Hey Ladies,

For a person who had 12 or so years with State Farm I can tell you the witdrawal from writing new policies is from an unexpectedly large volume of claims. It also cost the company their A rating, which is a first as far as I know.

Though I'm not certain, many of the companies are taking a tight hold on writing any new business where folks have had water damage claims in the past. This is due to them having to pay off on mold related claims. I'm not sure how this came about, but in some cases companies are stating they had usually about 100 mold claims a year and this past year they jumped into the 1000 catagory.

There is some new legislation in Sacramento which is under consideration of which some of it will require insurers in CA to pay for all mold related claims and if this gets through, the market is going to get really, really tight. Meanwhile, newly issued policies all contain new versions of exclusions for payment of mold related claims.

From a historical sense I can see what may lie ahead on this issue. If you can remember when just about every company in CA stopped writing homeowners coverage because they felt they couldn't carry the financial weight of offering EQ coverage to everyone and they created the California Earthquake Authority as a resolution to the problem. That was back in 1994. I'm not sure what may happen with the mold situation, but its not going to be good for consumers.

As usual, the agent (me) sits in the middle. I can see both sides of this situation. The actuaries that develop the premiums to cover the risk didn't count on mold claims and so the insurers are suffering financially. On the other hand, the consumer who has a serious mold problem needs assistance and in the future they will either have it or not. The bottom line is that if mold claims are covered, then consumers are going to have to pay a lot more for homeowners insurance.

Some companies are already raising their rates and they are not small increases either, we are talking about in the two hundred dollar per year increase level. Ouch.

Today I'm relieved I don't work for State Farm....Petra