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Head of Crumbling Foundations Fund Says $1B Needed

The superintendent of a new captive insurance company charged with distributing millions of dollars to Connecticut homeowners with crumbling foundations is warning he doesn’t have enough money to address the problem. Michael Maglaras said he hopes to secure funding and assistance to help the thousands of affected homeowners from various sources, including the insurance industry, banks, the U.S. Department of Housing and Urban Development, the Federal Emergency Management Agency and the state of Connecticut. Maglaras is heading the new Connecticut Foundation Solutions Indemnity Company, created by state lawmakers, which will oversee the distribution of $100 million in state bonding – $20 million a year for the next five years – as well as the estimated $8.5 million to $9 million in annual proceeds from a new $12 annual surcharge on Connecticut homeowners’ insurance policies. That surcharge is supposed to last 10 years. The new indemnity company is expected to be up and running Nov. 15 at the earliest, or possibly around Dec. 1, to begin cutting checks. But Maglaras estimates the roughly $133.5 million committed over five years will cover the cost of replacing foundations for only 650 to 700 homes, considering the average $185,000 cost per home. Maglaras estimates 5,000 to 9,000 homes will have to be fixed over the next few years. That includes homes with the most severe cracking and deterioration, as well as those just beginning to show signs of the problem, which has been linked to the presence of pyrrhotite, an iron sulfide that has reacted naturally with oxygen and water over the decades. Meanwhile, Maglaras said he was still waiting, as of last...