According to Mark Sektnan, American Insurance Association assistant vice president-Western region, under the current law the only disclosure requirement that an insurer has on a claim is that an insured has a right to request all records related to it within 15 days.

Section one of the revised measure would require that a claims handler, adjuster or insurance representative "immediately" provide all relevant information related to mold "or the possibility that there may be mold related to the claim," he said.

The problem with this, Mr. Sektnan explained, is the ambiguity of the terms "immediate" and "relevant information."

In a water claim "that's handled correctly there should not be any mold," he said. "So does that mean that you have to disclose that there could be mold?"

The bill is designed, he said, to open up "a whole new area of liability. This is a virtual smorgasbord for the trial bar."

Mr. Sektnan said the bill's proponents "are spreading misinformation about the true impact it will have on the insurance market." The bill, he said, would make insurance for both homeowners and homebuilders more difficult to find and would hurt new home construction "critical for the state's economic recovery."

He continued that supporters of SB 1763 claim the bill "only clarifies existing law, but ignore the fact that the risk of mold has fundamentally changed in the last two years." The increased risk, he said, has not been reflected in the current insurance rates.

Section two of the bill, he said, would keep insurers from creating sub-limits. "Most of the exclusions that are filed with the department are simply clarifications of the existing policy parameters, because mold is not a covered peril."

The intent of the bill's sponsors, he explained, is "clearly to do away with sub-limits and make the liability up to the full amount of the policy limits. That would be a fundamental change."

AIA also said that basing rates on prior year's loss experience is no longer adequate due to the explosion of mold claims in California.

"The California Department of Insurance is required by Proposition 103 to hold public hearings on all rate increases above 7 percent," Mr. Sektnan said.

He said insurers face difficulty in getting rate adjustments which accurately reflect their costs, because when they seek approval for the necessary rate increases, they are often challenged by trial attorney-sponsored "interveners" during public hearings.

Proposition 103, he said, allows trial attorneys to fight insurers' attempts to properly price their product to reflect California's new mold reality. "Mold is rapidly becoming uninsurable. Insurers cannot predict the risks for mold because there are no scientific standards for health impacts, testing, assessment or remediation."

Until we have sound science and standards for mold exist, he said, "mold will be difficult, if not impossible, to insure. The insurance industry is ready to join with other interested parties to develop and fund a badly-needed, objective scientific study on this issue."