"There is a void of solid knowledge about what's happening," he said.

Many consumers complain that a variety of ailments are caused by exposure to mold, Mr. Montemayor said. He noted one discussion he had with a claimant who attributed his lung cancer to exposure to mold.

During their discussion, Mr. Montemayor said, the claimant acknowledged that he had been smoking cigarettes since age 18. Nonetheless, he said, the claimant insisted that mold caused his cancer.

The issue of mold has had a very detrimental impact on the homeowners market in Texas, he said. Texas, Mr. Montemayor noted, has been in the forefront of the issue, partly because of the unusual nature of its market.

First, he said, Texas essentially allowed only two types of policy forms. These were an all-risk form and a reduced coverage form that insured only main perils.

While mold was an excluded peril, Mr. Montemayor said, there was an exception involving other covered perils, including continuous seepage. That exception gave rise to mold claims, he said.

All risk homeowners coverage, under language in the state-specified policy form covers "accidental discharge" of water, which encompasses seepage that leads to mold. In other states the policies read "sudden accidental discharge."

At the same time, Mr. Montemayor said, has a facility called Texas Lloyd's, which is exempt from state rate regulation. Although originally intended to cover only certain risks, Texas Lloyd's now accounts for 95% of the homeowners market, he said, up from 20% in the 1980s.

Thus, Mr. Montemayor said, Texas, in effect, had tight form regulation but no rate regulation. When the mold claims started coming in during the year 2000, he said, the market was disrupted.

Generally, he said, insurers did four things. First, if a policy applicant had a previous water claim, insurers would reject coverage. Second, he said, some insurance companies stopped writing coverage at all.

Third, Mr. Montemayor said, some companies switched to writing only the main peril policy. Fourth, he said, some insurers raised rates by 300 percent to 400 percent.

The state faced an availability and affordability crisis, he said, and had to take steps to resolve it.

To do so, Mr. Montemayor said, the insurance department went back to basics. The exclusive use of standard forms was reconsidered. The department recently approved a form filed by State Farm, he said.

The form covers water damage from sudden and accidental events, but not from seepage. However, he said, consumers can buy coverage for seepage damage if they choose.

Mr. Montemayor said that he expects other forms, developed by USAA and Insurance Services Office, will be approved shortly.

In addition, he said, a task force put together a best practices guide aimed at consumers and insurers that hopefully will lead to less litigation.

The real key, Mr. Montemayor said, is putting common sense back into the market.

There are still problems, he said. For example, Mr. Montemayor noted, many people are getting into the mold remediation business with little or no training.

"Some of these people come out of nowhere," he said. "They give rise to a lot of fear-mongering."

Looking to the future, Mr. Montemayor said he expects the Texas legislature to try to address this issue by licensing and regulating remediators.

In addition, he said, he expects to see public hearings on standards for exposure to mold. There is a real need, Mr. Montemayor reiterated, for sound science on this issue.

Third, Mr. Montemayor said, he expects legislation to be introduced at some point establishing rate regulation of the entire industry.

Mr. Montemayor said that his message to fellow regulators is that this is a tough, emotional issue. The answer in Texas, he said, is to reestablish consumer choice.

Homeowners are asked to look at their own needs, he said. Basic policies are available to everyone, Mr. Montemayor said. Consumers are advised that if they need further coverage, they should buy it, he said.

Alan Chapman, senior vice president of state affairs with AIA, noted that while Texas has been the focal point of much of the activity surrounding mold claims, legislation has been introduced in 10 states during the past two years.

The good news, he said, is that the legislation generally takes a "go slow" approach, aimed at developing information to understand what is happening.

The insurance industry, Mr. Chapman said, is in a containment mode, trying to prevent a rush to judgment.

Any standards for mold, he said, must be based on sound science.

But Mr. Chapman added that this is a very hard issue for politicians. It affects all the homeowners in their districts, he said.