On January 5, 2022 at 5:00 PM, we are unfortunately going to be leaving some people behind. In particular, these are existing CLAIMANTS as well as existing CONTRACTORS.
Let’s start with claimants.
CLAIMANTS: if by 5:00 PM on January 5, you are an existing Active or Inactive claimant who has not taken the steps necessary to move yourself into the Participation Agreement line over the last 180 days, we will move you out of the CFSIC program, and you will have to re-apply as if you had never been our claimant. We will also release the financial reserves associated with your claim to free them up for the incoming group of Pending claimants, many of whom have been waiting in line since January 13, 2020.
Now let’s talk about contractors.
CONTRACTORS: if by 5:00 PM on January 5, a claimant gets pulled from our system because you have failed to respond to ESIS with your supporting documents, including any Contractor Acknowledgments as well as bond schedules you owe us, for any project in question…we will remove not only the claimant BUT WE WILL ALSO REMOVE YOU FROM THE PROGRAM.
You read that right.
Claimants…your contractors have a responsibility to us to provide documentation from their end. You could be 100% ready to go, and it in fact could be the contractor who you signed a contract with who causes you to be pulled from the program because of their lack of compliance.
The legal implications for contractors who haven’t done their part to move claimants into the PA line by close of business on January 5 will be obvious. Remember…CFSIC is not a party to the construction contract.
We encourage contractors to leave the job site an hour early this week…go back to the office…comply with what you know needs to be done to help your claimants move into line.
The number of claimants who are walking away from their applications is unfortunate. The absence of return phone calls, return emails, and no responses even to letters, is deeply troubling…but if we lose some of these claimants, at least we will be able to move Pending claimants into line to take their place more quickly.
We’re sorry to report that this problem also includes condominiums where some applications were filed (in some cases at least a year ago)…supporting documents were filed (in some cases at least a year ago)…and then complete radio silence has followed in the face of repeated requests from ESIS staff to secure construction proposals that could be approved…in other words, whatever would be needed to return condo unit owners the kind of equity in their units they deserve.
And let’s be clear…to get a minimum of two condo construction proposals approved, and to select one and enter into it, in order to get into the PA line, has never required committed bank financing. No one from CFSIC has ever said to a condo association, “Don’t bother to apply if you don’t have the financing.”
The number of contractors who are also sitting on their hands rather than helping claimants get into line is also troubling. We’re about ready to pull some contractors from the CFSIC program for lack of compliance.
We’re going to take the steps we need to, to re-emphasize the discipline needed in the process of dispensing taxpayer funds, so that those funds can be disbursed to claimants who have taken an active interest in having their foundations restored.
The next group of claimants to benefit from the discipline of our system will be the next group of 700 Pending claimants…where more than 300 of them have been independently verified as being Severity Class coded 3. These folks need our help, and they will soon get it.
The Cap Is Going Up…
The cap on allowable construction costs will rise to $190,000 from $175,000 for stand-alone homes, and to $76,000 from $70,000 for condo units, effective 9:00 AM on January 5, 2022.
The Superintendent has conducted research on the issue over the past three months, with particular regard to the costs of materials and labor, and the difficulties with supply chain management. With the full support of CFSIC’s board, the Superintendent has made the decision to increase the caps in place.
Because the calculation of the cap can only be done by first using the linear and square footage factors applying, those will change as well. The current $719 maximum allowable cost calculation per linear foot of house foundation will rise from $719 to $777. The square foot maximum allowable costs for basement slab currently at $27 will rise to $30. The maximum allowable cost per linear foot of garage foundation will go from $657 to $710. The maximum allowable costs per square foot of garage slab will rise from $12 to $13.
We remind everyone that CFSIC currently permits special calculations for slab on grade construction. These will change as well. For linear per foot foundation measurements, the maximum allowable cost factor will go from $1,012 to $1,093, with the square foot of slab on grade itself maximum allowable cost moving from $29 to $31. (For garage calculations, see above, as these will be the same.)
These changes will apply to any new construction proposals submitted to ESIS for the first time on or after January 5, 2022. What does this mean?…if you have at any point between January 10, 2019 and January 5, 2022 submitted construction proposals to ESIS, the old cap applies to you.
As an example, if you are currently an Active claimant (and you already know that you need to get into the Participation Agreement line by 5:00 PM on January 5 or be taken out of the system), please understand that you will be unable to wait until January 5 and submit two new proposals at the new cap and at the new factors. As will be clearly understood, it is not going to be possible for staff to review your new proposals and approve them, for you to then have one of them executed, for your contractor to then submit all needed documentation, and for you to then be moved into the Participation Agreement line…all within 24 hours.
But here’s what’s more important… you will already have submitted proposals to ESIS. Therefore, it will not be for the “first time” when you re-submit. We at CFSIC can’t pretend that we already didn’t have proposals on your remediation prior to January 5.
We’ve supplied a few questions and answers to help everyone understand these changes.
Question: Will contractors be able to download a new template to calculate linear/square footage costs?
Answer: The template will be up online on this site on January 5 on or before 9:00 AM. The new template (including the new factors) cannot be used before that date and time, and any such proposals staff receive before that time will be rejected.
Question: I’ve heard that the current cap of $175,000 is not nearly enough. What makes you think that going to $190,000 is that much better?
Answer: We think you’ve heard wrong. Under the current $175,000 cap, our average allowable costs are actually right at $160,236. Contrary to what has been suggested in social media, the cap has always worked. It will continue to work as a way to spread limited funds among as many victims as we can.
Question: Are any other parts of the program changing on January 5?
Answer: No. For example, the relatively new requirement that if a homeowner has progress payments due, then the total of these progress payments must be evenly spaced in sync with contractor progress payments throughout the project, will remain in place.
Question: It doesn’t seem fair that just as you’re starting to open up Pending claimant files, Pending claimants get a bigger benefit than claimants who signed up on Day One. I think what I’ll do is withdraw myself from the Participation Agreement line and start all over again.
Answer: The system permits you to withdraw your claim from the PA line. But here’s what happens if you do: you would then reapply and automatically become a Tier 2 Pending claimant on a foundation for which you had originally provided proposals prior to January 5, 2022, and therefore you would have wasted your time…for while you think you would get the benefit of the increased cap, you would not, because we would apply the old cap to your claim…and on top of it your foundation, which would probably be replaced in 2022 or 2023 if you’d stayed in line, would most likely now get replaced in 2027 or 2028. That choice would be yours but would clearly make no sense.
January 5 Is Coming…
On January 5, 2022, we begin the process…for the first time…of opening Pending claim files and moving verified Severity Class 3 claimants into Active status.
Also on January 5, 2022, as was announced back on July 5, 2021, if you are an Inactive or Active claimant, you have had 180 days to do what is necessary to get yourself into the Participation Agreement line.
January 5, 2022 is right around the corner.
And let’s be clear: if you wait until the 2nd of January or if you try to get this all done in the week between Christmas and New Year’s, think again: the staff will be taking some well-earned time off.
Most disappointing of all is the number of condo buildings and condo associations who’ve had almost 180 days to get those buildings into line for remediation by taking a few simple steps. We realize that an association’s board of directors moves at a difference pace than a single homeowner with regard to the way decisions are made; but associations run the risk of having two types of buildings on their property: buildings that are fully remediated and buildings that won’t be remediated for years. The difference in the value of those respective condo units in the open market will be apparent to anyone who gives it some thought.
Simply put…on January 5, 2022 any current Inactive or Active claimant (not Pending) who has not taken the steps necessary to get into the Participation Agreement line will be taken out of CFSIC’s system.
Of course, nothing prevents that individual claimant or that association from re-applying from scratch. The consequence of having to do that may mean that we do not get to your foundation remediation for five to seven more years.
This will be the last time we will be making this announcement.
We encourage everyone who has been contacted repeatedly by ESIS claim staff to take heed and to what you need to. You run the very real risk of your claim being removed from our system, and the reserves allocated to you being given to claimants who have done what they have to do to get into the line for help.
What Happens on January 5, 2022: Chapter 1
Our great claims staff at ESIS ProClaim has been working on a daily basis with the remainder of our Active and Inactive Severity Class 3 and 2 claimants, contacting them one by one, to determine if they want to proceed with their claims by moving into the Participation Agreement line.
By way of reminder…we announced on July 5, 2021 that if you were an Active Class 3 or 2 claimant registered with CFSIC you had 180 days (until January 5, 2022) to do what is necessary to get into the PA line and to be moved into line. If you were an Inactive claimant on July 5, 2021, you also had 180 days to make your claim Active and to be moved into the PA line.
We’re pleased to tell you that some folks have worked hard to take the needed steps to move into the PA line. With CFSIC, when you take those steps, that means you’re serious.
Of course, applying to CFSIC to begin with is serious. Making sure that the necessary uploads to your claim file are complete is also serious.
But what’s really serious…what really counts…is when you move into the PA line, which means we can make the dream of your claim become the reality of remediation.
The number of Inactive claimants who won’t take a few necessary steps to make themselves Active is an alarming number. The number of Active claimants who won’t get the necessary two construction proposals and go through the approval process to get into the PA line is even more alarming. To be that close to the end of your victimization and not to return staff emails and phone calls is inexplicable.
If you are an Inactive or Active Severity Class 3 or 2 claimant currently in our system, and you are not yet in the PA line, we carry a financial reserve for the value of your claim on CFSIC’s balance sheet. Why do we do this? We do it because at one point you were serious about restoring the value and safety of your home.
What happens on January 5, 2022? If you have not made the effort to move forward and been moved into the PA line by that date, your claim will be removed from our system and your reserve transferred to a claimant who is serious about remediation.
What would be left? You start all over again as if you had never applied.
We’re not really sure why some of the victims of this crisis would bother to apply and go through part of the process only to disappear out of sight, when so little is in the way of remediation. But the facts are the facts.
CFSIC must and will start moving reserves away from non-compliant claimants to those who have worked hard to get the job done, and we will start that process on January 5, 2022 at 5:00 PM.
What Happens on January 5, 2022: Chapter 2
Also on January 5, 2022, we will begin the process of sorting through all Pending claim files.
We currently have almost 700 Pending claimants. It’s going to be a major job. One by one those files will be opened; one by one, beginning with valid Severity Class 3 foundations, more than 300 claimants will be contacted directly.
We expect to be able to get through 100 to 150 of those files by the middle of June of 2022, at which point we’ll be moving people into the PA line, in many cases three to four years ahead of when we thought that would happen.
This posting is directed to the CRCOG-vetted contractors being paid by CFSIC to do the important work of foundation remediation for the victims of this crisis.
We’ve recently learned of an example of a contractor, frequently using subcontractors on the job, who has adopted the position that, if a claimant has an issue or a problem with the work being done, the claimant should deal with the subcontractor on the jobsite…rather than bringing that concern to the attention of the contractor.
CFSIC’s position is a little bit different.
If you are a contractor, and you’ve entered into a written construction contract with one of our claimants, we don’t care how many subcontractors you use, but we fully expect any homeowner’s issues or concerns that arise on the jobsite be addressed directly by you…and that you instruct your subs of a claimant’s right to contact and deal directly with you at all times.
We at CFSIC spend a lot of time trying to police abuses and potential abuses of the CFSIC system. This includes contractors. We’re going to have zero tolerance for any contractor who is unwilling to deal directly with their claimants on all issues concerning each and every remediation.
We will remove immediately and permanently any contractor unwilling to comply with this expectation. Removal from the program will mean an immediate return of all deposits held by that contractor for future work.
We encourage claimants during their foundation’s remediation to contact their assigned claim adjuster at ESIS if at any time their calls or emails aren’t being returned, or their concerns aren’t being addressed, by the person with whom they have signed their construction contract.
To be clear: we have many contractors doing remediations who not only do good work, but who also deal efficiently, compassionately, and without arrogance with the claimants who have entrusted their homes to them. We’re speaking very directly today to a small handful of contractors who do not seem to understand, even after these many months, the importance of the task they have been given, and the compassion and understanding they must at all times exhibit. Regardless of whether you as a contractor are approved by CRCOG…CFSIC can and will shut you off from the program if you are unwilling to deal directly with the people who have entrusted you with their home.
Be aware of these words…and make sure you educate your subs.
Protecting the Claim Transfer Process
Effective November 16 at 5:00 PM CFSIC has instituted a tightening of the claim transfer process. Go here to see highlighted changes to CFSIC’s Underwriting and Claims Management Guideline.
Annual Report Infographics
At the recent Annual Meeting of the board of CFSIC, the Superintendent presented the board with some infographics on the status of the program. Click here see this PowerPoint in its entirety. This is a supplement to CFSIC’s Annual Report dated September 29, 2021.
CFSIC’s Audited Financial Is Available
The Board of CFSIC was presented at its recent Annual Meeting with CFSIC’s independently audited financial report. By way of reminder, the independent auditor retained by CFSIC performs two audits: a statutory audit on behalf of the Connecticut Insurance Department and the Board, and an independent state audit provided to state government. CFSIC’s 2021 audit is posted here.
The claims disbursement process was tested independently. The separate cash disbursement process was tested. The audit was independent, vigorous, and complete. No exceptions were noted in the audited financial concerning any aspect of CFSIC’s operations.
By way of reminder, CFSIC’s auditor is the only service provider that does not report directly to the Superintendent and only to the Board of Directors.
Read CFSIC’s Third Annual Report
CFSIC believes in transparency and in data. The only way victims have been helped and can be helped is through an understanding of what we’ve accomplished, and how far we have yet to go. You can read the Superintendent’s 2021 Annual Report to CFSIC’s Board of Directors here.
How We Pay a Claim
This week we are pleased to feature a new white paper written by Kevin Miller on the importance of the visual examination of impaired foundations. This link will take you to this latest installment in this series.
An insurance company has to have a process by which it pays (it adjusts) a claim.
A state insurance commissioner, whether the insurance company in question is a captive or it is not, will not approve an operational plan for that insurance company unless that regulator is satisfied that the factors used to determine how a claim is paid are correct, fair, and based on logic.
This is why CFSIC does not use the results of foundation testing (whether through the extraction of a core sample or by other means) in determining how we actually pay a claim…how we disperse taxpayer funds.
While we believe that the victims of this crisis need to have any information about their foundation that they can get…including the results of foundation testing…the results of foundation testing are not the basis on which CFSIC pays a claim.
There are very good reasons for this.
When CFSIC opened its doors on January 10, 2019, its Board of Directors was under significant public pressure, primarily from some concrete activists, to use the results of foundation testing as the basis on which claims should be paid.
After a lot of consideration, CFSIC’s board rightly rejected that idea. Given CFSIC’s limited financial resources (which are still limited) CFSIC’s Board of Directors chose to create an underwriting and claims payment platform based on the quantifiable severity of impairment…a visual examination by qualified professionals, documented by photographic and measurement evidence, as the basis of prioritizing who would get their claim paid first.
How could we have built a claims management platform off the results of pyrrhotite testing? Let’s ask ourselves a series of questions that will help us get to the answer.
– Does a positive core sample tell you how badly your foundation has deteriorated?
– Do the results of concrete sampling predict when a perfect foundation (with no hint of impairment) might begin to show signs of impairment?
– Does it predict the year or even the decade when that might occur?
– Does it predict with any accuracy, once the impairment begins to show itself, how long it will take before you can no longer close your front door?
– In fact, does it actually predict anything at all with certainty?
The answer is “no.”
Not only that, but we at CFSIC believe that it may be a decade or more before enough data is collected to begin the process of what we call “predictive modeling.” Meanwhile, what do we do with claimants whose foundations are obviously impaired? By that, we mean visibly, quantifiably impaired. Do we tell them that, even though they have the scientifically proven visual outward signs of pyrrhotite, they still need to get a test? What happens months later and what do we tell them when they are facing bankruptcy or possibly even eviction because the structure is unsafe? Do we tell them “…sorry, we can’t help you, even though your basement obviously has a pyrrhotite infection, because our claims management guidelines don’t allow us to pay a claim without a core test”?
CFSIC felt it needed to move quickly, because the victims of this crisis were suffering emotional as well as financial loss.
We felt it was important to prioritize severe, scientifically quantifiable and measurable foundation impairment. We felt that, when a victim can no longer close their front door because of a crumbling foundation, that was far more important than whether or not that foundation had tested positive for pyrrhotite and at what level.
We still believe this to be the case.
We asked those then who wanted us to use a positive pyrrhotite test as the basis of disbursing taxpayer funds just how it would work. If your foundation tested positive for pyrrhotite (in whatever amount) and your foundation was still in perfect condition…did that mean that the taxpayers of CT should tear down that perfect foundation…a foundation that is not failing…and replace it just because that foundation might fail in the future? No one we spoke with inside or outside of state government thought that was a great idea, except for a handful of crumbling foundation activists.
If CFSIC had adopted a positive foundation test as the criterion for using taxpayer funds, how would we have identified who should be first in line? How would we have determined who was placed ahead of whom…especially when some people were unable to close their kitchen cabinet doors anymore?
There is no scientific and no statistical evidence supporting the idea that foundation testing results can predict, with any certainty, when a foundation will fail or even if it will at all. Make no mistake: CFSIC is not anti-testing. Far from it. CFSIC is about the use of hard facts in the disbursement of taxpayer funds.
Once testing data becomes available with statistical validity, CFSIC will not hesitate to use it, and it will not hesitate to build that data quickly and absolutely into our claims management program. Until that time comes, foundation testing is not the basis on which CFSIC pays claims.
CFSIC’s board had a choice: it could adopt a rational visual examination policy to rapidly put people in line who were the victims who were suffering the most…or it could have relied on who got a core test first. Had we done the latter, very few homes would now be remediated in Connecticut.
We believed then, and we believe now, that the visible manifestations of pyrrhotite infection, observed and documented by trained professionals, is the way that a professional insurance company’s claims program needs to operate. We are not going to change that position any time soon.
Ask any one of the 37 victims in Stafford Springs, CT whose foundations we have already replaced in 28 months whether they would have preferred us to use the results of foundation testing versus the results of visual examination in determining how their claims were paid. If you can walk into your basement and, because of your crumbling foundation, you don’t need to turn the lights on because sunlight is pouring in through the cracks…we think the answer is obvious.
CFSIC has never been approached at any time to collaborate with anyone validly collecting the results of testing information. We find that puzzling, as CFSIC is all about collaboration and all about the reasonable sharing of information for the public’s benefit. If we weren’t about sharing data, then our data would not be up on our website. We did experiment briefly with one possible collaboration in this regard…but we stopped when it became clear that it wasn’t going to be a collaboration of equals.
We stand ready to receive and accept valid foundation testing data and to incorporate it into our underwriting system when that data becomes available by way of using it to predictively model exactly when a foundation will fail.
Until then, we’re busy putting lives back together and restoring the tax base in the hard-hit towns of the Northeast Corner of Connecticut.
Next $20M Received!
CFSIC has received the next $20M in CT Bond Commission allotment…the last allotment of the original $100M pledged by the State of CT to get CFSIC’s remediation program off the ground.
We are grateful to DOH Commissioner Mosquera-Bruno and her team for partnering with us to get this job done.
The Superintendent has directed CFSIC to re-open its doors this week for the issuance of new Participation Agreements.
For the first time, we will be getting to Severity Class code 2 foundations, which is great news for those families who have been waiting in line a long time.
If you have any questions about the operation of the program, ESIS is your best source of information on your claim, and their phone number and email are shown below.
As you work through the information and application process (understanding that we are in suspension for the taking of new applications), here’s how you can get help:
– Call ESIS (the claim adjuster) at: 844-763-1207
– Email ESIS at: firstname.lastname@example.org
– Email CFSIC at: email@example.com