Where We Are
As of Friday, June 21, CFSIC holds statutory claim reserves on active claims of $72.6 million. It holds $17.4 million in reserves for inactive claim matters.
We have executed $28.9 million in Participation Agreements, assuring either reimbursement for past work, or work in progress, or work to come. Of those agreements we have paid $6.7 million in reimbursements and foundation replacements to claimants as of last Friday.
We have 666 applications on our books, of which 472 represent active claims.
It’s important to remember that if your claim is inactive, and you are severity coded 3 or 2 at the point at which your application was submitted, or at any point thereafter, we have a reserve on our books for the probable payment of your claim. We may, however, not have the cash on hand to honor it when your claim actually becomes active, because it is the Participation Agreement, and only that document, that can trigger the payment process.
We will not sign a Participation Agreement if we don’t have the cash to honor the complete claim obligation to you. It is at the point where we are out of cash that the Participation Agreement process ceases…even though we continue to accept applications based on the long-term promise inherent in the enabling legislation of future funding.
The Participation Agreement and the Timing of Reimbursement or Replacement
CFSIC is in charge of many things…but it is not in charge of the scheduling of the construction process.
If we enter into a Participation Agreement with you, it is a promise to pay for a foundation replacement or reimbursement. If it is for a foundation replacement, we could be providing a deposit to a contractor to hold your place in line with that contractor…but where the work might not get done for three to four years at the current schedule, which has been brought to our attention.
Understand that CFSIC sunsets on June 30, 2022. At that time, we will have construction that has not yet started on that date, but where we have put down deposits with contractors on behalf of claimants. What this means is that, even though CFSIC will not be accepting new applications after that date, the construction will be paid for. CFSIC will essentially go into what we call in our business “run-off”…this means no new applications, but it does not mean that we won’t honor the Participation Agreements we’ve signed.
As of June 19 at 5:00 PM, proposals prepared by the contractor Mr. Dean Soucy for Type 1 (foundation replacement) services will not be accepted for payment by the CFSIC program. This includes any Type 1 proposal made on or after June 19, 2019, and also includes any Type 1 proposal made prior to June 19. Mr. Soucy will continue to be able to provide Type 2 (partial or full foundation reimbursement) services to eligible claimants under the CFSIC program, subject at all times to the maximum number of full Type 2 reimbursements mandated by CFSIC’s board, as well as assistance to “Legacy Claimants” for whom work was done in the past. This change with respect to Mr. Soucy affects CFSIC only. CFSIC does not maintain, neither does it have responsibility for, the contractor vendor list maintained by CRCOG.
This decision does not affect the firm known as “Soucy’s Concrete Service” located in Stafford Springs.
Fiscal Year Close
CFSIC is a licensed captive insurance company under the direct supervision of the CT Insurance Department. Its fiscal year will close on June 30, 2019. CFSIC is required under CT insurance statutes to provide a statutory audited financial to the CT Insurance Department. CFSIC is a private company. It is not a branch of state government. However, CFSIC is committed to the posting of its audited financial on this website when that audited financial, undertaken by an independent audit firm, is completed, which we expect to be within the next 90 days. This is appropriate and is in keeping with CFSIC’s status as a 501(c)(3) organization.
The Home Inspector Certification Program
On June 25, 2019, CFSIC will conduct the second and final day-long home inspector certification course for eligible licensed home inspectors as well as engineers.
The eight hours of course work will culminate in an examination, where we hope as many 25 additional home inspectors and engineers will be certified by CFSIC to provide foundation evaluations.
What follows are some “Q&A” covering the CFSIC certification program.
Question: What does it mean to be “certified” by CFSIC?
Answer: Before this, in order to file a Type 1 claim with CFSIC, the only option open to homeowners was to have a foundation evaluation performed by a CT-licensed professional engineer, resulting in a written report. Effective June 12, 2019, a visual examination and written report rendered by a CFSIC-certified home inspector will be accepted by CFSIC as part of the application process, provided that the home inspector (or engineer) in question assigns a CFSIC severity class code to the foundation.
Question: Does this make CFSIC responsible for the home inspector’s or engineer’s written evaluation?
Answer: It does not. CFSIC assumes no responsibility for any report rendered by a home inspector or engineer, whether CFSIC-certified or not. The licensed professional rendering the evaluation is totally responsible, in every respect, for the work product provided under that person’s license. CFSIC’s education and certificate program is aimed at making the claim process easier and more fluid. It is not aimed at anything but that goal.
Question: What were the requirements CFSIC imposed on enrollment in the course?
Answer: The course was open to CT-licensed engineers (who wish to become certified by CFSIC) and to CT-licensed home inspectors with a minimum of three years of professional experience.
Question: Where do I find the list of CFSIC-certificated foundation professionals and how do I contact them?
Answer: You can find the list of CFSIC-certificated foundation professionals here.
Question: Are there rules in place for the conduct of certified home inspectors and engineers?
Answer: There are, and you can find the rules here.
Question: Are evaluations done by home inspectors reimbursable under the CRCOG program?
Question: If CRCOG is not going to reimburse part of the evaluation done by a home inspector, why would I even do it?
Answer: Good question…you might not. We’re giving homeowners 25 more certified professionals they can turn to, which means faster delivery of evaluation services. The choice is yours: a long line involving CRCOG reimbursement…or a shorter one (with home inspectors).
Question: Is there a fixed price for home foundation evaluations done by a CFSIC-certified professional?
Answer: No. It is a free and open market.
Question: There has been a lot of talk about what constitutes a severity class code 1. Has the severity code changed?
Answer: No. Go here to see the description of all three Type 1 severity class codes. The course work went into great detail about these standards, and included numerous examples. Examination questions dealt with the differences.
Question: Are home inspectors required to severity code a foundation they evaluate…even if it is a severity class 1?
Answer: If they are certified by CFSIC, the answer is “yes.” Any CFSIC-certified professional refusing to provide a severity class code, including class code 1, at the fixed point in time of evaluation, will be terminated from the program immediately.
Question: But if I’m assigned a severity class 1, and a year from now I get another evaluation indicating I’m a severity class 2, what happens?
Answer: First, it depends on whether or not you have filed a claim with CFSIC. If you filed a claim with CFSIC as a severity class code 1, and a subsequent evaluation done by a professional engineer or CFSIC-certified home inspector indicates that the status of your foundation has deteriorated, you can notify ESIS of the change, submit the subsequent evaluation, and have the status of your claim change. Remember that no core sample is ever needed for a severity class code 2 or 3. Also remember… you can file a claim as a severity class code 1, but you will remain inactive with CFSIC until you also file a positive core sample test result.
Question: So what is the value of getting a CFSIC severity class code 1 to begin with?
Answer: First, it is a fixed point in time evaluation of your foundation. We emphasize the term “fixed point in time.” Secondly, to the extent you make a claim with CFSIC at any point, it places you in line for possible assistance at some point in the future when the severity coded 3 and 2 foundations have been addressed (with the understanding that if you remain a severity class code 1, the only way that your claim can become active is through the second step of submitting a positive core test result… as CFSIC is not in the business of replacing foundations with no impairment on the basis of a severity class code 1 evaluation where no pyrrhotite in any amount is known to exist).
Question: So why hasn’t CFSIC established standards for the amount of pyrrhotite in the aggregate that must exist in order to qualify for coverage?
Answer: Because no standards exist. There are no existing definitive standards stating exactly what percentage of pyrrhotite in the course aggregate automatically, definitively, and 100% of the time causes a crumbling foundation to happen. We could have established an artificial standard at the inception of the CFSIC program. If we had done so, two things would have happened: the first is that we would have been delayed by months (possibly years) with the start of the program; the second is that we would have automatically eliminated a minimum of 50% of persons currently getting assistance from the program. The good news is that CFSIC would have survived longer, because we would have paid fewer claims. The bad news is that CFSIC would have become another program focused on the crumbling foundations crisis, which would have promised much and delivered little. It is for this reason that no core sample is required at all for a foundation evaluated as a severity class code 3 or 2; and for a severity class 1 active claim to exist, pyrrhotite must exist in the aggregate in any amount…even in the most minute trace. CFSIC is more focused on inclusion than on exclusion.
Important Changes for Condo Owners
CFSIC has, effective, June 10, 2019, adopted a more streamlined process for condo owners, aimed at getting condos in line with more efficiency and speed.
It is very important that condo owners carefully read everything that follows:
1) CFSIC will now permit (effective from today forward) a single application for all affected building foundations and covering all eligible units on those foundations.
2) This will not be a two-application process…but a single application from this date forward.
3) If you have already applied to CFSIC using the two-application process, where you have first applied for eligible buildings containing four units and fewer…you should continue with the two-application process, because you are already in the application pipeline. If you have not done so, use this new process effective today.
What follows is an important “Q&A” which should help your understanding:
Question: If I’m submitting one application for my buildings and units, how do I let CFSIC know which buildings/units I’m applying for?
Answer: Go here. This is the template for an email that the president of the condo association can send, but only once the application is completed and all points of evidence are uploaded to ESIS. This email, then addressed to ESIS (not to CFSIC) will explain what you have applied for if you complete it correctly.
Question: So, you are saying that from June 10, 2019 forward there will be one single application per condo association?
Answer: Yes. But remember…if you don’t follow up the application with an email (and we mean “follow up”…you should not include the email with the application, but send it separately as a follow-up), we won’t know who you are and what you’re applying for.
Question: So I will be applying for all my condo units on a one-time basis, regardless of the CFSIC severity code assigned to each foundation?
Answer: You will, but be careful: this implies that all of the foundations of all of your buildings have been severity coded by a CT-licensed professional engineer (or, after June 12, 2019 to include CFSIC-certified home inspectors). If you haven’t done this yet, your claim would remain “inactive” because you had not been able to submit that point of evidence. The object is to get an application into CFSIC for all of your buildings/units so that we can estimate the current liability associated with severity class coded 3 and 2 buildings, as well as the potential future liability associated with those buildings severity coded as class 1. One last point…once a severity code is applied to any part of a building’s foundation, it applies to the whole foundation. (For example, a foundation indicating a severity class code 3 in one part of the foundation is considered to be entirely a severity class 3.)
Question: Has the enabling legislation changed, enabling us to include buildings with more than four units on the foundation?
Answer: We understand that it has changed…but is still subject to the Governor’s signature. Because we anticipate that the Governor will sign this legislation, we are now moving quickly, as a result, to use a single-application methodology in order to streamline the process for condo owners.
Question: What about bank-owned or commercial investor-owned units?
Answer: They are excluded.
Question: How will the contractor calculate the foundation work if, for example, with a six-unit building we have to exclude one unit?
Answer: The contractor will calculate the work based on the existence of six units, because it is impractical for a contractor to do it any other way. However, CFSIC will only contribute to the cost of five units, because of the exclusion of one unit. This means a potential significant financial burden on the association and its unit owners.
Question: This poses a significant additional potential financial burden, does it not?
Answer: It does. Which is why we encourage condo associations to write to the bank or commercial investor owning any unit in question, and ask them to bear their share of the total cost of the building’s foundation, inclusive of everything CFSIC won’t pay for with respect to that one unit.
Question: Can you give me an example?
Answer: Let’s use an example of a building with six units, and where that building is severity coded class 3. One of the six units is owned by a bank. The contractor, using CFSIC’s replacement cost parameters and the contractor worksheet, prices the replacement of the entire foundation as if one of the units was not bank-owned. For example, the contractor prices the six-unit building foundation total construction cost at $480,000. (Again, including the bank-owned unit.) The contractor then determines that CFSIC’s allowable concrete costs come in at $420,000. (Again, including the bank-owned unit.) Here are the options: (i) the association bears the cost of the bank-owned unit ($70,000 for allowable concrete work plus one-sixth of the difference between $420,000 and $480,000, which is $10,000, for a total additional association shared expense of $80,000), or (ii) the association asks the bank owner in question to contribute $80,000 to the cost, and the contractor bills the bank directly, or (iii) the building doesn’t get fixed. Obviously, approaching the bank or commercial owner of the condo to bear their proportional share of the foundation’s expense makes sense…because all owners succeed if this occurs.
Question: Has anything changed about the cap for condos?
Answer: No. The allowable concrete work cap of $70,000 per condo unit still applies, with the exception of single condo units sited on a single foundation platform, where a cap of $175,000 applies.
As always, your best source of information is ESIS. If there is any doubt as to how to apply, email ESIS at email@example.com or call them at 844-763-1207.
CFSIC-Sponsored Foundation Re-Examination Program
The CFSIC-sponsored foundation re-examination program is scheduled to end on July 31, 2019. It will not be continued.
The re-examination program had been put in place to assist homeowner who had had written visual examinations conducted by engineers in the past where no CFSIC severity class code has been assigned. It is now common knowledge among engineers doing this work that severity codes should be assigned. Additionally, CFSIC will be conducting two foundation evaluation workshops for CT-licensed home inspectors, permitting them to do written evaluations. By the end of June, we expect thirty or more home inspectors to have passed the course work and examination for certification. This should assist greatly in the ability for claimants to get the help they need.
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, 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
Michael Maglaras, Principal
Michael Maglaras & Company