37 Condo Units and Counting…
As of this past Friday, CFSIC has put 37 families owning condos back in safe and secure homes. All of these units were Severity Class 3. We expect this number to double by April 1, 2022.
But more good news….11 condo families who came together cooperatively to pool their own resources and take a risk on fixing their own foundations have all been reimbursed by CFSIC.
Severity Class 2s Start This Week…
One by one, beginning today, we’ll be providing Participation Agreements to Type 1, Severity Class 2 claimants. This is the first time we have gotten to this group, and the Superintendent has directed a seven-day-a-week effort to make sure that we get through as many Severity Class 2 claimants as we can with the current funds available to us. It’s a major milestone in CFSIC’s progress.
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.
IMPORTANT REMINDER: Tightening the Claim Transfer Process
Transferring an existing CFSIC Type 1 claim when a home is sold to a new buyer, and allowing that buyer to assume the seller’s place in line for remediation as a claimant, is a privilege…it is not a right.
CFSIC permits a claim transfer to occur under carefully controlled circumstances that are clearly articulated on this website. A CFSIC Type 1 claimant can transfer a claim without regard to what class of claim is involved…whether Active, Inactive, or Pending.
Effective fifteen days from today (Tuesday, November 16 at 5:00 PM) CFSIC will require that all new transfer claims be fully transferred from seller to buyer within 30 days of the sale of the original claimant’s home. Otherwise, the original claim will be removed from our system, and the new buyer will have to start the application process from scratch as if the original claimant never applied to us.
What does this mean? It means that, if you bought a home with an impaired foundation owned by a CFSIC claimant, and you thought you would get in line quickly because you would inherit the seller’s place in line…you may be waiting for years to get help. You may not get help at all…if the claim transfer doesn’t happen within 30 days. A CFSIC claim transfer is the sole responsibility of the original claimant.
What do the rules say now about the length of time a claim transfer can take?
Right now, the rules are silent in this regard. There is no timeline governing a transfer. We have determined that a rule must now be put in place. In too many cases, the process of transferring a claim has become endless. It’s becoming too expensive administratively. CFSIC staff are chasing sellers who have failed to effectively transfer their claim. CFSIC believes that this is not right: chasing claimants is, we feel, a poor use of taxpayer resources.
There are three parties involved with the transfer of a CFSIC claim:
– the seller of the home, who is our CFSIC claimant, and who has primary responsibility for transferring his or her claim;
– the real estate agent involved in the transaction, who should be using the “Concrete Advisory and Disclosure for Sellers and Buyers” form and should be advising both sides about where to obtain data on claim transfers from CFSIC’s website;
– the buyer…who through the means of a quick Google search (where you type in “crumbling foundations”) can determine the locations of the towns suffering through this crisis. Any buyer purchasing a home in the Northeast Corner of CT has no excuse for not knowing about this crisis.
In too many cases, one or more of the parties noted above are being negligent in properly transferring a claim, or even in discussing the possibility of a claim’s existence as part of the sale transaction, and the result is that CFSIC staff must deploy financial resources to chase people, when those resources can be better used to provide immediate assistance to the victims of this crisis.
It is for this reason that, beginning at 5:00 PM on November 16:
– if you are a CFSIC registered claimant selling your home, and you have not taken the steps necessary to fully transfer your existing claim within 30 days of the date your home is sold, we will remove your claim from the system; in other words, no claim transfer will be possible;
– if you are a real estate agent, we do not expect you to be an expert on CFSIC’s guidelines; but we do expect agents to direct both buyers and sellers to CFSIC’s website, to the ESIS telephone number, which is (844) 763-1207, or to the ESIS email address, which is firstname.lastname@example.org in order to get more information on any claim in our system. If you complete a sale and walk away without advising both sides as to the simple existence of the CFSIC claim transfer program, and have not directed both parties in the transaction to where they can get information, you have failed to do what is right.
– if you are a buyer, and you’ve made the assumption the claim would automatically transfer to you, but you have no evidence of that transfer, you should be in touch with the seller and/or the agent involved in the sale, and ask why the necessary steps have not been taken to transfer the claim to your ownership, and therefore allow you to take advantage of the remediation process, which was no doubt part of your intended purpose to begin with in buying a home with an acknowledged potential impaired foundation.
CFSIC strongly urges the three parties in any home sale transaction to move effectively and promptly in order to avoid future misunderstandings. It is no secret to anyone selling or buying residential real estate in the Northeast Corner that the crumbling foundations crisis exists. It is no secret to any real estate agent making that sale that the crisis exists.
CFSIC will be taking steps, beginning on November 16, to tighten the claim transfer process and eliminate needless delays and a waste of the valuable time of CFSIC staff, who must turn all their attention to active foundation remediations.
CFSIC’s claim transfer program is designed to give claimants a fair break. It’s designed to have a positive effect on the real estate market in the Northeast Corner. It is designed to treat people fairly and equitably. It is for these reasons that we can no longer permit an extraordinary amount of time to go by before a claim can be transferred.
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: email@example.com
– Email CFSIC at: firstname.lastname@example.org