State of Connecticut pledges another $100m to CFSIC to tackle crumbling foundations
The State of Connecticut has provided another $100 million of financing to the Connecticut Foundation Solutions Indemnity Company (CFSIC), the captive insurance company established to protect homeowners suffering from crumbling foundations due to the iron sulfide mineral pyrrhotite.
The money is being handed to Michael Maglaras & Company (MMC), the captive organiser and consultant which manages CFSIC, having been approved by strong majorities in both the Connecticut House and Senate. It will be available from July 1, 2021.
Michael Maglaras, principal of MMC, said the move “signals state government’s confidence in our captive underwriting platform.”
Rep. Jeff Currey, the Deputy Majority Leader of the Connecticut House, said MMC had proved the captive management structure could tackle the crumbling foundations crisis. “I’ve seldom seen a government/private partnership work this well in my political career,” he added.
Michael Maglaras & Company formed CFSIC in 2018 at the request of the state government as a captive underwriting programme dedicated to the payment of property claims associated with the residential crumbling foundations crisis in Connecticut.
The foundations of thousands of CT homes are affected by “crumbling concrete” which occurs when the mineral pyrrhotite exists in concrete aggregate and causes, through oxidation, the eventual failure of the foundation structure. In 27 months, CFSIC has, through its unique electronic underwriting platform, identified almost 2,000 claimants and has already put more than 300 families back in safe and secure homes.
Because of the effective way in which CFSIC works as an underwriter, Maglaras has also secured financial support for claimants from The Hartford, Travelers and Liberty Mutual.
Maglaras said CFSIC represented “about the most perfect use of a captive insurance company I can imagine.”
He added: “We’ve got the expertise and know-how to manage the underwriting process, and the State of Connecticut has the funds. It is the ultimate public/private partnership.”
CFSIC has already received pledges of more than $120 million from the state government. Steve Werbner, CFSIC’s board chairman, said the additional funding will “wipe out this crisis for another generation.”
Maglaras praised the efforts of the whole team behind the CFSIC. “I’ve assembled a great team, and nothing like this can be done without a great team,” said Maglaras. “I’m supported by my colleagues at ESIS ProClaim, Marsh, Paul Frank + Collins, Crowe and Milliman. This has been from day one a team effort and continues to be, as we use an innovative captive insurance structure to solve an insurance coverage as well as an economic crisis.”