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Thursday, June 28, 2001
Study of claims is possible
Governor in favor of mold insurance
By Neal Falgoust
Caller-Times
   Texas Insurance Commissioner Jose Montemayor might call for a study before deciding whether insurance companies should be allowed to exclude mold damage claims from homeowner policies.
   Part of that effort likely would include asking insurers to collect data on how many claims they have received and how much those claims have cost, some close to the issue said.
   State Rep. Judy Hawley, D-Portland, spoke with Montemayor on Wednesday and said he hinted that the insurance department might need to collect the data to get a firmer grasp on the problem.
   "I think we are going to request an interim study," Hawley said.
   Gov. Rick Perry also said that the increased attention on mold is something that requires great attention so Texas residents can ensure that they have the appropriate coverage.
   "Obviously we think that the citizens of the state should have access to insurance that would cover any impact that mold would have on residence or business, not unlike flood insurance, fire, any other casualty-type insurances," Perry said during a visit to Corpus Christi on Wednesday.
   The news followed a Tuesday hearing during which Texas Department of Insurance officials took testimony from insurers, homebuilders and residents on a proposal by Farmers Insurance Group to exclude mold damage coverage for standard home policies.
   Jim Davis, spokesman for the Department of Insurance, said the commissioner wants to collect more information about mold claims before making a decision on the proposal, but he would not say what that task might entail.
   "He did stress that this is a fact-finding effort and that he doesn't have the information," Davis said.
   "How he plans on doing that he did not specify."
   Joe Woods, manager of the Southwest region of the Alliance of American Insurers, an insurance trade group, also said that Montemayor likely would ask for a more in-depth study, but could not say when that would take place.
   "I'm assuming we'll do some kind of data call for insurers," he said.
   The fact-finding mission likely would involve collecting data from contractors and homebuilders, but would primarily focus on insurance companies and the claims they have collected - something that has not been done in the past.
   "This is not something that people have been tracking over the years," Woods said.
   But insurance company officials have told the Caller-Times that:

Farmers Insurance Group estimates that mold claims will cost insurers $128.5 million.

In Texas, State Farm Insurance has seen its mold claims rise 650 percent since January. The company didn't track mold claims last year.

Insurers estimate that losses resulting from mold could drive a 30 percent to 40 percent increase in the cost of homeowners insurance in Texas.
   The problem, lawmakers said, is that there is no centralized database for information collected by the companies.
   Collecting that data from the companies would provide state officials with the necessary information to make a more informed decision, Hawley said.
   "You've got to have data to make your decision," she said. "I'd like for them to produce information based on their claims."


Staff Writer Paula Caballero contributed to this report. , Contact Neal Falgoust at 886-4334 or falgoustn@caller.com

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