Where We Are
As of Friday, September 13, CFSIC had 1,196 Type 1 and Type 2 claimants recognized as in our system. That is 84 more claimants than we had reported as of August 31. The application process was turned off at 5:00 PM on September 6, and clearly many people realized that time was growing short.
As of September 13, we have $100.1 million in active incurred claim liability. CFSIC to date has paid $14.1 million in claims. Homes are up off the ground throughout the Northeast Corner. We have signed 247 Participation Agreements to date.
We have been informed that a special session of the Connecticut Bond Commission will be held on September 17. We know that we are on the agenda for the approval of our next $20 million in bond allotment. We are grateful to the Governor and to the Commission.
Here’s what will happen after our allotment approval:
1) Our counsel will immediately begin the process of working with the Governor’s office and the CT Department of Housing on the Memorandum of Understanding needed in order to move funds from state government to CFSIC.
2) Based on our experience with the finalization of this document the last time we entered into it, plus the actual time it takes to move funds into our account, homeowner claimants should anticipate at least 7 to 10 business days at a minimum before we can begin the process of sending Participation Agreements to homeowner claimants in line.
3) Once funds hit our account, our staff will begin the process of pre-filling Participation Agreements for the first 61 homeowners in line, who have been in line in some cases since June 14. Give us a few days to get these PAs to you…and most importantly: check your spam folder.
4) If we enter into Participation Agreements for all 100 homeowners in line, we will be back in suspension before December 1…so we are going to begin the process of rationing Participation Agreements at a rate of two per week, beginning seven days from the 61st Participation Agreement countersigned by the Superintendent. We have no other choice in this matter. We have been told that we will not receive our next bond allotment until after July 1, 2020. It is important to note that we anticipate getting $8.5M through our share of the Healthy Homes surcharge in June of 2020. This will help us with as many as 65 homes…but to be clear, we do not know when we will get the next $20 million at all. Therefore, we are rationing Participation Agreement signings through the nine months remaining in this fiscal year.
5) If you are in line now and are within the group of 61 claimants noted above…if you review and sign your Participation Agreement quickly once you receive it, the Superintendent will quickly countersign it, which means that your contractor could have a deposit in his hands in just a few days from the date of the Superintendent’s countersignature. You’ll be able to schedule your work, and you’ll be able to get on with your life.
We pledge to move quickly, as we know that all of you must schedule construction and must uproot your lives in order to get your work done.
Our claimants should be aware that we have requested that our September 17 allotment not be $20M, but $60M…in other words, we have requested a pre-funding of all remaining bond allotments due CFSIC. We have had no response thus far from state government on this request.
Here’s what would happen if we got $60M on September 17:
– There would be no rationing in this fiscal year of Participation Agreements; all 100 people in line (as of Sunday, September 15) would immediately be able to schedule their construction.
– The Superintendent would put the first 50 severity coded 2 claimants in line immediately.
– CFSIC’s ability to restore the tax base in the top ten affected towns would be greatly accelerated.
– More contractors, affording more homeowner choice, would enter the marketplace, because they would be assured of a flow of funds being available.
– There would be no reason to go into suspension for Participation Agreements between now and CFSIC’s sunset date of 2022.
All of us who work on the CFSIC project understand clearly that our robust claim application process has greatly accelerated the identification of claimants in need. We make no excuses for our success. We all signed on to a project with the understanding that CFSIC would only get annual Bond Commission allotments of $20M, regardless of how fast we were moving. No one within the CFSIC system is pretending otherwise.
However, we have urgently asked state government, based on the facts in our Annual Report and our outstanding success at identifying citizens affected by this natural disaster, to re-consider the timing of which they give us what they give us. We have made our case. We hope for the best.
Insurance Company Acceptances and Denials
CFSIC currently carries inactive claim reserves valued at approximately $9.5 million specifically related to our claimants who are awaiting acceptance or denial of their crumbling foundation claims from commercial homeowner insurers. Many of the claims filed with commercial insurers have been in line for a decision for more than six months.
To be clear, we carry reserves on severity coded 3 and 2 claims, even if those claims are inactive, if petrographic and/or visual examination reports accompanying the application substantiate that severity coding. We place reserves on these claims even though they may be in line with a commercial insurer…because when they come out of line they will immediately become active claims.
To be doubly clear…if the only thing standing in the way of our putting your currently inactive claim in line for payment is a commercial insurance company acceptance or denial, then it is hardly in your interest not to let the ESIS team know immediately if you have received a “thumbs up” or “thumbs down” from your insurer. We have no record in our system of our claimants dragging their feet in this regard.
It is for this reason that we do not believe that the delay in making these inactive claims active rests solely with our claimants in all cases.
We need to be fair. Not every commercial insurer is slow in responding with an acceptance or a denial to our claimants. But enough are. Our claimants have indicated to us that claim acceptance/denial delays are resulting from many factors, including the need for an insurer to place a claim before outside coverage counsel for an opinion before deciding on behalf of a homeowner. Additionally, some insurers have indicated that there aren’t enough laboratories able to handle needed core tests. Some insurers have cited a backlog because of the absence of enough qualified engineers to undertake visual examinations. We remind these insurers that CFSIC has certified 47 home inspectors to accomplish this task. These professionals have been certified through the means of a rigorous concrete failure curriculum that did not exist until CFSIC put it together. We encourage the commercial insurance industry to use these resources if a backlog exists.
Because the vast bulk of crumbling foundation claims have not been accepted by the commercial insurance industry (otherwise, there would not be active litigation efforts underway), and this fact is well known to our claimants, we encourage all insurers to move as quickly as they can to make claim determinations. We at CFSIC are standing by to rebuild homes and rebuild lives…but we can only do this after a coverage determination by somebody else.
CFSIC will not pay first. We have been asked to participate in potential joint claimant resolution discussions with affected members of the commercial insurance market. The Superintendent has been approached directly on this matter. We will not be doing that. CFSIC is a secondary payer. It will remain so.
CFSIC’s Annual Report
CFSIC’s Annual Report can be viewed here. (This is not CFSIC’s 2019 audited financial, which will be available on this site shortly.)
CFSIC Has Temporarily Suspended New Application Activity Effective Friday, September 6 at 5:00 PM
CFSIC is in suspension for the taking of new Type 1 and Type 2 claim applications. We do not know when we will be out of suspension in this regard.
CFSIC Is In Suspension for the Signing of New Participation Agreements
CFSIC is in suspension for the signing of new Participation Agreements. We believe that we will be out of suspension at some point during the first week in October.
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: email@example.com
– Email CFSIC at: firstname.lastname@example.org
Michael Maglaras, Principal
Michael Maglaras & Company