Federal disaster relief officials are keeping a closer eye on companies that help it provide flood insurance, following allegations by Hurricane Sandy victims that claims were denied or underpaid based on manipulated engineering reports.

A spokesman for the Federal Emergency Management Agency said Monday the agency is notifying insurers it will more closely monitor engineering firms hired to help inspect homes and funds paid to cover their expenses.

Dozens of private insurers participate in a program to help the agency provide flood insurance. The federal government ultimately pays damages and expenses associated with handling claims.

Rafael Lemaitre, a spokesman for the agency, said in an e- mailed statement that “pending further guidance” FEMA will review and approve all proposed engineering costs from insurers. The goal is to ensure that the companies are “fulfilling their role by guaranteeing that taxpayer funds are being appropriately expended and their work is consistent with putting policyholders first,” he said.

FEMA will “not fund or approve work with any engineering firms that are known to have values that differ from FEMA’s survivor-centric approach,” Lemaitre said.

FEMA’s Action

The agency last week asked insurers to step aside in settlement talks over more than 1,000 outstanding disputes primarily in New York and New Jersey. The talks involve claims from the October 2012 storm, which caused massive coastal flooding in the Northeast.

The agency said it would take charge of the discussions in an effort to speed up the resolution of claims, which have been mired in controversy over allegations reports were rigged to avoidinsurance payouts.

The issue came to light in a case over an insurance claim for a Long Beach, New York, house which owners said was severely damaged by flooding during the hurricane. An insurer rejected part of the claim, citing a report which attributed much of the damage to long-term problems. A judge found that an earlier draft of the report, not initially disclosed to the homeowners, had been rewritten to change the conclusion.

Insurers have denied using manipulated reports, saying they have no reason to cheat homeowners because FEMA pays the claims. Engineering firms say there’s nothing suspicious about peer- reviewed revisions to their first-draft damage reports.

The case is Ramey v. U.S. Forensic LLC, 2:14-cv-06861, U.S. District Court, Eastern District of New York (Central Islip).