LOUISANA EXCLUDES MOLD/CALIF. INVESTIGATES CONTRIBUTIONS

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Louisiana Approves Mold, Terrorism Exclusions

BATON ROUGE, La. 01/22/2002 (BestWire)-Louisiana Acting Commissioner of

Insurance J. Wooley said the department has approved mold

exclusions for certain lines of insurance.

The department's decision to approve specific coverage exclusions is

intended to address the concerns of insurance companies so they can

provide additional markets to Louisiana policyholders, the department

said in a statement.

In the wake of high-profile cases in Texas, Wooley said the insurance

department will grant exclusions of mold as a covered loss, and

exclusion of remediation costs such as testing, monitoring, containment,

and treatment, the department said.

Insurers should take note that standard homeowners policies in Louisiana

do not provide coverage for water seepage or damage arising from wear

and tear or the failure to do proper maintenance, the department said.

However, such exclusions should not be used to deny coverage for the

costs of repair and restoration of the insured premises for damages

arising from a covered cause of loss, even if some mold is present,

Wooley said.

Also, the department said reasonable terrorism exclusions would be

conditionally approved for commercial property and liability insurance

policies, until Congress enacts legislation to provide assistance to the

terrorism reinsurance market or until other market conditions warrant a

change in the department's position on terrorism exclusions, the

department said.

Louisiana workers' compensation laws do not permit exclusion of

terrorism from workers' comp insurance, the department said.

Wooley said the department gave the issue careful consideration and

ultimately determined that without terrorism exclusions, insurance would

not be available for many commercial policyholders. The department will

require that terrorism exclusions clearly define excluded terrorist acts

in such a manner that they do not exclude coverage for other potentially

violent acts such as vandalism, malicious mischief, and riot, said

Wooley.

For several years, the Louisiana Department of Insurance has limited the

use of pollution exclusions in response to overutilization by some

insurers, creating a backlog of forms pending approval and caused

significant concerns for some carriers, according to Wooley.

In response to industry requests, the department issued an advisory

letter announcing the approval of the current ISO Absolute Pollution

exclusion in policies and endorsements, and approval of the current ISO

Total Pollution Exclusion Endorsement, the department said, bringing

Louisiana current with other states.

Attempts to contact the Louisiana department for additional comments

weren't successful.

Although mold claims have been filed in every state and worrisome trends

are showing up in Oklahoma and Louisiana, the mold epicenters are Texas

and California. Environmental factors and the broad coverage offered in

the state's HO-B policies combine to make Texas a hotbed for mold

claims, with 50,000 to 60,000 mold claims still open at the end of 2001

(BestWire, Dec. 31, 2001).

The top five writers of homeowners multiperil coverage in Louisiana,

according to A.M. Best Co.'s state/line product information for 2000,

are: State Farm Group, with a 32.8% market share; Allstate Insurance

Group, 17.4%; American International Group Inc., 7.2%; Southern Farm

Bureau Group, 6.3%; and Travelers/Citigroup Cos., 5.4%.

(By Hillman, associate editor, BestWeek: john.hillman@...)

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Calif. Consumer Group Monitors Insurers' Campaign Contributions

SACRAMENTO, Calif. 01/22/2002 (BestWire)-Concerned about a potential

conflict of interest, a California consumer group is monitoring

insurers' campaign contributions to candidates for insurance

commissioner.

The Foundation for Taxpayers & Consumer Rights has created the

" Quack-O-Meter " --a nod to former Insurance Commissioner Chuck

Quackenbush, who resigned on the eve of a legislative investigation into

his office---to track insurance industry contributions to the candidates

running for office of the state's top insurance regulator.

Only candidates who have received more than a total of $250,000 in

contributions will be tracked, the foundation said. " The more insurance

company money received by a candidate, the more he will look like

disgraced former Insurance Commissioner Chuck Quackenbush, " Doug Heller,

a consumer advocate with the foundation, said. " We want an independent

commissioner, and taking contributions from insurers is not a step in

that direction. "

Among the three candidates who have raised more than $250,000 so far,

only Assemblyman Tom Calderon, a Democrat, has accepted insurance

industry money, the foundation said. He's raised $799,324 from the

insurance industry, about 50% of his total fund raising of $1.6 million.

In his first campaign for commissioner, Quackenbush raised $2.5 million

from insurers.

Former Insurance Commissioner Garamendi has raised $1.1 million,

and Former Assemblyman Tom Umberg has raised $1.8 million, but neither

Garamendi nor Umberg, also both Democrats, have accepted contributions

from insurers.

The foundation said it's also keeping track of which insurers are major

contributors. So far, Mercury Insurance leads the pack, having donated

$150,000 to date, followed by Farmers Insurance, which has donated

$135,404 and 21st Century, which has donated $30,000. "

Companies like Farmers give to candidates because we are looking for a

person or a candidate that is going to provide fair and balanced

regulation of the industry, " said , a spokesman. " Everybody

recognizes the industry is going to be regulated, the question is will

it be done fairly or for pernicious reasons. "

noted that the company has " a constitutional right to support

candidates as long as we do it in a fair and honest manner. That's our

right as far as Americans and as an American corporation. "

Other companies that have donated to Calderon include St. Cos.,

with $25,000, and Allstate, which gave $20,000.

Eleven candidates have been certified to run and will be on the March 5

primary ballot, according to the Secretary of State's Office. In

November, 13 candidates had filed declarations of intention to run, and

a 14th was listed as a pending candidate, although no date for his

declaration was included in the department's online information.

The list of 11 certified candidates includes four Democrats--Calderon,

Garamendi, Umberg, and Bill Winslow, an attorney/insurance consultant

(BestWire, Jan. 18, 2002). Three Republicans who are certified to run

for their party's nomination are: Wes Bannister, an insurance agent and

two-time past candidate for the post; Mendoza, who was the head of

the Department of Corporations under Gov. Pete ; and Stefan

Stitch, an insurance auditor.

In November, J. Larkin, a Simi Valley political activist, and

Marvin Lessmann also were listed as Republican candidates but won't be

included on the March ballot, according to the Secretary of State's

office.

Four third-party candidates have also been certified to be on the

ballot: A. Klein, a businessman, for the American Independent

Party; Ishmael Sheidlower, an underwriting systems director, for

the Green Party; Dale F. Ogden, an insurance consultant/actuary, for the

Libertarian party; and Calderon Jr., health researcher and

educator, for the Natural Law Party.

Mark P. Lauterman for the Reform Party was listed as the 14th potential

candidate in November but won't be included on the March ballot.

Current Insurance Commissioner Harry Low has said he doesn't intend to

run in the election. Low was appointed to fill the post after

Quackenbush resigned.

The 2002 general election will be held Nov. 5.

(By Meg Green, senior associate editor, BestWeek: meg.green@...)