The Connecticut State Bond Commission has approved $350,000 to set up a non-profit captive insurer, which is a state government solution for an issue impacting a reported 5000 homes in the state.
The funds, approved in the State Bond Commission’s meeting on 16 February, will provide the initial capital and fund the services of a superintendent to begin the operations of the Connecticut Foundation Solutions Indemnity Company.
The captive will administer the Crumbling Foundations Assistance Fund, which was set up by the state government to distribute the remediation funds to homeowners across Connecticut affected by ‘crumbling foundations’ issue.
The issue was caused by concrete of a stone aggregate mined from a quarry containing pyrrhotite, which has resulted in cracks forming decades after the foundation was constructed.
According to the Connecticut Mirror, around 5000 homes have been affected and with the cost of re-pouring, a complete foundation estimated at between $150,000 and $200,000 the overall exposure to loss could be billions of dollars.
Commercial insurance companies have generally refused to cover the issue but the state government has developed a potential solution utilising a non-profit captive insurer.
State legislature SB 1502, passed in October 2017, authorised the formation of the non-profit captive to cover the exposures caused by the ‘crumbling foundations’.
The commission also approved a measure expanding eligibility for a previously approved $5 million in funding for foundations testing.
Following the change, the Department of Housing commissioner can approve reimbursements for households outside the originally approved radius, which was within 20 miles of J.J. Mottes Concrete Company in Stafford Springs.
According to Connecticut Captive Insurance Association (CCIA) president Stephen DiCenso the captive would essentially provide retroactive insurance coverage.
DiCenso explained: “At this preformation stage, it appears that the proposed and likely non-profit captive will not be a risk-taking vehicle; it will operate with a maximum payout, likely established by the actuarial estimate.”
State senator Tony Guglielmo has been working on this issue for years and said he was relieved to see the first step in the plan to help those affected.
He added: “At the end of the day we are making progress to help these homeowners and starting to fix this horrible problem. To that end, we must remain vigilant in watching this private entity and make sure that they are giving the homeowners the relief they so desperately need.”
