issue and not reviewed. The Summary of Negotiated Settlement by Location combines the total insurance settlement received by the location. For St. John, the total amount of insurance proceeds received for Property Damage supported is $23,310,261.00 (less the applicable facility deductible. Accordingly, the applicant has not supported their assertion that FEMA has misapplied actual insurance proceeds.
 Deductible Buy Back, Section D(f), at 9 (stating, under expenses to reduce loss – will indemnify reasonable and necessary expenses incurred to reduce the amount of business income loss and continue normal business operations) and Section J., at 14 (stating, under extra expense – will pay for additional reasonable and necessary in an effort to continue normal operations which are interrupted due to direct physical loss or damage from Covered Cause of loss to covered property).