Connecticut legislators are looking to help hundreds, if not thousands, of homeowners whose foundations are crumbling because of an iron sulfide found in the concrete by creating the state’s own insurance company.
The newly minted state budget includes language establishing a not-for-profit captive insurance company, run by a volunteer board of directors, to distribute grants for costly repairs or replacement of deteriorating foundations. It will be funded with $100 million in state bonds over five years.
Rep. Jeff Currey, a Democrat from East Hartford, said the captive insurance company will be regulated and licensed to give it “that extra layer of oversight.”
This will mark the first time the state has created such a captive insurance company, which is essentially a highly regulated form of self-insurance.
Steven Werbner, Tolland town manager and co-chairman of the Capitol Region Council of Governments’ crumbling foundations committee, said his group didn’t recommend the state create its own insurance company to distribute financial assistance, because it was concerned it might be “a bit too complex.” But they’re taking a wait-and-see approach to the concept, which could take months to set up.
“We remain open to see how it works,” he said. “But our immediate concern was to get money into the hands of those who need it as soon as possible.”
An estimated 30,000 or more homes and condominiums built in eastern and central Connecticut from the mid-1980s to 2016 could have failing foundations because of the presence of pyrrhotite. It reacts naturally with oxygen and water, causing concrete to crack and crumble over the decades, making some homes unsellable and unlivable. In many cases, homeowners have been unable obtain insurance. Repairs can cost as much as $200,000 to replace a foundation.
State officials are hoping that news of this new financial assistance will encourage more affected homeowners to come forward, potentially giving the state more ammunition in its bid to persuade federal authorities they need federal assistance.
The new captive insurance company will eventually create eligibility requirements and underwriting guidelines for affected homeowners. Grants will only be released to approved contractors and vendors. While the insurance company terminates in 2022, it can be extended.
The bill also creates for a separate loan program to help homeowners obtain lower cost state loans, as well as a new state-funded advocate to guide homeowners through the various assistance programs.
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