By Peggy Fikac
chief, Express-News Austin Bureau

AUSTIN — State Attorney General John Cornyn is looking into high insurance claims related to cleaning up mold-plagued homes in Nueces County.

The inquiry was requested by Insurance Commissioner Jose Montemayor, who has been wrestling with a leap in mold-related claims in Texas.

The business of fixing moldy homes is open for abuse because there is no specific regulation, including no licensing and no standards for what constitutes a good job, Montemayor said.

"Anybody who's got a 'rocket suit' and a magnetic sign on the pickup truck saying 'mold expert,' is one," said Montemayor, who spoke Friday to the Texas Association of Bank Counsel.

After his speech, Montemayor said, "I've got to believe there are many legitimate indoor air quality people out there that are toiling every single day and doing a good job at this. The problem is, it's getting very, very difficult to tell the difference only because there's such a level of activity."

Montemayor said he wants to be sure that price-gouging or other abuses aren't taking place, starting with the Corpus Christi area because the number of claims and the cost to clean up problems is so much higher than the rest of the state.

Nueces County also had more claims in which the same house was treated multiple times, according to the Insurance Department. Forty-two percent of its large claims involved multiple occurrences, compared to 10 percent in the rest of the state, according to the agency.

"At this point, all we know for certain is that the mold-related claims costs are higher in Nueces County than in the rest of the state. The statistics bear that out. We will look into why those numbers are different," said Cornyn spokeswoman Jane Dees Shepperd. "We don't want to prejudge the matter."

Cornyn "is very concerned that homeowners insurance remain affordable in Texas," she said.

While the Corpus Christi area had the highest claims, there were above-average claims in Brownsville, Victoria and McAllen.

By contrast, the San Antonio and Laredo areas showed below-average costs.

One possible explanation is "there are very few claims to begin with in terms of mold," Montemayor said.

Insurance Department spokesman Jim Davis said spikes in cost affect policyholders around the state.

"We're seeing these hot spots of Corpus Christi and along the coast and the Valley and Austin, and they're way above average," Davis said. "That's causing problems for everybody. When these companies are declining to write new policies they're not applying it just to those areas. They're applying it everywhere."

The Insurance Department and Montemayor said they are trying to avoid a crisis in availability of homeowner insurance and affordability caused by the jump in the number and cost of mold-related claims in the past 18 months.

The three largest home insurers in the state either have stopped writing new homeowner policies or are limiting new business to a policy that doesn't include coverage for most water damage.

Montemayor has an Oct. 16 public hearing scheduled in Austin on an insurance staff proposal to cap mold coverage at $5,000. The insurance agency said the proposal also would require additional coverage to be offered.

Montemayor is seeking public input and is expected to act soon after the public comment period on the staff proposal ends Oct. 29.

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10/06/2001