AAI Urges Caution on Coding Requirements of IL Mold Rule

The Alliance of American Insurers (AAI) warned that a bulletin recently filed by the Illinois Department of Insurance concerning mold “will create burdensome reporting requirements for insurers that will result in imprecise data.”

“The bulletin outlines the department’s requirements for insurers to file and use mold-related exclusions and limitations and requires insurers to maintain and track all mold-related claims and to make the information available to the department upon request,” said the AAI.

Kirk Hansen, Alliance director of claims, indicated that the organization basically “opposes any new governmental requirements for insurers to specially code, capture and quantify mold losses.” He explained that “Insurers face a unique problem of identifying what mold claims are.” While they commonly code claims to denote water damage, “few insurers currently have the ability to record the existence of mold. Even if insurers generally coded for mold, the data collected would be questionable at best.”

A first, or initial, report rarely indicates mold claims, said Hansen. More precisely, “Though most mold claims result from water damage claims, the mold is rarely reported or claimed by the insured with the initial report,” Hansen noted; “the initial coding, therefore, would not capture a significant percentage of mold claims.”