On a cold rainy day last fall, dozens of people gathered in a plaza across the street from New Jersey's state Capitol. They held press conferences and slept overnight in lawn chairs.

Everyone had come to make the same point: They'd made it through Superstorm Sandy, which hit the shores of New Jersey and New York in October 2012. But three years later, many hadn't made it home.

Doug Quinn, a 51-year-old from Toms River, N.J., had been in the plaza for two days.

"I should be at home in my house and part of my community and instead I'm here doing this," said Quinn. "I thought it'll be all right; my insurance will take care of what needs to be taken care of and I'll be back home in three to four months. It's [been] three years and I'm still not anywhere close. I look back now and think how naive I was."

Superstorm Sandy wasn't a disaster for everyone, though. For some, it was big money.

NPR and the PBS series Frontline have spent the past year investigating the business of disaster and have uncovered a complex system in which private companies profit and homeowners and clients suffer.

At the center of that system is the National Flood Insurance Program, which is designed to help in disasters like Sandy. Almost everyone with a mortgage who lives near water pays for flood insurance through the program, so more than three years later most residents expected to be home.

But in many cases that didn't happen. While thousands of homeowners like Quinn said they have not received the recovery help they need, our investigation found that their private insurance companies that administer the government's flood program made as much as an estimated $240 million to $406 million in profit annually over the past four years.

We reached out to flood insurers — including some of the nation's largest firms — that represent the majority of homeowners affected by the storm and all declined to comment on this story. Records show that nearly 80 firms participate in the government's flood program.

Robert Hartwig, head of an industry group funded by the insurance companies, said insurance companies price their services to make a reasonable profit, like any business.

"It is always going to be the case — in the event of a major catastrophic loss where hundreds of thousands of people will have seen damage or complete destruction of their property — in some instances that they will believe they are due more than in fact the claim was ultimately adjusted for," he said.

"This is a fee-for-service operation," said Hartwig, president of the Insurance Information Institute. "The federal government determines what the appropriate payment is."

Still, FEMA's top flood official acknowledged that the program needs fixing and told NPR and Frontline that he is pursuing reforms. Government auditors asked the Federal Emergency Management Agency seven years ago to impose stricter oversight of the program, including insurers' profit margins. But little has been done.

"What I can tell you is that I am focused on those policyholders and insuring that they get the resources and the payouts they are entitled to," said Roy Wright, who runs FEMA's flood program. He acknowledged that the program does not provide enough oversight of the firms. "Because when I go back and look, while we were providing oversight, it was not enough."

And after our reporting, FEMA announced Monday it will include more transparency in and oversight of the National Flood Insurance Program. That includes overhauling its contracts with private insurance companies and assigning a person to help policyholders through an appeals process.

'The Game Was Stacked Against Us'

To understand the challenges homeowners are facing, we set out for Toms River, N.J., where Quinn's house used to be.

The night of the storm, a wall of water surged across his lot, swamping Quinn's foundation and most of his first floor. State officials said his house had to come down, so he had it razed.

Quinn had the maximum flood insurance policy — $250,000 in coverage.

But when the letter arrived from the insurance company, he didn't get $250,000. He got $90,000.

That wasn't enough to rebuild his home. Now, more than three years later, he is still paying the mortgage on this nonexistent home while he rents the house he lives in now.

"I knew right off the bat that something was wrong," he says. "I did not realize that the game was stacked against us and there really was no way to win."

If it was a game, he wasn't the only player. Thousands of homeowners across New York and New Jersey were underpaid. Some got just a fraction of their policies.

FEMA runs the government flood program. But it doesn't write the policies or manage the claims. It pays private insurance companies fees to do that work.

When homeowners buy flood insurance, they pay a fee that doesn't actually stay with the insurance company. It goes into a pot of money to the flood program. After a disaster, the insurance companies that participate in the flood program decide how much a homeowner will receive. They then pay homeowners using the pot from the program.

When that money runs out, as it has during big disasters in recent years, taxpayers pay the rest.

In theory, homeowners shouldn't be shortchanged because the insurance companies are only acting as a middleman between FEMA and the homeowners making claims, essentially contracting with the government to evaluate damage and assess compensation.

And yet in the months and years after Superstorm Sandy, hundreds of homeowners in New York and New Jersey filed lawsuits claiming that not only were they shortchanged by their flood insurance, but they were cheated.

'A Noticeable Sea Change' In Insurer Attitudes

David Charles, an insurance adjuster who represents homeowners, says he had always loved his job and never had any problems with insurance companies. But after Hurricane Katrina destroyed much of the Louisiana and Mississippi coasts in 2005 — and became the most costly storm in U.S. history — things changed.

"There was so much money spent on Katrina, the insurance companies paid out so much that there was a noticeable sea change in the attitude of the insurance companies going forward," he says. "My files started coming back to me. Take this out, take that out. Every single change they made reduced the cost."

Charles says he was seeing cutbacks, no matter which insurance company he was working for. He says other adjusters shared similar stories.

The insurance industry says homeowners have not been systematically underpaid.

"There is no incentive for a private insurer at all to underpay these claims," says Hartwig, the insurance institute's president. "The vast majority of those individuals who in fact did have coverage are happy with their insurance companies and they're happy with the way the process unfolded for them."

Dozens of homeowners we interviewed described something different. So did several others who worked closely with the insurance companies after the storm.

Jeff Coolidge reviewed adjusters' files for multiple insurance companies after Superstorm Sandy. He says he quit his job in part because he was so bothered by what he was doing. The insurance firms he worked for used phrases like "pre-existing," "earth movement" or "ground settlement" to reject homeowners' claims of flood damage. "They use 'settlement' a lot. 'Sorry your house looks like it shifted to the left a little bit, but I think it was like that when you bought it,' " Coolidge said.

They told him to pay homeowners less than what they asked to be paid to rebuild, he said. He says that put pressure on him to get the independent adjusters in the field in line to back up these conclusions, or else their flat fee was at stake.

"I've told an adjuster that based on our guidelines that I need you to remove these items," he says. "I send it back for revision. He doesn't agree with that. He'll resubmit it. I'll reject it back."

If the adjuster wanted to pay the homeowner more, Coolidge would reject the adjuster's assessment until he got the answer his employer wanted, and in some cases he switched adjusters or threatened to do so. "'I'm going to take half your pay and give it to him," he recalls telling several adjusters.

Looking back, Coolidge says he regrets that behavior but at the time, he didn't feel he had a choice. "I feel bad every day for participating in that. It is what it is. [The insurance companies] had the upper hand. You either do it or they'll remove you."

Running Deficits Since The Beginning

Part of the reason insurance companies could have been shorting homeowners through people like Coolidge may lie in the way the program was set up — and how much it is paying insurance companies.

Congress created the National Flood Insurance Program in the 1960s when large storms swept across the Midwest, wiping out entire towns.

"The idea of the original program was brilliant," says Robert Hunter, who ran the flood program in the 1970s. "The program would become less and less expensive because people would be building safer and safer structures and ... the program would become self-sufficient and carry its own weight and not lose money."

But that has never happened. The program has run deficits from the beginning. In the 1980s it was $700 million in debt. In the 1990s, it was $1 billion in debt. And today, after Katrina and Sandy, the program is $23 billion in the red.

Hunter says that's partly because the program doesn't charge homeowners enough in premiums to adequately fund itself. But, he says, it's also because FEMA pays the private insurance companies too much money. At least a third of the money that homeowners put into the program gets paid to them, he says.

Last year, government data show, that came to more than $1 billion in fees.

Hunter says with so much money going to insurance companies, it's that much harder to cover storm losses, or save up to help pay for the really big ones, like Katrina or Sandy.

"In the long run you're going to lose money," he says. "And you're going to lose a lot of money, and that's what happening."

Now, when a big storm hits, taxpayers mostly pick up the tab, and the insurance companies get paid, regardless.

"It's a sweetheart deal" for flood insurance firms, Hunter says. "[The companies] like it. They have no risk. It's just doing what they normally do; they just tack it onto the homeowners policy and they make some money."

Exactly how much, however, could help explain why thousands of homeowners believe they were shorted.

There are a couple of theories for possible shortfalls.

For one, industry experts say insurance is a commercial business. It looks to lower costs and keep payments to homeowners in check. It's just habit, they say — even if it's not their money.

And then, after Hurricane Katrina, FEMA tried to crack down on overpayments to homeowners, when some companies charged unrelated damage coverage to the flood program instead of their own wind coverage.

But there was one more theory. The insurance companies make money on the program, regardless of how big the storm or the cost to taxpayers. But they won't make any money on the program if it doesn't exist.

So, the theory goes, the companies sought to cut the program's debt to save the program — and they did that by paying homeowners less.

"It was batten down the hatches and circle the wagons," says Steve Mostyn, a plaintiff's attorney who joined the fight with other lawyers to sue the insurance companies on behalf of 1,300 homeowners impacted by Sandy. "It was a systematic culture and plan to hold back the losses."

Mostyn has scoured insurance company documents for almost two years. He points to the repeated hearings Congress has held on Capitol Hill over the past few years asking why this program is so far in debt and talking about privatizing the flood program or even ending it.

"They've had this, 'You owe Congress 20-something billion-dollar deal' hanging over their head," since Katrina, he says. "And I think that they thought if they didn't protect this pot that they had, if they went deeply into debt again, that there would be a push to end the National Flood Insurance Program. You got to protect the goose that lays the golden egg."

But to know whether that is right, you would have to know how much the companies are making.

In 2009, a Government Accountability Office audit told FEMA to figure out how much profit the flood insurance companies are making off the flood program and take that into account when it paid them.

But Wright, who took over the flood program for FEMA last year, says he doesn't know how much money the insurance companies make from the program.

"I've never looked at the book of business to understand their profits," he says. "So you'd need to go specifically to the companies to understand those numbers."

The nation's largest insurance firms declined to disclose their profit margins on the flood program.

However, every year the insurance companies report what it actually costs them to do their flood work to the National Association of Insurance Commissioners, an industry association of government regulators. And every year, FEMA reports what it pays insurers who participate in the flood program. With both numbers, you can do some math. Government auditors used a similar method in 2009.

Based on the latest figures, that analysis shows the insurance companies together made anywhere from $240 million to $406 million a year just on their flood work since 2011 — without having to pay any claims.

A Curious Pattern Emerges Among Homeowner Claims

But if these profits led insurance companies to try to protect a program by paying homeowners less, is it even possible for multiple insurance companies to systematically shortchange people, as hundreds of lawsuits in New York and New Jersey allege?

Far from Superstorm Sandy's epicenter, in Houston, attorney Mostyn found a curious similarity among many of the homeowners he now represents in his lawsuit against the insurers.

He said he found a pattern among engineering reports that were used to reject or justify lower payments on homeowners' insurance claims. There seemed to be a template that many of the reports followed, which says the houses hit by the storm were not structurally damaged by the flood but were damaged by "long-term differential earth movement." That means natural forces over a long period of time damaged the home — not whatever disaster just occurred.

That's what homeowner Quinn was given for the reason his insurance company, Selective, used to deny much of his claim on his home along the New Jersey coast.

But Quinn was confounded. He had photos of his foundation from a year earlier. He didn't have any cracks. The day after the storm, large cracks were all over his foundation.

Quinn says he wasn't thinking about whether other people were in his same situation or whether the insurance companies were trying to keep the program costs down. He just thought it was a mistake. So he did what a lot of people did: He appealed to FEMA.

Almost five months later, a FEMA representative replied. The agency had denied his appeal, siding with Selective.

Selective declined to comment on Quinn's case. But NPR and Frontline obtained a copy of Quinn's case file. In it were emails between FEMA and Selective that Quinn had never seen before.

We showed the file to Quinn, and he started to read. As he got to the end, he saw where it says FEMA sent Selective his appeal and then asked Selective to review it and write a response.

First, Quinn reacted with an expletive. Then he said "This is not an objective third party review process. This is complete crap."

According to FEMA's own internal documents, FEMA sided with insurance companies almost 75 percent of the time. A government audit recently found that the process received inadequate oversight from FEMA. Wright acknowledges FEMA sent appeals to insurance companies.

Wright says he is making changes to the appeals process to ensure that it's more transparent and that homeowners get a fair review.

"The appeals process that was in place in the past did not have enough credibility," he says, adding the appeals have now been moved into a different department separate from claims review. Last year a Senate committee couldn't find any widespread underpayments of claims.

But since then, FEMA has reopened claims review for anyone who felt underpaid by his insurance company. More than 19,000 people came forward in addition to the 1,700 who sued. So far, FEMA is finding that more than 80 percent of the homeowners were underpaid by their insurance companies.

As for Quinn, he sued and eventually settled with Selective. In addition to the $90,000 in claim money that he received, his settlement gave him an additional $130,000. Quinn paid one-third of his settlement in legal fees. Win or lose, FEMA pays all the insurers' attorney fees.

Standing on his empty lot, Quinn opens a storage container with all that survived the storm: a couple of ceiling fans, boxes from his attic, a hockey helmet.

Until he can rebuild, he'll keep paying a mortgage and flood insurance on a house that no longer exists.

"I don't begrudge somebody making a living, and if they do a good living at it, there's nothing wrong with that," he says. "But when they do it on the backs of other people's misery, it is just wrong and it infuriates me."

And he, like many other Sandy survivors, feels his government let him down.

"They can't begin to fathom the amount of heartache that they've created," he says. "The amount of financial wreckage they've created for average people. We're average middle-class people and we're in ruins here."

Copyright 2016 NPR. To see more, visit http://www.npr.org/.