Cleaning & Restoration Breaking News

Nasty winter, worried wealthy driving mold remediation

May 7, 2004
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PITTSBURGH (AP) -- May 5 -- A nasty winter and lingering jitters about the perceived health effects of mold in homes continue to drive a remediation industry that many believed was headed for trouble as recently as last year.

Remediation companies say current stability in the market is due largely to wealthy homeowners who either refinanced to take advantage of low interest rates or put up homes for sale.

``Most of the new business is in high-end properties and driven by concern about property value, sometimes far exceeding the actual health concern,'' said Michael O'Reilly, chief executive officer at Trade-Winds Environmental Restoration. ``The fear is that your condo, worth $5 million today, will be worth $2 million tomorrow if it's blighted by mold.''

While the health effects of mold on most people remains a matter of debate, O'Reilly and others say mold harmful or not is more likely than ever to kill a real estate deal.

The industry saw rapid growth in the late 1990s and exploded in 2001, when an insurer was ordered to pay a Texas woman $32 million after it failed to cover damages for an infestation of the toxic mold stachybotrys.

Though the award was eventually reduced, thousands of people got into the remediation business to capitalize on what Texas Attorney General Greg Abbott called ``a mold rush.''

``We saw the emergence of unscrupulous operators using all kinds of scare tactics about health effects and property damage in an attempt to cash in on insurance coverage,'' he said.

Insurance companies paid out about $1.4 billion in claims nationwide in 2001, doubling payouts from the previous year, according to Robert Hartwig, chief economist for the Insurance Information Institute. That figure doubled again in 2002 to $3 billion, Hartwig said.

Two things have winnowed the industry drastically, however.

Since 2001, 45 states and the District of Columbia have allowed insurance companies to separate mold coverage from general homeowner policies, Hartwig said, meaning that if you want to be covered for damage from mold, you'll have to pay for it.

Secondly, several states have introduced legislation to regulate the mold remediation industry and as many as 20 more are expected to do so this year, said Glenn Fellman, director of he Indoor Air Quality Association.

No standards currently exist.

``For most companies, this is really a welcome thing because there has to be some balance,'' Fellman said. ``Some people see mold and with the increased public awareness, get freaked out. But there is a sizable number of the population that is asthmatic, and mold for them can be a problem.''

Yet even with fewer people in the business there are indications that the mold remediation industry has a healthy future, especially with freeze-and-thaw winters like the one that just struck the Northeast.

At Environmental Microbiology Laboratory, Inc. in San Bruno, Calif., the nation's second largest mold bioaerosol analysis lab, testing on mold samples is up about 30 percent compared with the same period last year, according to President David Bell.

There are fewer companies ordering fungal analysis, but those that do exist are doing more business, Bell said.

``This is definitely coming from refinancing and home sales in the high end of the range right now,'' he said. ``The people that can afford to have a company come in and at least look around, are doing that.''

Inspections can cost as much as $400 and treatment can run in excess of $20,000 for more serious calls.

Established companies such as PDG Environmental Inc., based in Pittsburgh, are focusing more on mold remediation because business from asbestos and lead abatement, unlike mold, will not be around forever.

``We see this as a growth business for us,'' said John Regan, chairman and chief executive officer. ``Asbestos is finite because buildings that went up post-1972 don't have it. Mold is anti-age.''

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