Damaged homes in Breezy Point, N.Y. on Dec. 03, 2012, one month after Super Storm Sandy hit.

(Bloomberg) — The Federal Emergency Management Agency is working on settling litigation with hundreds of Hurricane Sandy victims who challenged denials or alleged underpayments of flood insurance claims.

Brad Kieserman, deputy associate administrator for insurance at FEMA, disclosed the settlement talks during a break at a hearing in Brooklyn, N.Y., federal court Wednesday over whether an insurer, Wright National Flood Insurance Co., concealed from a homeowner the existence of conflicting reports over damages.

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