Crumbling Foundations Captive Superintendent To Step Down
August 19, 2019
Michael Maglaras, principal of Michael Maglaras & Company, recently announced that he will step down in October as superintendent of the Connecticut Foundation Solutions Indemnity Company, Inc. (CFSIC), the captive insurance company charged with providing financial assistance to homeowners affected by the crumbling foundations natural disaster.
Home damage is due to a so-called slow-moving natural disaster—specifically, the reaction of a mineral, pyrrhotite, to oxygen and water, according to the Connecticut Department of Housing. Pyrrhotite is an iron sulfide mineral, and its exposure to oxygen and water leads to a chemical reaction that results in the deterioration of home foundations. The presence of pyrrhotite indicates the potential for concrete deterioration, but its existence alone does not necessarily cause it. Homes and structures in approximately 36 towns could ultimately be impacted. As a structure continues to deteriorate, it often becomes unsound.
Dan Malloy, during his tenure as Connecticut governor, decided in 2017 to use Connecticut's captive statute to create an insurance company to help homeowners recover from the loss of their homes, despite commercial market reluctance, for the most part, to honor homeowner claims. CFSIC officially commenced operations on January 10, 2019.
At the end of July, approximately 700 claims were filed with the captive insurer by homeowners "seeking assistance with foundation replacements," according to the Associated Press, as reported in "In a State with Crumbling Home Foundations, Relief Arrives," by Susan Haigh, July 29, 2019. However, "Connecticut officials have said the problem could ultimately come in waves, affecting tens of thousands of homes in dozens of towns in the state and as far as southern Massachusetts. It's suspected that many with the problem have not yet come forward, and others don't know they have it yet," the Associated Press article by Ms. Haigh stated.
According to the Connecticut Department of Housing, greater than 35,000 homes in the northeast corner of the state could potentially be damaged.
Mr. Maglaras said, "When the statutory life of CFSIC is over in what I estimate will be, eventually, 2032, we will no doubt have paid out in excess of $1.5 billion in homeowner losses."
As reported in "Crumbling Foundations Insurance Company Superintendent To Step Down," an article by Kathleen McWilliams appearing August 16, 2019, in the Hartford Courant, CFSIC Board President Steven Werbner said, "CFSIC was launched in record time and is doing what it's supposed to be doing. What Mike and his team have created is a company that moves quickly and efficiently to get the job done, while taking adequate steps to ensure that taxpayer funds are used wisely in the work that is being done."
Mr. Maglaras said, "When we were engaged in May of 2018, I told my board that we would create a captive insurance company from scratch, create a sustaining claims reporting and management infrastructure, and be operational in less than 8 months. We've done what we said we would do."
A search for a new superintendent is currently in progress, according to Mr. Werbner.
August 19, 2019