Mold and the Insurance Mold and the Insurance Industry 2002:Industry 2002:
Mold Can Be ControlledMold Can Be Controlled
David GoldenDavid Golden
National Association of National Association of Independent InsurersIndependent Insurers
IntroductionIntroduction
Mold continues to grow as an Mold continues to grow as an insurance issue, but panic may be insurance issue, but panic may be lessening in the industry.lessening in the industry.
To lessen public unease, our To lessen public unease, our message must continue to be: message must continue to be: “Mold Can Be Controlled.”“Mold Can Be Controlled.”
Quickie Mold 101Quickie Mold 101
Mold is ubiquitous and ecologically Mold is ubiquitous and ecologically necessarynecessary
Mold helps break down dead organic Mold helps break down dead organic materialmaterial
Mold likes moisture, modern building Mold likes moisture, modern building materials and a temperature materials and a temperature between 40between 40oFoF and 100 and 100oFoF
Just like us!Just like us!
Quickie Mold 101Quickie Mold 101
Health effects of too much mold Health effects of too much mold are unprovenare unproven
Generally allergic reactionsGenerally allergic reactions Can be more serious for people Can be more serious for people
with compromised pulmonary with compromised pulmonary systemssystems
How Much is Too Much?How Much is Too Much?
No one knowsNo one knows Varies from person to personVaries from person to person Beware of junk science!Beware of junk science!
– Statistical associations don’t prove Statistical associations don’t prove causationcausation
– There are three kinds of lies: lies, damned lies, and statistics. - Benjamin Disraeli
Why Now?Why Now?
Modern buildings sealed to keep Modern buildings sealed to keep heat and a/c inheat and a/c in
Also keep mold and moisture inAlso keep mold and moisture in Mold loves to munch modern Mold loves to munch modern
materialsmaterials– Drywall paper, carpet, wallpaper Drywall paper, carpet, wallpaper
backings, particle board, etc.backings, particle board, etc. Ballard v. FarmersBallard v. Farmers - $32 million - $32 million
Insurance Lines at RiskInsurance Lines at Risk Homeowners - the early leadHomeowners - the early lead Commercial Property - running hardCommercial Property - running hard General Liability - “Where the Bucks Are”General Liability - “Where the Bucks Are”
– Premises and Products/Completed OpsPremises and Products/Completed Ops Workers Compensation - right behind GLWorkers Compensation - right behind GL Professional Liability - follows GLProfessional Liability - follows GL
– Doctors, Architects, Designers, Doctors, Architects, Designers, EngineersEngineers
Automobile - trying to hideAutomobile - trying to hide
Recent DevelopmentsRecent Developments
Media ModeratesMedia Moderates Insurers ImplementInsurers Implement Regulators RespondRegulators Respond Legislators LookLegislators Look Litigation LargeLitigation Large Internet InnovationInternet Innovation Feds FollowFeds Follow
MediaMedia
BallardBallard no longer news no longer news Less hype, but still show extreme casesLess hype, but still show extreme cases Still call it “toxic mold”Still call it “toxic mold” Admit no causal proofAdmit no causal proof Mention allergic reactions and Mention allergic reactions and
variabilityvariability Acknowledge importance of Acknowledge importance of
maintenance and quick responsemaintenance and quick response
Insurers / ReinsurersInsurers / Reinsurers
Clarify CoverageClarify Coverage Texas - “beefed-up” HO-ATexas - “beefed-up” HO-A ISO FilingsISO Filings
– All lines - similar definitionsAll lines - similar definitions– Options re: coverage/exclusionOptions re: coverage/exclusion– Revised GL additional insured endts.Revised GL additional insured endts.
Reinsurers Add Some ExclusionsReinsurers Add Some Exclusions
State RegulatorsState Regulators
Mostly approving mold form filingsMostly approving mold form filings TexasTexas
– Highest homeowner rates in U.S.Highest homeowner rates in U.S.– Commissioner’s rules for HO-BCommissioner’s rules for HO-B– Insurers respond with HO-AInsurers respond with HO-A– Banks/developers cry foulBanks/developers cry foul
LegislaturesLegislatures
About a dozen bills mid-March 2002About a dozen bills mid-March 2002 Most bills call for studies, disclosure, Most bills call for studies, disclosure,
etc.etc. No exposure standard bills (i.e. lead)No exposure standard bills (i.e. lead) Many mention exposure standards goalMany mention exposure standards goal California law - no funding for studyCalifornia law - no funding for study New York bill mirrors Cal. - pendingNew York bill mirrors Cal. - pending Indiana bill killedIndiana bill killed
LitigationLitigation
Ballard v. FarmersBallard v. Farmers - money talks - money talks– Claim HandlingClaim Handling– Coverage DisputeCoverage Dispute
Landlord/TenantLandlord/Tenant Products/Completed OperationsProducts/Completed Operations Additional Insureds - multiple limitsAdditional Insureds - multiple limits Bowers v. FarmersBowers v. Farmers - marijuana mold - marijuana mold Class actions - UC-Berkley studentsClass actions - UC-Berkley students
Internet and the Mold Internet and the Mold EconomyEconomy
Mold “Information” SitesMold “Information” Sites AttorneysAttorneys Expert WitnessesExpert Witnesses Remediation “Experts”Remediation “Experts” Mold TestingMold Testing ““Public” AdjustersPublic” Adjusters
Remember This Guy?Remember This Guy?
•From www.toxicmoldinfocenter.com
Feds Enter the FrayFeds Enter the Fray
Housing and Urban DevelopmentHousing and Urban Development Health and Human ServicesHealth and Human Services Environmental Protection AgencyEnvironmental Protection Agency Department of EnergyDepartment of Energy NAII Part of Interagency Task ForceNAII Part of Interagency Task Force
Moving ForwardMoving Forward
Media - Don’t seek, but manageMedia - Don’t seek, but manage InsurersInsurers
– Underwrite - evaluate Underwrite - evaluate risk/coverage/raterisk/coverage/rate
– Manage claim processManage claim process– Appropriate loss preventionAppropriate loss prevention– Policyholder educationPolicyholder education
Moving ForwardMoving Forward
Regulators & LegislatorsRegulators & Legislators– Education - separate facts from hypeEducation - separate facts from hype– Hearings - we have a messageHearings - we have a message– Forms/rates - must be appropriate to Forms/rates - must be appropriate to
riskrisk– Reinforce competitionReinforce competition
Moving ForwardMoving Forward
LitigationLitigation– Watch for trends & precedentsWatch for trends & precedents– Tort reforms, esp. jurisdiction Tort reforms, esp. jurisdiction
shoppingshopping– Judicial educationJudicial education– Minimize plaintiff advantagesMinimize plaintiff advantages– Cooper v. American Family Cooper v. American Family - insurers - insurers
can wincan win
InternetInternet
Awareness - know thine enemyAwareness - know thine enemy Debunk bad informationDebunk bad information
– It’s mold, it’s not asbestosIt’s mold, it’s not asbestos Offer quality informationOffer quality information Insurers can provide tools to Insurers can provide tools to
agentsagents
FederalFederal
Work with the processWork with the process– The bureaucracy has the powerThe bureaucracy has the power
Offer reasonable alternativesOffer reasonable alternatives Remember that regulations are the Remember that regulations are the
main way bureaucrats show valuemain way bureaucrats show value
Guard Against Junk Guard Against Junk ScienceScience
““Studies” are analyses, not scienceStudies” are analyses, not science Statistics are associations, not scienceStatistics are associations, not science Science requires experimentationScience requires experimentation Scientific MethodScientific Method
– Suspicion Suspicion Hypothesis Hypothesis Theory Theory Law Law Science can be replicatedScience can be replicated Remember the “three kinds of lies”Remember the “three kinds of lies”
Guard Against Junk Guard Against Junk ScienceScience
Demand that attorneys and Demand that attorneys and advocates show proofadvocates show proof– They can’tThey can’t– Hold the high groundHold the high ground
“A lie gets halfway around the world before the truth has a chance to get its pants on.”- Sir Winston Churchill
Choose: Another Radon or Choose: Another Radon or Another AsbestosAnother Asbestos
““Those who cannot remember the Those who cannot remember the past are condemned to repeat it.” - past are condemned to repeat it.” - George SantayanaGeorge Santayana
Manage the issueManage the issue– Separate fact from fictionSeparate fact from fiction
– Work with allied business groupsWork with allied business groups
– Align with our customers - Align with our customers - policyholderspolicyholders
The National Association The National Association of Independent Insurers:of Independent Insurers:
Mold Can Be ControlledMold Can Be Controlled
Thank you!Thank you!
Questions?Questions?