Texas Mold Claims Ride Higher

By E. E. Mazier

NU Online News Service, April 24, 4:01 p.m.EST?A Texas insurance agents group examining insurers'losses from homeowners' mold damage claims said the hits just keepcoming.

The Austin-based Independent Insurance Agents of Texas reportedits findings after analyzing the latest Texas Department ofInsurance data.

IIAT found that the price tag for the mold crisis is growing, asindicated in the department's latest available monthly report onwater-related losses paid under homeowners policies. The figurereached $138 million in December 2001, the IIAT said.

The department's report, which contains raw figures, also showedthat, for the year 2001, paid losses for water-relatedclaims--excluding freeze and foundation slab claims--totaled $1billion, twice as much as the 2000 total and three times the 1999total, the IIAT said.

The December claims payments were 16 percent higher than theprevious month, which had been the previous record-holder, the IIATstated.

The average claim cost also hit a new high in December at$8,900. This was 14 percent more than the previous high in Novemberand triple the 1999 monthly average of $2,800, according to theIIAT.

Additionally, the December claims payments were almost 50percent of the amount of homeowners premium written in that month.In contrast, in 1999 the ratio of water-related losses to premiumswritten was only 12 percent, the IIAT pointed out.

According to the group, "the only good news" from the TDIfigures is that the number of paid water-related claims--excludingslab claims and freezing water claims--apparently peaked in July2001.

The "bad news," said the IIAT, was that those claims peaked atlevels that were one-and-one-half times the level of two yearsago.

The IIAT said that, propelled by mold claims, the water-relatedclaims amount paid in December was triple the paid losses for justone year earlier in December 2000 and five times larger than thepaid losses in December 1999.

The claims volume for water-related losses peaked in July 2001at 18,300 claims paid, which was 46 percent higher than theprevious high of 12,500 which occurred in June 2001, and 78 percenthigher than the claims volume for one year earlier in July2000.

The IIAT also said that these losses' average claim cost of$8,900 in December 2001 was double the average paid in January 2001and more than double the average paid in December 2000.

"Unfortunately for insurers, the average cost of the remainingtypes of homeowners insurance claims also began rising suddenly in2000," the IIAT added.

While those costs did not rise as fast as water-related claims,the IIAT noted, they did rise at a rate of 9 percent in 2000 andanother 11 percent in 2001, compared with an average of about 5percent a year from 1990 through 1999.

"The combination of these trends, and the trends inwater-related claims, has been devastating to companies' bottomline results," the IIAT reported. Paid losses that averaged 67percent of written premium income during 1990-99 jumped to 82percent of premium in 2000 and 91 percent of premium in 2001, thegroup stated.