BATON ROUGE, La.—Louisiana insurance regulators and federal officials Tuesday reached an agreement under which public entities that sustain damage in multiple disasters could obtain federal financial aid to cover some uninsured damages in every loss, a state consultant said.

The terms of the agreement would provide less federal aid than Louisiana officials had hoped their program would provide for public entities. But until Tuesday, state officials had said officials with the Federal Emergency Management Agency were indicating that the state's program would not allow inadequately insured public entities to recover any federal aid in second and subsequent disasters.

The Louisiana Insurance Department created the program last year in response to FEMA's announcement that it would follow federal law more strictly by not providing aid to inadequately insured public entities that sustained damage to the same properties for which FEMA previously provided aid after a national disaster of the same nature.

FEMA backed off its intention last year after a storm of protest from risk managers, but the agency reinstituted its aid plan this year. FEMA officials contend that the federal Robert T. Stafford Disaster Relief and Emergency Assistance Act always had directed the agency to determine aid in that manner but that the agency had not always followed the law.

Under Louisiana's plan, public entities that cannot find enough flood or wind insurance to meet FEMA's insurance requirements could apply for a waiver from the requirements. The Insurance Department would certify that a public entity is eligible for the waiver if the entity could show that it has spent a prescribed percentage of its budget on insurance and still has not met FEMA's insurance requirements. The percentage of a budget that must be spent on insurance varies, depending on the type of public entity.

Under Tuesday's agreement, public entities that obtain the state certification that they could not buy adequate insurance and then sustain damage in a subsequent disaster would be eligible for FEMA aid to cover a portion of their uninsured damages. But FEMA would reduce that aid by the amount of the insurance deductible that the public entity faced at the time of the previous disaster, said Dan Jilek, a Baton Rouge, La.-based insurance specialist with James Lee Witt Associates who consults with the Louisiana Governor's Office of Homeland Security and Emergency Preparedness. Mr. Jilek conducts the first reviews of waiver applications and then sends them to the Insurance Department for separate reviews.

The state does not agree with that interpretation, Mr. Jilek said. It will look for support for its position in numerous rulings issued by FEMA on appeals filed by various public entities that have disagreed with agency aid determinations after earlier disasters, Mr. Jilek said. State officials hope any support for its position would convince FEMA officials to cover all uninsured costs for public entities that obtained a state waiver, he said.

While the state and FEMA do not have an adversarial relationship, the state would take its case to Congress if FEMA does not modify its position, Mr. Jilek said.

At that time, the state also would ask Congress to clarify its intentions with other Stafford Act provisions, Mr. Jilek said.

For example, FEMA interprets the act to mean that the agency must reduce its aid to an inadequately insured public entity without a state waiver after a subsequent disaster by far more than state officials think is reasonable. FEMA would reduce its aid by the amount of damage the entity sustained in the first disaster rather than by the amount of aid FEMA provided after the earlier event (BI, Aug. 25, Aug. 4).