A Q&A for Type 1, Severity Class 2 Claimants

The information that follows has been designed to help Type 1, Severity Class 2 claimants understand where they are in the process.

All comments and data are valid as of February 3, 2020.

First, by way of reminder, under CFSIC’s Underwriting and Claims Management Guidelines, as claims become active, they move up in priority with respect to access to available claim adjustment funds, but always in the order of severity: Class 3, followed by Class 2, followed by Class 1. Due to this prioritization system, active Severity Class 3 claim contractor proposal review has always taken precedence over the review of active Severity Class 2 foundation replacement contractor proposals.

This has always been and continues to be all about money...the uncertainty of the timing of when we receive our funds. We have never been certain about the scheduling of our funding.

When we re-opened our doors on January 13, 2020 for the taking of applications under our new “Pending claim” status, we made a promise that even if a new pending claim was verifiably a Severity Class 3...we would never put a Severity Class 3 Pending claimant in front of an active Severity Class 2 claimant who was active and in line prior to January 13. We’re going to hold to that promise.

The good news is that we now have a handful of Severity Class 2 claimants who have been placed in line for Participation Agreements. That’s progress. The unfortunate news is that we know we’re not going to get to those Severity Class 2 Participation Agreements until sometime after July 1, 2021, because we are rationing our current funding to conserve our cash, and the Superintendent is going to suspend the signing of Participation Agreements after the week February 10 on a temporary basis.

What follows is a brief Q&A on Severity Class 2 claim status as of January 31, 2020:

Question: I submitted my claim on January 10, 2019. I’m a Severity Class 2. How come I don’t have claim priority even though I submitted my application on the very first day?

Answer: You don’t because of the number of active Severity Class 3 claims that were ahead of you and still remain ahead of you. We still have a fair number of 3s in line for Participation Agreements and for funding...they are all ahead of you.

Question: If a Severity Class 3 claimant submits an application, for example, on February 3, 2020, will that claim jump ahead of mine?

Answer: No. Not if you became an active Severity Class 2 between January 10, 2019 and January 13, 2020.

Question: I think I understand. But let me put the question another way: I became an active Severity Class 2 claimant before January 13, 2020. Are you saying that you changed the old rules after January 13, 2020, and now any Pending claimant who filed a claim on or after that date, even with a verified Severity Class 3 foundation, is behind me for assistance?

Answer: Yes.

Question: You’ve had my contractor proposals for quite a while. When will you be reviewing my proposals?

Answer: We’re already doing that in the date order in which we received active claim proposals. Please understand that the only way we can schedule a review of Severity Class 2 proposals is for those claimants to actually be active Severity Class 2 claimants. We do this when there is a lull in our review and approval of Severity Class 3s. For example, there recently was a lull, and we quickly evaluated seven Severity Class 2 proposals and enabled them to move into line for Participation Agreements. More of these will now follow over the next few months.

Question: Great news. But are you saying that I could be in the Participation Agreement line, but still have a long wait before I actually get my Participation Agreement to sign?

Answer: Yes. We have no idea how much funding we will get from the first installment of the $12 per homeowner policy surcharge, which we expect to get in June of this year. We also don’t know when we will get our next $20 million from the CT Bond Commission. We expect to get our next $20 million at some point after July 1, 2020 but we simply don’t know when. That’s why the wait is going to be longer than expected for Severity Class 2s.

Question: But I thought you already got money from the $12 per policyholder surcharge?

Answer: This is a common misconception. The first installment of the surcharge began to be collected in April 2019. It stops being collected in April 2020. We don't get our share of the funds collected during those 12 months until June of 2020. We get another installment in June 2021, and a final installment in June of 2022. Under the current legislation, we go out of business on June 30, 2022. This is known as our “sunset date.”

Question: But I understand that the $12 per policy surcharge is scheduled to run until 2030.

Answer: That’s correct. But if we go out of business on June 30, 2022, those seven remaining installments will go somewhere else...CFSIC will be out of business if the June 30, 2022 sunset date does not get moved legislatively to June 30, 2030.

Question: How will I know, as a Severity Class 2, that I’m finally being placed in line for a Participation Agreement?

Answer: Your ESIS claim adjuster will contact you and tell you it’s happened. At that point, the Superintendent’s office will also be informed, and the Superintendent will be following the status of your claim.

Question: I received my contractor proposals several months ago. Will they still be valid?

Answer: That’s between you and your contractors. We have asked all contractors who have provided proposals to claimants to hold their pricing for the job at exactly what was proposed...regardless of the amount of time it will take to schedule the project. However, we do not control contractor pricing. That is between the claimant and the contractor. CFSIC controls what costs are allowable, and all those costs are in turn controlled by the cap.

Question: Where can I get more information on my claim?

Answer: Your best source of information about your specific claim is your claim adjuster at ESIS.