September 30, 2002

Nevada Commissioner Alice Molasky-Arman ordered that a “Construction Liability Clearing House” be established for the purpose of providing information on markets and availability of residential construction insurance. She also asked for assistance from the insurance industry for the formation of a Market Assistance Program. Molasky-Arman said an essential insurance association would not be formed to address the construction liability insurance issue. She stated, “Although there is overwhelming evidence that the current insurance issues facing the residential construction industry are multi-faceted, an integrated approach in finding long-term care solutions is more appropriate. An essential insurance association would not address the causal nature of the current hard market conditions.” Molasky-Arman conducted a public hearing earlier in the summer to determine whether a construction liability insurance crisis existed in Nevada’s marketplace. Insufficient evidence was provided at that hearing to indicate that coverage was available. Testimony presented at the hearing blamed rising premiums as a result of frivolous construction defect litigation. Insurers may have also exacerbated the current problem by applying more restrictive underwriting standards. Other contributing factors to the construction liability situation identified were deficiencies or discrepancies in Nevada law and the need for the construction industry to better police those not meeting professional standards. Molasky-Arman acknowledged that although these steps will help the situation facing the construction industry, they are not long-term solutions, which must be addressed in areas outside the Commissioner’s jurisdiction.

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Insurance Journal West September 30, 2002
September 30, 2002
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