Why the Cap Works…
First, there are a number of people out there who believe that the cap is something different than $190,000. It isn’t. It’s clearly posted on CFSIC’s website. (Let’s be clear…many people are just not familiar with our website.)
The original cap on remediation/reimbursement assistance was $175,000 ($70,000 for condos). We increased it recently for all the right reasons: cost of labor, cost of materials, inflation, etc. A cap makes sense.
CFSIC was under heavy criticism from Day One, particularly on social media, for instituting a cap, but no one came up with a better idea. An idea floated early on was to use a means test. In other words, to disburse claim funds based on a claimant’s ability to afford the difference between what CFSIC would pay and what it wouldn’t. The Superintendent reminded everyone that a means test of any kind requires verification. What’s the best source of verification of your means?
Your federal tax return.
When the Superintendent mentioned that, the means test idea died, and I think we can guess why.
The disbursement of funds by CFSIC is based on two criteria: the linear and square foot measurements of the foundation (including special allowance for slab-on-grade construction) multiplied by the maximum permissible linear/square foot factors permitted under the program. Those factors are published. They are known to every contractor participating.
It’s that first step that’s important.
That calculation, though, is then further limited by the $190,000 cap ($76,000 for condos). That’s how the playing field gets leveled.
The smallest remediation that CFSIC has done is 900 square feet. The largest is 5,800 square feet. (That claimant, by the way, spent a lot of time trying to convince the Superintendent to give him an exception to the cap “because of the size of my house.” The Superintendent rightly refused.)
The cap levels the playing field and treats everyone equally. The linear/square foot factors objectively value the claim…the cap is the reason we are able to spread limited claim funds in a fair and equitable way.
Again, the paper trail of criticism is clear. When CFSIC opened its doors, we were told “no foundations would be fixed if there is a cap.” We’ve proven that to be wrong as we push quickly now towards 600 families helped. One of the reasons we were voted another $100 million last summer is because the cap works, and it treats people fairly.
We believe that the means test would have failed and that few remediations would have been done.
But to be clear, CFSIC’s board is continually looking for ways to improve every part of our process. If you’ve got a legitimate and constructive way to improve anything we do (legitimate and also thoughtful and prudent) you can always suggest how we can do better by writing to: firstname.lastname@example.org
The Most Common Errors…
The electronic application process on this website has been designed to enable claimants to efficiently apply to the CFSIC program.
We think it’s important to re-emphasize a few key points…particularly since anyone applying on or after August 17, 2021 is a Tier 2 Pending claimant. Make no mistake: CFSIC wants you to apply, and it’s very important that we know who you are and where your impacted foundation is.
If you are thinking about applying, here’s a list of the most common mistakes. Don’t make any of these mistakes, and the process will go much more smoothly for you:
#1: Keep a copy of everything you upload as part of your application…including the application itself. More than 30% of our applicants actually don’t keep a copy of anything they send us. It’s a mistake not to do it. Keep a folder with what you send us so you can refer to it later.
#2: You do not need all points of evidence in order to apply to the program. (If you’ve got all the points of evidence that are specified in the application when you apply, then that’s great, but it is not necessary in order to apply on a first-time basis and at least begin the application process.) The application process permits you, once your preliminary application is filed, to upload anything else after the fact. Anyone applying to the program automatically receives a claim number. Print that email out and hang onto it.
#3: We can’t emphasize enough the importance of filing your crumbling foundation claim with your current homeowner’s insurer BEFORE you file with CFSIC. If there is any chance that your homeowner’s insurer will pay all or part of your remediation, it will not only be better for you, but if you are a Pending claimant it will be faster. CFSIC cannot make your claim Active if you’ve not submitted the claim to your homeowner’s insurer first and have EITHER a claim acceptance letter or a claim denial letter from that insurer, which then, either way, becomes part of your CFSIC claim file. (And, yes, contrary to the rumor mill, a number of claims have been paid in whole or in part by commercial insurers.) CFSIC will never be primary (pay before) a commercial insurer’s acceptance or rejection…it’s the way our system has worked from Day One. You paid a premium to a homeowner’s insurer: you have to ask them first if they will pay your crumbling foundation claim. That’s how insurance works.
#4: For purposes of filing a Pending claim, don’t waste your time getting construction proposals. CFSIC’s claim adjustment staff won’t even look at them. You don’t need them yet. In fact, if you file today as a Pending claimant, you are two-and-a-half to three years away from the beginning of your remediation anyway…and no construction proposal issued today would be valid after that passage of time. The staff at ESIS ProClaim will ask you in writing to obtain the minimum of two contractor proposals when your claim moves to Active. Okay…to be clear: if you want to get proposals while you are a Pending claimant to determine how much might potentially be coming out of your pocket, that’s okay to do; but it has nothing to do with the process of your CFSIC claim until a claim adjuster starts to work your file, and you are officially made an Active claimant.
#5: PAY ATTENTION TO APPENDIX 1 OF THE APPLICATION: There is an appendix (Appendix 1) to the application, which appears before the signature line on the electronic application (and directly after the signature page of the PDF version). Many claimants never bother to read it. There is not a single more important document in the application process for a Type 1 or a Type 2 claim. It is in the appendix where clear rules are specified about the original date of the purchase of your home and why that date is vitally important to your claim.
Observing these points and paying attention to them can go a long way towards making the application process easier and more efficient.
The Importance of Rules…
It is our adherence to the written and published Underwriting and Claims Management Guidelines of CFSIC that make CFSIC a success.
CFSIC’s guidelines are subject to review and approval by the Connecticut Insurance Department. These guidelines are a part of CFSIC’s Plan of Operation. The aim of the guidelines is to be as fair and equitable as we can possibly and humanly make them.
The guidelines exist to spread limited and unpredictable funding (from a scheduling perspective) among as many victims as possible. We would not have been voted another $100 million last year if several times a month we had granted “exceptions” to the rules. What the CFSIC program needs and requires is objective administration and stability. It doesn’t need chaos.
The Superintendent has dealt with more than 75 requests for “an exception to the rules” since the inception of the program and has granted a few of them when they have been reasonable and based on a specific set of unique facts. These have been few and far between. When you run an insurance company with limited funding, it’s sticking to the guidelines, as they are written, that will make the difference between success and failure…between a vote of confidence from state government and the opposite.
CFSIC’s website is publicly presented. It’s available for all to read. Our complete Underwriting and Claims Management Guidelines are on this site. They have been since we opened our doors.
If you are moving from another state and buying a property in Connecticut, particularly in the Northeast Corner, and you have not made yourself aware of this crisis, that is hardly the fault of Connecticut taxpayers. If the seller of a property has conveniently forgotten to even mention that the crisis exists… that is also not the fault of the taxpayers of Connecticut. If the required mandated “Concrete Advisory and Disclosure for Sellers and Buyers” was not presented at the time of sale (whether you used a realtor or you did not), clearly the Connecticut taxpayers have nothing to do with that failure.
And, lastly, if the Concrete Advisory and Disclosure was completed and available to you, and you paid no attention to it, or its existence didn’t even suggest to you that you should probe further…and you didn’t connect the dots…it’s not the fault of the taxpayers of Connecticut.
In short, CFSIC only succeeds if it sticks to the rules.
The mandated Concrete Advisory and Disclosure for Sellers and Buyers is designed to alert people to the existence of the crisis in our state. If it isn’t used, then it’s not effective, and it doesn’t educate the public as a result.
The more information we have about this crisis, the better off everyone is. The mandated Concrete Advisory and Disclosure is designed to force-function complete transparency and to educate potential home buyers about a crisis that they may otherwise have been unaware of.
It’s also not the fault of the taxpayers in Danbury, or Westport, or Norwich…all cities and towns where this is not a crisis…and, despite that fact, taxpayers in those towns too have still entrusted us with their money. These unaffected towns and their representatives who voted us $100 million demand adherence to the rules, and they have a right to expect it.
The rules are there. They’ve been voted on unanimously by a volunteer board of directors who have no axe to grind in any direction except fairness and consistency. CFSIC has undergone three clean audits at both the statutory and the state levels. We got through those audits with the grade we got because what we do, we do consistently.
The rules are there to protect everyone: the victims of this crisis as well as the taxpayers who have ponied up funds from towns where the crisis will never exist.
An Important Reminder About Type 2 Claims…
Last week we announced that the CFSIC quota on paid Type 2 claims had been increased from 100 to 125. This is an important change in the program.
It’s very important to remind all existing and potential Type 2 claimants that if you decide to be a Type 2 claimant (reimbursement claimant), and the construction (remediation) of your foundation occurred or is occurring on or after January 10, 2019, then you will not be reimbursed if you do not use a CRCOG-vetted contractor (a contractor found on CRCOG’s website). This rule is hard and fast. You cannot do it yourself. You can’t do parts of if yourself. You can’t use your favorite remodeling contractor. You have to use a contractor shown on CRCOG’s website.
Increase on Cap for Type 2 Claims…
At a recent meeting of the volunteer Board of Directors of CFSIC, the Board unanimously approved a recommendation by the Superintendent that the cap on the number of paid Type 2 claims be raised from 100 to 125.
This change will take effect 15 days from today on July 21.
To be clear, CFSIC has paid 88 Type 2 claims (reimbursement claims, not to be confused with Severity Class 2 claims) for a total of $8,794,566 in disbursements to victims since the inception of the program…so we are still under the cap of 100 that was originally set at the inception of the program on January 10, 2019. Of course, in the months leading up to the launch of CFSIC, there was a lot of social media discussion about how 100 paid Type 2 claims would “never be enough”…of course the history is different: 100 paid claims as a maximum has proven to date to be over-adequate.
Having said this, we at CFSIC believe that we must leave room for more folks who may dip into their savings or retirement accounts to do their own foundations (always under our strict guidelines and with an approved contractor) in order to place themselves in line for reimbursement assistance. We think adding another 25 families to this limit may encourage some victims to apply and to take advantage of this program, which is designed, at the end of the day, to help as many victims of the crisis as we can.
Healthy Homes Funding Received…
Today CFSIC received $12.4 million from the Healthy Homes Fund though the auspices of the CT Department of Housing.
We thank Commissioner Mosquera-Bruno for her continued support and advocacy on behalf of the victims of the crumbling foundations crisis.
As a result of these funds being received in our account, CFSIC is re-opening its doors effective today for the process of issuing new Participation Agreements. To be clear, we have to go back to those who have been in the PA line since July of 2021, which is where we left off in that line when we last went into suspension, and start there first. Fair is fair, and CFSIC is committed to fairness.
Once we get through that remaining group of claimants, we will immediately continue the process until those funds are committed to victims.
If CFSIC is fortunate enough to get its $25 million installment from the CT Bond Commission at its July 29 meeting, then we will have the momentum we need to keep the PA line moving well into the month of May of 2023.
Some of the next projects in the PA line are in fact more condos…we’ve done 78 units to date.
We will be moving rapidly now to 600 families assisted.
Pending Claimant Update…
CFSIC continues to move as rapidly as we can with our Tier 1 Pending claimants to bring them into Active status and from there into the Participation Agreement line.
By way of reminder, anyone who applied to CFSIC for the first time on or after January 13, 2020 but before August 17, 2021 is categorized as a Tier 1 Pending claimant. Anyone applying on or after August 17, 2021 is a Tier 2 Pending claimant.
To be absolutely clear, we’re not going to get to Tier 2 Pending claimants for some time to come.
With respect to Tier 1 Pendings, CFSIC staff began to open these claim files for the first time on January 5, 2022. Since then, we have moved 164 of these victims into Active status, and many of them are now in the PA line awaiting the funding of their claims.
All of these claimants are Severity Class coded 3. We’re speaking of thousands of pages of claim documentation supporting the claims of these victims.
In fact, with our next round of funding, we will actually get to a number of these claimants and at least two years ahead of schedule. CFSIC continues to work diligently to bring the victims of this crisis the assistance they need as rapidly as our flow of funds allows.
A Reminder: Participation Agreements…
As a reminder, CFSIC is currently in suspension for the issuance of new Participation Agreements. The Participation Agreement signed by a claimant and, in each case, countersigned by the Superintendent is the only way that CFSIC claim funds get committed to a foundation project.
We’ve had a lot of phone traffic recently, where claimants have not only called but then written to us expressing their disappointment that their projects have not been funded, and claiming that they don’t understand, because “after all, I’m an Active claimant.”
With CFSIC’s guidelines, the funding of your claim is never based on the date you applied. It is never the date on which you became Active. It’s not even the date when you make it into the Participation Agreement line (because you’ve gotten your minimum of two approved contractor bids)…it’s the date on which your PA is countersigned by the Superintendent.
This all bears repeating: we have claimants in line for Participation Agreements right now, but no funds to give them…and we won’t have funds until the next round of funding. Being in the PA line means that your application is dated and time-stamped for funds once they are available. With any luck, we will be getting as much as $36 million this summer in new claim funding.
Until then, every PA in the PA line is on hold. Not only that, but when we do get our funding, we will go backwards into the PA line to July of 2021, which is where we stopped the last time we ran out of funds. We will start with those claimants first.
Of all the processes within CFSIC, the process that is most misunderstood is the Participation Agreement process. Once you get your PA, you complete it, sign it, and return it to the Superintendent’s office, everything can move quickly and efficiently.
We look forward to re-opening our doors for new PAs on the very day the money arrives.
Crossing an Important Threshold…
With 2,002 recorded claimants in our system as of last Friday…we’ve crossed an important threshold of service, with more than 2,000 families accounted for in our system.
At an average of 125 pages per confidential claim file, that’s 250,000 pieces of data on this crisis, its extent, and its cure.
CFSIC wants to acknowledge all of the service providers who have made this possible, starting with our colleagues and friends at ESIS ProClaim and continuing with our collaborators at Crowe LLP, Milliman, Marsh, KE Miller LLC, Rogin Nassau and Paul Frank + Collins, Tami Burke & Associates, and MRW Connected.
These are the people working behind the scenes to make sure that the application system is responsive and that the claims process is as seamless as our funding sources permit. What they do doesn’t make the papers or the evening news. What they do (fortunately) doesn’t show up on Facebook…it doesn’t show up, because what they do, they do quietly and behind the scenes, which is the way business should be conducted. The success speaks for itself.
There are not 35,000 crumbling foundations in the Northeast Corner of CT. There aren’t 30,000 or 20,000. We now know that, and our data absolutely supports it.
The crumbling foundations natural disaster is a human disaster…make no mistake…the lives of families have been turned upside down. The news we should all celebrate is only the good news…there are fewer affected families than we thought.
We’re anticipating $188 million of funding between now and June 30, 2030. As of Friday, CFSIC’s operating expense ratio to annual booked revenues is 3.7%. We’re allowed as much as 10%. That’s 6.3% turned back into the business of replacing foundations.
In Connecticut, we know how to fix this crisis, and we’ve demonstrated that. Connecticut is an international model for putting government resources and private insurance company management expertise at the service of people. The message CFSIC sends to other parts of the world where this crisis exists should be obvious.
Next week, CFSIC’s independent auditors will begin the financial and operational audit of CFSIC’s operations. Those results will be published (as have the last three audits) on this website at some point in October.
It’s 1983 and 1983 Only…
We at CFSIC want to put a rumor to rest now. This rumor has no basis in fact.
The rumor flying about is that there is a “top end” to the date range for “year built” (the year an affected home was constructed) in order to qualify for CFSIC claim consideration, either now or in the future. The rumor suggests that there is a date range for CFSIC claim eligibility for these homes, and that the range is between 1983 and 2015 (or 2016, depending on who is spreading the rumor).
It’s not true, and it never has been.
Here are the facts: it is true that the bottom end of the date range is 1983 (that year is set by statute); however, there is no top end date to the range. CFSIC’s claim eligibility process can literally apply to a house completed yesterday.
Here’s the evidence.
First, see what is in bold below:
“proof that the building or addition in question was originally constructed during calendar year 1983 or subsequent”
The above, in bold, is from CFSIC’s claim application as well as our Underwriting and Claims Management Guidelines, which are published on our website. It is one of the required points of evidence in order to file a claim to begin with. Notice the words “or subsequent.” It doesn’t say 1983 to 2016, for example. This means that there is no top end date to the range for claim eligibility.
There is no artificial top end to the date range established by CFSIC just because some people believe that 2015 or possibly 2016 are the years that Mottes stopped pouring…nothing in CFSIC’s published guidelines indicates a top end to the date range. Any home inspector, any engineer, and most recently any real estate agent…if any of you are using that top end date on a formal or informal basis because you feel the need to artificially connect the end of Mottes pours with CFSIC’s guidelines…and whether you are doing it in writing or just verbalizing it…you are wrong to do so.
Additionally, see what’s in bold below.
“For any residential building purchased on or after February 1, 2019, if the buyer of such residential building is aware that the building or any addition(s) to the building, inclusive of any garage, was constructed in 1983 or subsequent, such buyer will only be eligible to apply to CFSIC as a Type 1 or Type 2 claimant if the buyer or seller of the building has tested for pyrrhotite, or has conducted a visual exam for evidence of pyrrhotite conducted by a Connecticut-licensed professional engineer or CFSIC-certified home inspector, prior to the date of sale.”
This is excerpted from Appendix 1 to the CFSIC claim application itself. (And, yes, it is absolutely published in our guidelines on our website.)
Note again that it is “1983 or subsequent”… no mention of “2015” or “2016” is in that paragraph.
As is true with so many rumors about CFSIC’s underwriting guidelines and operations, we all need to get this straight. We encourage real estate agents in particular to refer people to the Superintendent’s office for clarification of CFSIC’s guidelines.
Transfer Claimants: Real Estate Agent Alert…
Real estate agents can play an important role in helping to move residential real estate in the Northeast Corner by understanding how a claim with CFSIC can be transferred from seller to buyer.
We want to help realtors understand the CFSIC claim transfer process. Realtors can play an important role in this process…and we don’t mean by interpreting the CFSIC claim transfer process (which is not their job)…we mean by being there for their clients to assure that the process works smoothly and the claim can be effectively transferred.
We’ve decided to use a Q&A format for this alert.
Question: Can any claim with CFSIC be transferred?
Answer: Yes…with ONE EXCEPTION. No claim where the foundation remediation process is already underway can be transferred.
Question: Define “underway.”
Answer: Where any part of the remediation process has begun…including the moving of even one piece of equipment onto the claimant’s property in preparation for construction to begin.
Question: What are the steps in the process?
Step 1: Simply ask the seller whether they have applied to CFSIC.
Question: What if the seller can’t remember if they applied to CFSIC?
Answer: Unfortunately, that happens a lot (surprising but true). Ask the seller if they have a CFSIC claim number, or if they kept a copy of their original application and any supporting documents. If the seller can’t find this information, they can call the Superintendent’s office at 860-487-0000.
Question: Can I as a realtor just call instead?
Answer: No. If the seller wants to transfer an existing claim, it must be the seller who calls.
Question: Okay…can we just get the buyer to call?
Answer: Same answer as above.
Question: Okay…what is “Step 2”?
Answer: As a realtor, either point the seller to the link below, which fully explains the claim transfer process, or print this information and hand it to the seller:
Question: But what if they start asking me questions…
Answer: You’d be providing information well outside your license…that’s what the Superintendent’s office is for (see phone number above).
Question: Is there a “Step 3”?
Answer: Yes. The claimant/seller should then contact ESIS ProClaim at (844) 763-1207. They provide their name (claim number not needed) and their address to any member of our adjustment staff. The staff member will then provide the claimant/seller with a Claim Transfer Data Form. The data form must be completed by the seller or the seller’s attorney.
Question: Can I as the agent complete it?…or how about the buyer?
Answer: No and no.
Question: What comes after that?
Answer: The seller or seller’s attorney must directly and personally return the completed Claim Transfer Data Form to their contact at ESIS ProClaim (preferably by email)…and to anticipate your next question, this cannot be done by you and or the buyer.
Question: This process sounds pretty simple at this point. When does it start to get complicated?
Answer: It never gets complicated, as long as the seller stays involved every step of the way. At this point, depending upon whether the seller is an Active, Inactive, or Pending claimant, CFSIC needs to send a Claim Transfer Agreement to that claimant/seller by email. That comes from the Superintendent’s office, NOT from the claims adjustment staff at ESIS ProClaim…and that email communication from the Superintendent’s office will be specific about what happens next. (The Superintendent’s office can help a seller/claimant understand how their claim status affects anything else that needs to be done before the claim transfer can be completed.)
Question: Are we getting to the last step?
Answer: Yes. You are on it right now. The claimant/seller completes the Claim Transfer Agreement (sent to them by the Superintendent’s office) by signing it and having it witnessed (no notary required), and then provides it directly or through counsel to the buyer for their signature (with a witness as well), and the buyer then returns it to the seller. LASTLY, the seller must then return the fully executed Claim Transfer Agreement to the Superintendent’s office (where it came from in the first place) ATTACHING A COPY THE WARRANTY DEED.
Question: What happens if we just can’t get the seller to follow through and do this work?
Answer: Then CFSIC will not transfer the claim.
Question: Okay…once you get back the Claim Transfer Agreement with the Warranty Deed attached, is the buyer of the home now a CFSIC claimant?
Answer: Yes. The buyer occupies the exact same place in our system that the seller once did in each and every respect. That residential home address has now transferred fully to the buyer for purposes of CFSIC.
Question: Is there a time limit to get this all done and what happens if we don’t make it?
Answer: There is a time limit: thirty days from the date of sale. If the entire transfer process (and, yes, the entire process…from beginning to end) isn’t completed by then, it can’t be completed. So, if a seller represents that they have a CFSIC claim and walks away from their absolute obligation to do what they have to do as an existing claimant, within the time limit, to see that the claim is fully transferred to the buyer…then potentially some serious misrepresentations have been made to a buyer, and we know you will understand what that means.
Question: Any final advice for real estate agents?
Answer: Yes. Take a moment and print out this section of our site. Put the printed copy in your briefcase and take it with you wherever you go in the Northeast Corner of Connecticut.
January 5, 2022 Is An Important Date…
We wanted to remind everyone that anyone who applied to CFSIC on or after January 13, 2020 is by definition a “Pending” claimant.
If you’ve made application to CFSIC on or after that date, our electronic claims system has recorded key facts about your application, and that’s important to know.
But for most Pending claimants, there is something much more important for you to know…and that is that none of CFSIC’s claims adjustment staff began to look inside Pending applications in any detail until January 5, 2022.
Said another way, it was only on January 5, 2022 that our great staff at ESIS ProClaim actually began to open Pending claimant files and review them, document by document and page by page. Prior to that time, the staff had not done anything with your Pending claim except register its existence in our system. As you can imagine, we have been very busy taking care of Severity Class 3 and 2 claimants who first applied when we opened our doors on January 10, 2019.
We’re rapidly going to move into the adjustment process with Pending claimants from February through June, reviewing claim files and contacting Pending claimants directly about the status of their claims. Some of the Pending claims filed will be in perfect condition (a complete application, all points of evidence, etc.). Some Pending applications will be incomplete, or may be missing points of evidence.
Either way, our great claims staff will be working though each individual Pending claim file to get to the answer.
We’re going to start with verified Severity Class 3 Pending claimants first. We have more than 300 of those, and it’s going to be a job of work managing that process.
But what’s the goal?
Simply put…it’s to be in touch individually and directly with as many Severity Class 3 Pending claimants as we can, as soon as we can, and in the order, after January 13, 2020, in which their applications were received, so that when our next round of funding arrives (we hope this summer), we can move dozens of Pending claimants into Active status and from there quickly into line for a Participation Agreement.
New PAs Now in Suspension…
Effective this past Friday, CFSIC has suspended the issuance of new Participation Agreements until it receives its next round of funding, which is anticipated to happen this summer.
To be clear…we are still very much moving Active claimants into line to receive PAs in future…we’re just not sending new PAs to claimants while we are in suspension.
We are expecting to receive approximately $10.6 million to $11.0 million from the Healthy Homes surcharge perhaps as early as the end of June and, in addition, another $25 million from the CT Bond Commission as early as July or August of 2022.
When these funds are received, starting with the Healthy Homes surcharge funds, we’ll immediately re-open the Participation Agreement line.
By way of reminder, CFSIC’s Superintendent has directed that the captive will always maintain a minimum operational cash balance, so that we can continue our work while we are between funding allotments. This is particularly important since we are now rapidly opening Pending claim files and moving Tier 1 Pending claimants into the Participation Agreement line as quickly as our process permits.
Our goal is simple: make Pending claimants Active; make Active claimants eligible to receive a PA. We are moving as quickly as we can to make this happen.
Clarifying Severity Class Code 1 Foundations…
The Superintendent has directed that CFSIC publish a guidance on the visual inspection of foundations as it relates specifically to the classification of a foundation as a Severity Class 1. (This guidance does not apply to Severity Class 2s or 3s.)
Beginning immediately, the Superintendent has directed that in order for a Severity Class 1 to be validly applied through a visual inspection undertaken by one of our certified inspection professionals or a CT-licensed professional engineer not otherwise certified by CFSIC, 50% or more of the measurable wall space of the foundation must be visible to the professional assigning the severity class code. Otherwise, no Severity Class 1 code can be applied, and the professional must designate the foundation as “unable to certify.”
It is important to remember that a visual inspection cannot be successfully accomplished for a Severity Class 1 if 50% or more of the interior foundation area is simply not visible.
To be clear: the requirement that any home sold after February 1, 2019 must have, in order to qualify for a potential CFSIC claim, EITHER a visual inspection report or a core sample report prior to the date of sale, is not compromised by this guidance. Nowhere in CFSIC’s guidelines is it required that the visual inspection must be severity coded in order to satisfy this requirement…the only requirement CFSIC has with regard to the February 1, 2019 rule is that one or the other has to have taken place: a visual inspection or a core test. This is an important fact that is not widely understood, particularly by some professionals in the real estate community.
No claimant ever becomes an Active claimant in CFSIC without a severity class code (and it doesn’t make any difference whether you’re a Class 3, 2 or 1)…so we draw everyone’s attention to the difference between what the rule is for homes purchased on or after February 1, 2019 as opposed to CFSIC’s rule about how you qualify to be an Active claimant. The first rule gets you in the door at CFSIC; but unless you have a Severity Class code you will never actually become an Active claimant. We encourage real estate agents in particular to pay close attention to this very important distinction.
Professionals undertaking a visual examination where a Severity Class code of 1 might normally apply will never be required to provide that designation to a foundation if they cannot see 50% or more of what they are trying to classify.
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.
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.
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: email@example.com
– Email CFSIC at: firstname.lastname@example.org