Unexpectedly large mould-related claims have led to significant disruption in the Texas homeowners market, and could lead to financial strength ratings downgrades, ratings agency AM Best said in a new special report.
Several carriers have stopped writing new business entirely in the state, while others have scaled back.
As a result of mould claims, a large percentage of the market continues to record poor financial performance, with several carriers posting triple-digit loss ratios as of 30 September 2001.
The Texas Department of Insurance has recently issued new guidelines in response to this economic and capacity crisis.
AM Best said that although these guidelines could bring future stability to the market, it believed that "in the near term a number of Texas writers will continue to face significant financial pressure because of the continued debate over coverage issues, as well as the potential for litigation."
The agency added that the financial strength ratings of some insurers were expected to face downward pressure as their financial performances and capital positions continued to deteriorate.
A copy of the report is available for $25 (approx. £17.25) from BestWeek at www.bestweek.com. The report is free to BestWeek subscribers.
