No coverage for flesh-eating bacteria, cancer-causing chemicals, and mold: Harvey and Irma's lingering health threats

Understanding the Spike in Mold Claims
Environmental policies are more important than ever
By Kari A. Dybdahl





From mold to Legionella bacteria outbreaks, environmental- and pollution-related losses on commercial properties are on the rise, and these types of claims will only increase in the wake of Hurricanes Harvey and Irma. As a result, closer attention is being paid to pollution exclusions on property and liability policies.

This reality is changing the game as far as which coverage forms respond to losses and how claims are approached. For example, water grossly contaminated with bacteria is now handled as an environmental claim instead of being covered as a water loss under property policies. Mold losses that once fell under property policies as water losses are now either excluded or subject to significant sub-limits. More publicly known, Legionella claims are triggering pollution exclusions found in general liability and property policies.

As risk managers witness the change in how claims professionals read and apply pollution exclusions, insurance professionals have a great opportunity to offer environmental liability products to their commercial-property clients—and to protect themselves from errors and omissions claims.

For hospitality and high-rise condominiums—the traditional buyers of environmental impairment liability (EIL) policies—claims related to mold outnumbered all other claims even before Hurricanes Harvey and Irma. However, we have found that fewer than one percent of commercial building owners purchase EIL coverage. This means 99 percent of commercial buildings are underinsured for claims associated with contamination, including mold.

Recent flooding—especially from Hurricane Harvey—will compound this issue. According to the Institute of Inspection Cleaning and Restoration Center’s (IICRC) Standard and Reference Guide for Professional Mold Remediation, mold needs three things to grow: a food source, heat, and water. Depending on the amount of saturated organic matter, mold spores can colonize within 72 hours. If relative humidity is 60 percent or over for an extended period of time, there will be environmental losses. Furthermore, bacteria can reproduce their colonies by 100 percent every 20 minutes in an ideal situation, and Hurricane Harvey created ideal situations for both mold and bacteria growth. Hurricane Irma may well have created such conditions in certain areas, as well.

The poor take-up rate of EIL insurance in the commercial property space can be explained by the general breakdown in the insurance distribution channel for environmental insurance products. Most commercial property insurance agents and brokers are not trained in pollution, fungi, and bacteria exclusions, so they cannot effectively convey the need for environmental insurance to their customers. Insurance buyers, therefore, do not see a need to purchase environmental coverage for their loss exposures. We believe this, rather than price, is the main reason for low EIL insurance market penetration.

Historic Inconsistencies in Applying Exclusions

The current influx of mold claims under EIL policies began in 2005 when insurance companies began including exclusions for fungi, mold, and bacteria losses into virtually all personal and commercial insurance policies. The anti-concurrent causation clauses eliminate coverage for ensuing losses from an otherwise covered cause of loss. Once any amount or type of mold or bacteria becomes involved in a loss scenario, the entire loss falls under the anti-concurrent causation exclusion. Claims professionals are very skilled at the use of anti-concurrent causation provisions found in flood exclusions, and this same skill should be applied to the anti-concurrent causation provisions for fungi and bacteria.

In addition to these specific policy exclusions, bacteria contamination has been determined by case law in many states to be a “pollutant” in insurance policies for decades. Therefore, damages from leaking drains and sewage (Category 3 water, which is the IICRC’s classification for water considered “grossly unsanitary”), or any water you wouldn’t drink, can be excluded by both fungi/bacteria exclusions and a pollution exclusion on the same policy.

These double exclusions for Category 3 water-related losses should have driven many claims to high-quality EIL policies over a decade ago. But it never happened.

Essentially, most claims professionals were unaware of how these new anti-concurrent fungi, mold, and bacteria exclusions were designed to operate, and, as a result, fungi, mold, and bacteria claims were paid as ensuing losses from covered water damages rather than excluded when the water was grossly contaminated with bacteria. Ignoring these anti-concurrent causation provisions played a significant role in delaying the migration of claims to, and the customer demand for, EIL polices.

Rising Application of Exclusions Leads to More EIL Claims

Increasingly, claims professionals are discovering the intent of fungus, mold, and bacteria exclusions in water damage losses, and they are figuring out how mold and bacteria exclusions and sub-limits operate to limit insurance recoveries under standard property and liability policies. Environmental loss exposures to commercial properties can be applied in a broad sense. We have heard and seen environmental claims on commercial properties varying from a banana peel shutting down the ICU of a hospital to an elementary school condemned due to mold, resulting in the school being shut down for an extended period.

Now, more denied mold claims in the standard property and liability insurance policies are spilling over to the EIL polices, if an EIL policy has been purchased. This, more than changes in weather patterns or increased take-up of EIL policies, is driving the recent rise in EIL claims. More Category 3 water losses are being shut off at the $25,000 sub-limits commonly found in property insurance policies for bacteria and mold-related losses.

The good news for insurance purchasers is that bacteria can be an insured pollutant in specifically designed EIL polices. EIL policies provide broader coverage for mold- and bacteria-related losses than traditional property and liability insurance policies, even if those policies do not have anti-concurrent causation fungi and bacteria coverage restrictions. EIL policies cover first-party property damage (cleanup and restoration expenses, loss of rents, and extra expense) as well as third-party liability and defense costs that may also be incurred by the owners of commercial properties.

Considering the frequency of mold-related damages in commercial properties due to wet drywall, broader coverage under EIL policies combined with more excluded fungi and bacteria claims under traditional property and liability insurance policies would logically explain how mold became the cause of so many EIL claims in 2016.

We should ask ourselves, where did the other 99 percent of mold- and bacteria-related losses not covered by commercial property policies end up? My educated guess is these incurred losses are festering and looking for a home for cost recovery. If the insurance buyer has not already declared bankruptcy from an uninsured fungi-, mold-, or bacteria-related loss, then cost-recovery efforts usually end up in court, in a search of responsible parties.

For example, there is a commercial office building in the middle of an environmental loss due to a fiber optics contractor drilling into the main water line and sewer line. Recently, a rainstorm caused a flood of water grossly contaminated with bacteria, which closed a dentist’s office down for two weeks. This most recent flood resulted in human waste sitting stagnant in the parking garage for over two days. The property owner was aware of the specially designed EIL policy and how it would be applied, but declined to purchase the coverage. That property owner will ultimately be funding this loss out of his own pocket when an EIL policy could have been triggered.

The use of EIL policies is no longer limited to hazardous material manufacturers or facilities. The need for EIL policies should be applied to commercial buildings and managers more than ever. The frequency of mold-related losses in commercial buildings occur more than we might think.

Based on the loss results in EIL policies, it appears that the anti-concurrent causation exclusions for losses related to fungi and bacteria in property and liability policies are finally taking hold in claims settlement practices on commercial properties. The big question is, when will EIL insurance become an accepted and necessary line of insurance in the commercial property space?



=================





Flesh-eating bacteria, cancer-causing chemicals, and mold: Harvey and Irma's lingering health threats
Doctors are finding health problems left over by the storm.
Updated by Julia Belluz@juliaoftorontojulia.belluz@voxmedia.com 

October 16, 2017
  A casket in Texas uprooted by the floods of Hurricane Harvey. Photo by Spencer Platt/Getty Images

In the weeks following Hurricane Irma, parts of Florida have been awash in millions of gallons of sewage. Meanwhile, in Texas, oil refineries and chemical plants have dumped a year’s worth of cancer-causing pollutants into the air following Hurricane Harvey. In both states, doctors are on the lookout for an uptick in respiratory problems, skin infections, and mosquito-borne diseases brought on by the water and mold the storms left behind.

Thanks in part to better emergency planning and response, the immediate death tolls from Harvey and Irma seem to be far lower than those of Hurricanes Katrina and Sandy, which took some 1,400 and 117 lives in the US respectively. So far, a total of 80 deaths have been reported in Texas after Harvey, and there have been at least 42 deaths in Florida as a result of Irma.

But health officials are warning about the much longer-term health fallout from this year’s hurricane season. America’s Gulf Coast region perennially records some of the worst health outcomes in the US — and they’ll almost surely be aggravated by the storms that recently slammed the southern states. (That’s not to mention the hurricanes’ hefty price tag, which could total nearly $200 billion.)

Here are some of the most severe and worrying health problems that may linger in the southern US, long after the 2017 hurricane season.
1) A bacteria could cause an uptick in skin infections and deaths People walking down a flooded streets as they evacuate their homes after Hurricane Harvey on August 27, 2017, in Houston, Texas. Photo by Joe Raedle/Getty Images

Vibrio vulnificus is a bacterium that lives in the Gulf Coast waters and kills one in seven people it infects. It’s also one of several pathogens that can lead to necrotizing fasciitis, which is commonly referred to as “flesh-eating disease.”

With the flooding from the hurricanes and storm surges, people have been coming into contact with coastal water, and potentially with Vibrio.

“We’re on the lookout for that here [in Texas],” said Peter Hotez, dean of the National School of Tropical Medicine and a professor of pediatrics and molecular virology and microbiology at Baylor College of Medicine.

Health officials in Texas have already announced the death of a 77-year-old Harris county resident from Vibrio: She came into contact with flood waters when they ripped into her home, and later died as a result of flesh-eating disease. According to Florida Department of Health, as of October 13, 41 cases of vibrio have been reported this year across 20 counties.

The toll may continue to grow. There was an uptick of Vibrio infections across the Southern US following Katrina, including five deadly cases — and Hotez said health officials expect we’ll see much the same following Harvey.

Though infections are rare, Vibrio can sicken people — especially those with weakened immune systems or other chronic health issues — in two disturbing ways: 1) through wound infections, which sometimes require amputation to get rid of; 2) and through septicemia, an infection of the bloodstream. “We’ll be watching for skin infections from people who have had direct contact with floodwaters,” Hotez added, “especially if they’ve had open wounds.”
2) Parts of the Texas Gulf Coast have been bathed in cancer-causing pollutants An oil refinery in Corpus Christi, Texas, before the arrival of Hurricane Harvey on August 25, 2017. Photo by Joe Raedle/Getty Images

The hurricanes that hit the US also unleashed a cloud of pollutants that pose health dangers — in both the short and long term.

The Texas Gulf Coast is home to many of the nation’s oil refineries and chemical plants, which routinely use chemicals like benzene that are known carcinogens. Harvey flooded or damaged more than 50 oil refineries and chemical plants, dumping a year’s worth of pollutants into Texas within a matter of weeks.

According to the Austin American-Statesman, “Fifty-five refineries and petrochemical plants in the Houston, Corpus Christi and Beaumont areas collectively emitted 5.8 million pounds of benzene, ammonia and other pollutants to the air in connection with Hurricane Harvey.” Independent environmental advocacy groups have already been warning that benzene levels in some areas of Texas have reached worrying highs, while more than a dozen toxic waste sites were also flooded or destroyed.

“Whether there’s going to be an uptick in cancer rates is something we’re going to have to follow,” said Hotez.
3) Irma caused more than 28 million gallons of sewage to be dumped across Florida A truck stranded in sand and sewage in Key West, Florida, near the southernmost point of the United States, two days after Hurricane Irma slammed into the state on September 12, 2017. Photo by Chip Somodevilla/Getty Images

South Florida is not the petrochemical capital Texas is. But many of its septic tanks, wastewater treatment plants, and agricultural and industrial areas were flooded or shut off because of Irma, releasing raw sewage and waste across the state in what’s been described as “a literal shitstorm.”

Florida relies on a system of wastewater lift stations with electronic pumps that move sewage through the state. But when Irma knocked out the electricity in many areas, some of the sewage pumps were also cut off, leading to overflows and spills of raw sewage — which harbor dangerous bacteria, viruses, and parasites, such as E. coli, salmonella, and hepatitis A.

There have already been dozens of Irma-related pollution notices describing the streets, homes, and neighborhoods that have been drenched with wastewater. Emily Atkin at the New Republic tallied up the total damage in these filings — and it’s staggering:


Combined, those discharge reports showed more than 28 million gallons of treated and untreated sewage released in 22 counties. The total amount is surely much more; at least 43 of those reports listed either an “unknown” or “ongoing” amount of waste released, and new reports continue to roll in — sometimes as many as a dozen per hour.

That’s why the Florida Department of Health is warning locals to take precautions and avoid the polluted water Irma left behind.
4) The mold left behind by the hurricanes may lead to respiratory problems A mold-covered ceiling fan in New Orleans after Hurricane Katrina devastated the area in 2005. Photo by Ethan Miller/Getty Images

Hurricane Harvey dumped more than 50 inches of rain on Texas and Louisiana. Irma drenched Florida in 16 inches of water. When people’s homes and workplaces have been swamped, the moisture that’s left behind — especially in the hot and humid South — becomes a breeding ground for mold. And mold can wreak havoc on the respiratory system.

According to 2009 World Health Organization guidelines on the health impacts of mold, exposure to spores can cause or worsen asthma, lead to respiratory infections, and bring on fits of coughing and wheezing as well as difficulty breathing. The Centers for Disease Control and Prevention advised those affected by the storms to quickly clean up the mold in their homes. But that work isn’t always straightforward because mold can be difficult to spot: After Hurricane Katrina, even homes that were only partially flooded had mold lurking within their walls.
5) The storms could exacerbate mosquito-borne diseases Debris is seen during a storm surge near the Puerto Chico Harbor during the passing of Hurricane Irma on September 6, 2017, in Fajardo, Puerto Rico. Photo by Jose Jimenez/Getty Images

Massive floods, like the ones Harvey and Irma caused, wash away mosquito breeding sites, as well as the insects that transmit diseases like Zika and West Nile. But in the pools of water that are left behind by the storms, mosquito populations can quickly reestablish themselves — and again threaten transmission of those viruses.

“If there’s increased transmission of mosquito-borne diseases [after the hurricanes], it’ll be from West Nile and Eastern equine encephalitis,” explained Duane Gubler, an expert on mosquito-borne diseases with Duke-NUS Medical School. Unlike other mosquito-borne diseases, such as chikungunya or Zika, West Nile and Eastern equine encephalitis are always present in the US, circulating in birds and mosquitoes, and don’t need to be imported by travelers from abroad to spark outbreaks.

But there’s some good news here: Storms aren’t always followed by increased transmission of mosquito-borne diseases, and we’re nearing the end of transmission season in the US, with the weather cooling down in time for winter. (Peak transmission typically occurs in August through early October.)

“If the mosquito transmission cycle gets knocked down by the storms and has to re-amplify, there may not be enough time after October,” said Scott Weaver, director of University of Texas Medical Branch’s Institute for Human Infections and Immunity. What’s more, states have been taking precautions after the hurricanes, with large-scale spraying efforts to control mosquito populations. And we’re also at the tail end of the Zika and chikungunya outbreaks here.

But Weaver warned of a longer-term threat. The Caribbean islands, which have been in the crosshairs of Hurricane Irma — and now Hurricane Maria — have suffered a huge amount of damage. “If some of these islands lose their capacity to do mosquito control, and the destruction from the storms creates opportunities for larger mosquito transmission,” Weaver said, we might see an uptick of the mosquito-borne diseases that circulate there, like dengue (which could spread beyond the Caribbean’s borders as people travel to and from the islands, carrying the viruses with them).
6) Mental health problems are expected to linger for years Artemio Tamez and Franco Tamez sit in front of Franco's house after torrential rains caused widespread flooding during Hurricane Harvey on September 2, 2017, in Houston, Texas. Photo by Joe Raedle/Getty Images

Irma and Harvey damaged property in hundreds of communities, mainly in Texas and Florida but also parts of neighboring states like Louisiana and Georgia. A staggering 40,000 people lost their homes due to Harvey; the flooding also ruined a million cars. The stress and anguish that arises after such devastating losses of property can carry serious mental health consequences — particularly among those who have a history of anxiety or depression.

In the month after Hurricane Katrina, some 17 percent of people in New Orleans reported experiencing mental problems, most commonly post-traumatic stress symptoms including nightmares and flashbacks. Among children, the rates were even higher: 37 percent of kids who lived through Katrina were diagnosed with a mental condition after the storm.

Charles Benight, who studies trauma at the at the University of Colorado, told Vox, “We all have a threshold that if we watch a loved one swept away in rushing water and drown, that can definitely create post-traumatic stress disorder.” In a situation like Harvey, he expects that between 5 and 15 percent of those affected will end up with “significant mental health challenges such as post-traumatic stress disorder.” Up to 50 percent, though, will experience shorter-term stress related to the storm and the recovery.