Michael Maglaras, principal of Michael Maglaras & Company, explains that Dan Malloy, during his tenure as governor of Connecticut, was confronted with a looming problem: the crumbling foundations disaster.

Crumbling foundation cracks result from too much pyrrhotite being mixed into concrete, which can cause dramatic damage to a home. The commercial market's reaction to the crumbling foundations issue has been to say that this is a product liability issue and therefore not covered under the traditional homeowners policy form.

Former Governor Malloy and the Connecticut legislature used the state's captive statute to piece together legislation that would create a captive insurance company to deal with the crumbling foundations matter.

Why a captive insurance company? The legislature believed that captives bring disciplined approaches to claims management. Above all else, they wanted these state funds to be used wisely, to be used well, and to be accountable.