The answers seem to be contained in the article.
"In fact, Stewart said he has since found out that his insurance coverage will replace his house, meaning he's ineligible for a FEMA grant anyway."
"But some say FEMA is in a no-win position. After the 2004 Florida hurricanes and Hurricane Katrina, the agency came in for heavy criticism from both Congress's General Accounting Office and detractors in the press, for paying out money to people who shouldn't have qualified.
"In Katrina they lost so much money because they were not careful about payout," Clare Rubin, a disaster management consultant, told the News. "The GAO hit them hard."
I know when the inspector came to inspect my roof damage after Hurricane Gustav, she told me that since I was insured that the claim probably wouldn't qualify but that I should file anyway because "you never know". They ended up denying me that claim because of "insufficient damage" but offered to pay hotel room bills because of the mold in the house. Of course that was useless because there were no hotel rooms available south of Arkansas.