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