Panelists Try to Break Down Mold Issue in E&O

By | November 13, 2002

Orlando, Fla. – A panel on architects & engineers E&O looked at the ramifications of one of the latest issues to impact that segment of the insurance industry – mold – during the second day of the 15th Annual PLUS Conference.

Titled Terrorism Inside: The Mold Litigation Explosion, the
session addressed the issue that has many insurers searching for answers and keeping an eye on rising claims, especially in Texas and California.

Jim Nealon of GeneralCologne Re noted that according to Texas Department of Insurance statistics, mold claims rose from 1,050 in the first quarter of 2000 to 14,706 in the fourth quarter of 2001. “It is something we’re concerned about, but I don’t think it is the next asbestos,” Nealon commented.

Richard Horner of Victor O. Schinnerer, noted that “We have not
seen an explosion of mold claims. Can you underwrite out mold? Yes, but at the end of the day, you’re probably not going to be a viable market.”

According to Horner, schools have been a high source of claims, and he said that avoiding territories is also an issue. “Texas, California, Louisiana, Florida, etc. have been major areas of concern, but if you’re avoiding territories, there is not going to be much of a market
left to meet your underwriting criteria.”

When asked if the panel thought mold was the next asbestos, all
were in agreement that while it is a concern, it at this point does not appear to be the next asbestos. Several suggested that the media has been a major player in over promoting the mold issue, an issue that trial lawyers have seized in the last year or two.

The conference wrapped up Tuesday with a number of educational
sessions and a report on the overall state of the industry.

The theme of this year’s conference was “Insuring Our Future,”
which looked at the environment of fast-changing laws and precedent-setting lawsuits.

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