Twenty one legislators ask state officials to investigate insurance companies handling of crumbling foundations issue

April 16-- Apr. 16--State legislators wrote to Gov. Ned Lamont, Attorney General William Tong and Insurance Commissioner Andrew Mais on Monday asking that they open an investigation into insurance companies' handling of claims filed by homeowners with failing foundations.

The 21 members of the bi-partisan crumbling foundation caucus, including Rep. Tom Delnicki, R-South Windsor, Rep. Pat Wilson Pheanious, D-Tolland, and Sen. Dan Champagne, R-Vernon, asked that the state launch an investigation under the Connecticut Unfair Insurance Practices Act. The act prohibits unfair competition and deceptive business practices in the insurance industry.

"The taxpayers and homeowner insurance policy holders of Connecticut are currently footing the bill for this catastrophe. The time has come for a Connecticut Unfair Insurance Practices Act investigation," the letter said. "Transparency and accountability for all stakeholders in this issue is critical for our communities. We respectfully request that an immediate Connecticut Unfair Insurance Practices Act investigation be initiated into all aspects of the crumbling foundation issue."

Hundreds of homes in northeastern and north central Connecticut have failing foundations caused by the presence of a mineral, pyrrhotite, which oxidizes when exposed to oxygen and water. As many as 34,000 homes could be at-risk for a failing foundation.

Insurance companies have denied homeowners' claims saying that the problem does not fall under their definition of collapse. Homeowners have said their insurers changed the language of their policies in the early 2000s when the issue became known.

In 2016, then-Attorney General George Jepsen said that the Insurance Department had not initiated a Connecticut Unfair Insurance Practices Act investigation, despite requests from homeowners at the time.

In the letter sent Monday to Lamont, Tong and Mais, legislators wrote that an investigation still had not been initiated since Jepsen's letter three years ago.

"To the best of our knowledge, no substantial action was taken as a result of [Jepsen's] letter, but with the dawn of a new administration, we are asking for the new Insurance commissioner and new attorney general to take a fresh look at this issue which impacts 42 cities and towns in Connecticut, which make up roughly one-quarter of our state's municipalities," the letter said.

The call for an investigation was bolstered in recent weeks after at least two homeowners reported to the insurance commissioner that their insurers had sent them non-renewal notices due to their crumbling foundations. The commission reminded all insurance companies that taking such action against homeowners was a direct violation of a directive issued by former Insurance Commissioner Katharine Wade in 2016. The Insurance Commission said that the letters had been sent in error to the homeowners.

Maribel La Luz, a spokeswoman for Lamont, said in a statement that Lamont will review the legislators' request for an investigation.

"Having just recently received the letter, the Governor's Office, in collaboration with the Connecticut Insurance Department, will review the request carefully understanding the impact that crumbling foundations have had on the lives of people across Eastern Connecticut," she said in a statement.

Elizabeth Benton, a spokeswoman for Tong, said the office is also reviewing the situation.

"The Office of the Attorney General is closely monitoring this matter. Under the statute, the authority to open a [Connecticut Unfair Insurance Practices Act] investigation rests with the Connecticut Insurance Department," she said.

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