The non-profit captive insurance company set up to assist Connecticut homeowners affected by the ‘crumbling foundations’ issue will run out of funds by May next year if it continues at its current rate.
The Connecticut Foundations Solutions Indemnity Company (CFSIC) was set up to administer the Crumbling Foundations Assistance Fund, which was designed to distribute the remediation funds to homeowners across the state impacted by the forming of web-like cracks in their foundations, which can cause irreversible damage.
The captive launched officially on 10 January 2019, receiving 174 applications in the first 55 minutes, and aims to begin the actual process of lifting houses and replacing foundations in April.
Some 30,000 Connecticut homes could be impacted and Michael Maglaras, the superintendent of CFSIC, has previously suggested that if the captive is “to complete its mission paid losses will likely be between $1.2 billion and $2 billion”.
Undoubtedly, the captive faces an issue over funding. Its current allotted funding is around $137.5 million, which includes state funding and around $15 million from local commercial insurers.
At the beginning of March, CFSIC had $56 million in incurred claim liabilities, and Maglaras expects to have nearly $90 million by the end of June.
He suggested: “Based on the growth curve of the incurred claims liabilities we will be pretty much stopped by May 2020.”
“Without funding, we will essentially be in run-off.”
Currently, Maglaras is working with US senators and a number of key congressmen from Connecticut.
He explained: “We are actively engaged with the federal government for additional financial assistance.”
Maglaras said he is “reasonably confident” they will be successful in securing more funding because once they run out of funding, they will announce they cannot take any more applications and replace any more foundations, which “will be a deeply political message”.
He added: “Like everything else in life the way to get people’s attention is through dramatic news, and the dramatic news will be when we go into run-off.”
For more about CFSIC and the state of Connecticut, check out the domicile profile in the upcoming issue of Captive Insurance Times.
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