Connecticut Crumbling Foundation Insurer Seeks $100 Million

The state-created captive insurer handling Connecticut homeowners’ claims for crumbling foundations is in line for another $100 million in bond funding in the biennial budget now awaiting Gov. Ned Lamont’s approval.

Lawmakers are promising $25 million in each of the upcoming fiscal years in what should be the last appropriations needed, according to officials at the Connecticut Foundation Solutions Indemnity Co. (CFSIC).

The insurer’s superintendent, Michael Maglaras, has said he does not intend to ask for any more funding for CFSIC beyond the fiscal year 2030. By then, the “vast majority of this crisis will be behind us, and that it will be time to wind down CFSIC’s operations by the end of 2031,” he wrote In a February report.

Maglaras estimates that by 2030, there could about 725 new claimants that will require a minimum of $100 million in funding. That would bring the total number of CFSIC claimants since it began underwriting in 2019 to between 3,200 and 3,700.

“CFSIC’s position is that we must manage the company with an eye to ending state governmental support and putting the crisis to bed as quickly as possible,” Maglaras stated in the report.

Steve Werbner, president, CFSIC, has indicated the board supports that timeline.

CFSIC was formed to assist homeowners affected by crumbling foundations due to the presence in their concrete foundations of pyrrhotite, a mineral that causes concrete to slowly deteriorate as it is exposed to oxygen and water. State officials discovered that concrete produced from a quarry in Willington contained the pyrrhotite that was causing the foundations to deteriorate. Early on, officials had estimated there could be as many as 35,000 homes in the state built with the suspect material from 1983 to 2015. However, CFSIC data suggests there may be between 3,500 and 4,500.

The state got involved because most insurers were denying homeowners’ claims, relying on policy language. In November 2019, the Connecticut Supreme Court backed the insurers, ruling that they were not liable for crumbling foundations caused by defective concrete unless the home is on the verge of collapse.

Topics Carriers Connecticut