California insurers have a ticking time bomb on their hands according to many in the industry. Others, however, say the supposed bomb is being blown out of proportion. Who do you believe?
The reported bomb is mold, and insurers across the country are keeping a close eye on California and Texas to see if mold is going to drive insurers out of the two states.
A just released study by the Insurance Information Network of California (IINC), which was answered by all the major homeowners insurers in California, reports that rising household water damage claims have impacted state insurers to the tune of billions of dollars, putting a stranglehold on the California homeowners market.
According to the figures, the cost of water damage has risen in each of the last four years, jumping $47 million over the last two-year period alone. On average, individual water claims cost surveyed insurers $4,730 last year, approximately double the $2,537 average water claim at the start of the survey period.
Despite those numbers, some industry experts view the situation in California as an issue, but not on the level of the mold concerns in Texas.
“I see Texas as a much more volatile area than California,” says Andy Rosenfeld, president of California’s Canon Insurance Service.
“I think California is still responding to what is going on in Texas. It’s just not clear what is going to develop here. I don’t know that mold is as a big of problem in California as all the hype is making it out to be. I think the original intention of all property policies was to exclude it—it was just some fancy litigation that got around the traditional property exclusions that brought it in. Having discussed this with some mold remediation contractors—they’re responding to the situation, but their own feeling is that people are over-reacting. In terms of legislation, there is so much posturing, that until something actually comes out that is law, it is more effective for us to respond to what is law.”
To view the full story, please see June 24 issue of Insurance Journal West, beginning on Page 20. To comment on the story, please e-mail: email@example.com
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