Bad Faith Claims Should Not Be Dismissed Lightly
If you were to check through the archives of National Underwriter, youd find that the first mention of a "mycologist" came in 1997, in an article about opportunities in the world of "miscellaneous E&O" coveragethat is, professional liability for pros other than doctors, lawyers, accountants and financial institutions.
In the article, an underwriter, who defined mycologist as "a professional expert skilled in identifying mushrooms," joked that while there might not be "a wave of litigation against mycologists who failed to sort the edible morels and truffles from deadly poisonous fungi," the potential was certainly there.
While reporters at NU had a good laugh over this "mushrooming" opportunity in the E&O market, and a lot of fun locating a photo of such an expert studying mushrooms, weve all since come to know a lot more about the mycologists–who also study mold for a living–and a crisis in personal lines thats been anything but funny.
Last weeks edition put a spotlight on mold claims, with experts predicting there would be no onslaught of mold-related commercial lines claimsleast of all against mycologists, who these days are being sought after for their expertise in testing for and identifying different types of mold. The experts gave reasons why the mold losses for the commercial insurance industry crisis would never rival the mountain of asbestos claims still damaging insurer balance sheets to this day.
The comments delivered by insurance experts in last weeks edition, and in recent NU Online News Service reports about the reduction of the $32 million award that seemingly put "mycologists" on the map, however, seem to us to be a little bit too dismissive on two fronts.
With contractors claims involving construction defects leading the way, the Insurance Information Institute reports that some commercial insurers saw mold claims jump 60 percent last yearhardly something to sneeze at.
The more troublesome hand waving over mold-related claims, however, came in reports about the $32 million award in the Ballard case being lowered to $4 million in December.
The decision should "help quell the national mold hysteria," one industry trade group said. Clarifying this comment further, a representative of the group told NUs Online News Service Editor Dan Hays that although the case centered around a bad-faith allegation, in the publics mind and throughout much of the media reports, "this case was tied to mold" and led to a rash of lawsuits.
So are we to take it that the industry would rather have had the media focus on the true root of the problema bad-faith claim? Are bad-faith claims of any size something that the mediaand the insurance industryshould stop paying attention to? And since when did a $4 million homeowners claim stop being a big deal?
We think that insurers should actually be quite happy that the media got it wrong and grabbed hold of the mold issue, where the science supporting claims is questionable, rather than the real issue of bad faith.
For our money, perhaps the most instructive article in last weeks edition was the one on page 10, which gave a step-by-step guide for avoiding bad-faith litigation.
Reproduced from National Underwriter Edition, February 24, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.