Mold and the Insurance
Industry 2002:
Mold Can Be Controlled
David Golden
National Association of
Independent Insurers
Introduction
Mold continues to grow as an insurance
issue, but panic may be lessening in the
industry.
To lessen public unease, our message
must continue to be: “Mold Can Be
Controlled.”
Quickie Mold 101
Mold is ubiquitous and ecologically
necessary
 Mold helps break down dead organic
material
 Mold likes moisture, modern building
materials and a temperature between
40oF and 100oF
 Just like us!

Quickie Mold 101
Health effects of too much mold are
unproven
 Generally allergic reactions
 Can be more serious for people with
compromised pulmonary systems

How Much is Too Much?
No one knows
 Varies from person to person
 Beware of junk science!

– Statistical associations don’t prove
causation
– There are three kinds of lies: lies, damned
lies, and statistics. - Benjamin Disraeli
Why Now?
Modern buildings sealed to keep heat
and a/c in
 Also keep mold and moisture in
 Mold loves to munch modern materials

– Drywall paper, carpet, wallpaper backings,
particle board, etc.

Ballard v. Farmers - $32 million
Insurance Lines at Risk

Homeowners - the early lead
Commercial Property - running hard

General Liability - “Where the Bucks Are”

– Premises and Products/Completed Ops

Workers Compensation - right behind GL

Professional Liability - follows GL
– Doctors, Architects, Designers, Engineers

Automobile - trying to hide
Recent Developments
Media Moderates
 Insurers Implement
 Regulators Respond
 Legislators Look
 Litigation Large
 Internet Innovation
 Feds Follow

Media

Ballard no longer news
Less hype, but still show extreme cases
 Still call it “toxic mold”
 Admit no causal proof
 Mention allergic reactions and variability
 Acknowledge importance of
maintenance and quick response

Insurers / Reinsurers
Clarify Coverage
 Texas - “beefed-up” HO-A
 ISO Filings

– All lines - similar definitions
– Options re: coverage/exclusion
– Revised GL additional insured endts.

Reinsurers Add Some Exclusions
State Regulators
Mostly approving mold form filings
 Texas

– Highest homeowner rates in U.S.
– Commissioner’s rules for HO-B
– Insurers respond with HO-A
– Banks/developers cry foul
Legislatures
About a dozen bills mid-March 2002
 Most bills call for studies, disclosure,
etc.
 No exposure standard bills (i.e. lead)
 Many mention exposure standards goal
 California law - no funding for study
 New York bill mirrors Cal. - pending
 Indiana bill killed

Litigation

Ballard v. Farmers - money talks
– Claim Handling
– Coverage Dispute
Landlord/Tenant
 Products/Completed Operations
 Additional Insureds - multiple limits
 Bowers v. Farmers - marijuana mold
 Class actions - UC-Berkley students

Internet and the Mold Economy
Mold “Information” Sites
 Attorneys
 Expert Witnesses
 Remediation “Experts”
 Mold Testing
 “Public” Adjusters

Remember This Guy?
•From www.toxicmoldinfocenter.com
Feds Enter the Fray
Housing and Urban Development
 Health and Human Services
 Environmental Protection Agency
 Department of Energy
 NAII Part of Interagency Task Force

Moving Forward
Media - Don’t seek, but manage
 Insurers

– Underwrite - evaluate risk/coverage/rate
– Manage claim process
– Appropriate loss prevention
– Policyholder education
Moving Forward

Regulators & Legislators
– Education - separate facts from hype
– Hearings - we have a message
– Forms/rates - must be appropriate to risk
– Reinforce competition
Moving Forward

Litigation
– Watch for trends & precedents
– Tort reforms, esp. jurisdiction shopping
– Judicial education
– Minimize plaintiff advantages
– Cooper v. American Family - insurers can
win
Internet
Awareness - know thine enemy
 Debunk bad information

– It’s mold, it’s not asbestos
Offer quality information
 Insurers can provide tools to agents

Federal

Work with the process
– The bureaucracy has the power
Offer reasonable alternatives
 Remember that regulations are the
main way bureaucrats show value

Guard Against Junk Science
“Studies” are analyses, not science
 Statistics are associations, not science
 Science requires experimentation
 Scientific Method

– Suspicion  Hypothesis  Theory  Law
Science can be replicated
 Remember the “three kinds of lies”

Guard Against Junk Science

Demand that attorneys and advocates
show proof
– They can’t
– Hold 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
Another Asbestos

“Those who cannot remember the past
are condemned to repeat it.” - George
Santayana

Manage the issue
– Separate fact from fiction
– Work with allied business groups
– Align with our customers - policyholders
The National Association of
Independent Insurers:
Mold Can Be Controlled
Thank you!
Questions?