A scoping study on the costs of indoor air quality illnesses: aninsurance loss reduction perspective

Allan Chen, Edward L. Vine*

Environmental Energy Technologies Division, Lawrence Berkeley National Laboratory, Energy Analysis Department, 1 Cyclotron Road,

MS 90-2000, Berkeley, CA 94720, USA

Abstract

The number of indoor air quality (IAQ)-related health complaints in commercial buildings, and the frequency of litigationover the e�ects of poor IAQ is increasing. These increases have rami®cations for insurance carriers, which pay for many of thecosts of health care and general commercial liability. However, little is known about the actual costs to insurance companies

from poor IAQ in buildings. This paper reports on the results of a literature search of buildings-related, business and legaldatabases, and interviews with insurance and risk management representatives aimed at ®nding information on the direct coststo the insurance industry of poor building IAQ, as well as the costs of litigation. The literature search turned up little speci®ccost information, but indicated that there is a strong awareness and growing concern over the ``silent crisis'' of IAQ and its

potential to cause large industry losses. The source of these losses includes both direct costs to insurers from paying healthinsurance and professional liability claims, as well as the cost of litigation. In spite of the lack of data on how IAQ-relatedhealth problems a�ect their business, the insurance industry has taken the anecdotal evidence about their reality seriously

enough to alter their policies in ways that have lessened their exposure. # 2000 Published by Elsevier Science Ltd. All rightsreserved.

Keywords: Indoor air quality; Insurance industry; Liability; Risk management; Commercial buildings; Litigation

1. Introduction

While most media attention has focused on outdoorair pollution in the last few years, indoor air pollutionis typically under-reported and less regulated than itscounterpart (e.g., Ott and Roberts, 1998). A cursoryglance at news reports and government reports inrecent years on buildings with poor indoor air quality(IAQ) suggests that the number of IAQ-related healthcomplaints, and therefore, the costs of insurance and

litigation to redress these problems, are signi®cant, andperhaps rising (Federal Register, 1994; GAO, 1999).Tenants and owners of commercial buildings are bring-ing IAQ cases against a broad array of defendants as-sociated with building construction or maintenance,from building owners and managers (including insur-ance companies that own real estate1), to contractors,engineers, consultants and leasing agents. The increasein IAQ litigation in the 1980s and 1990s is a newtrend, and a�ects the insurance and risk managementcommunities as well as the self-insured2.

Research quantifying the costs of IAQ-related ill-nesses to the insurance industry and other potentiallyliable parties is scarce. Thus, the primary objective ofthis study was to answer the following question: what,if any, is the relationship between IAQ-related illnessesin commercial buildings and costs to the insuranceindustry (including medical and legal costs)?

A second objective was to ascertain the insurance

Environmental Science & Policy 2 (1999) 457±464

1462-9011/00/$ - see front matter # 2000 Published by Elsevier Science Ltd. All rights reserved.

PII: S1462-9011(99 )00044 -1

www.elsevier.com/locate/envsci

* Corresponding author. Tel.: +1-510-486-6047; fax: +1-510-486-

4673.

E-mail address: elvine@lbl.gov (E.L. Vine).1 US life insurers control nearly $60 billion in real estate and $200

billion in mortgages (Mills, 1998)2 Prior to the mid-1980s, environmental plainti�s were most likely

to be individuals seeking redress for single-contaminant exposures

(Kirsch and Hayle, 1997).

industry's interest in IAQ issues, and identify potentialinsurance providers, insurance brokerage companies,risk management ®rms, or related institutions inter-ested in working with the Indoor Environmental Qual-ity (IEQ) Subcommittee that is developing one portionof the International Performance Measurement andVeri®cation Protocol (IPMVP). The IPMVP is a con-sensus document for measuring and verifying energysavings from energy-e�ciency projects (US Depart-ment of Energy, 1997)3. The US Department ofEnergy (DOE) is interested in developing consensusstandards and protocols for improved IAQ in build-ings, as part of the IPMVP. The intent of these stan-dards is to improve the health of building occupants,and reduce the exposure of building owners, facilitiesmanagers and the insurance industry to liability forIAQ problems. Hence, a related objective of ourresearch was to identify insurance industry concerns inIAQ problems.

2. Methodology

We searched library data bases on building science,business, law and medicine, and interviewed loss-re-duction managers at insurance companies, experts atinsurance brokerage and risk management companies,lawyers involved with IAQ-related litigation, andothers working with insurance-related professional so-cieties and standards-setting organizations.

We examined the following databases: ABI-Inform;ASHRAE Healthy Buildings/IAQ Meeting Proceed-ings, 1986±97; Current Contents; Indoor Air MeetingProceedings, of 1984, '87, '90, '93 and '96; Medline;the University of California Melvyl Magazine andMelvyl Newspapers databases; and the catalog of theUniversity of California School of Law. We also con-ducted Internet searches for insurance and IAQ infor-mation and relevant organizations.

Colleagues provided a number of contacts in theinsurance and risk management communities, and wealso drew from a list of general insurance industryexperts compiled by the Insurance Industry Project ofLawrence Berkeley National Laboratory. Of course,the literature also provided a number of contacts andlegal case citations.

IAQ-related illnesses in the commercial sector arethe focus of this paper because costs and litigationappear to be rising and, as a result, the public andprofessional awareness of these illnesses has recentlyemerged. Because IAQ standards and protocols for theo�ce workplace largely do not exist and data arescarce, we felt there was a need to see if any infor-

mation on this topic could be collected and analyzed.The types of illnesses for which we sought cost data inthis sector are: sick building syndrome, respiratory ill-nesses, allergies and asthma. The term ``sick buildingsyndrome'' (SBS) typically applies to buildings inwhich a substantial percentage of the occupants com-plain of a variety of subjective symptoms, the causesof which are unknown. These symptoms include irri-tation of eyes, nose, and skin; headache; fatigue; anddi�culty breathing (Fisk and Rosenfeld, 1997).Although psychosocial factors such as the level of jobstress are known to in¯uence SBS symptoms, there islittle doubt that SBS symptoms are linked to featuresof buildings and indoor environments (Fisk andRosenfeld, 1997) and create real problems which arepersonally detrimental and economically costly interms of absenteeism, decreased productivity, investiga-tive resources and legal fees.

3. Insurance-related costs

Both the literature search and discussions withexperts in the insurance and risk management commu-nities con®rm that information on the costs of IAQ ill-nesses from health insurance or business liabilityclaims do not exist, or are di�cult to obtain. Mostsources said that the insurance industry has not seenmany claims that unequivocally can be called IAQ-re-lated. Others noted that many claims are settled out ofcourt and remain con®dential. As a result, the industrydoes not recognize indoor air quality as a problem.For example, Randolph Zellis, loss control manager atthe Royal Insurance Company, reported the following:

We don't have a sort category for indoor air qualityor sick building syndrome in our claims database. . . we go up to 99 loss codes, and I believe this is astandard [database structure] throughout the indus-try . . . the codes are very account speci®c, and willspecify something like `pain in the back from usingmachinery'. [Zellis, 1997].

Zellis could not recall any o�ce-building relatedclaims, nor were there categories for IAQ in the Royaldatabase. The only way to determine if any of theclaims in the Royal records are IAQ-related would beto go through the thousands of individual claimreports and read the problem descriptions to see ifthey contain any hints of a building-related origin.

Loss control specialists contacted at other compa-nies (St Paul Companies, Reliance, Prudential andState Farm) either agreed with Zellis' description oftheir data base's structure, or searched through theirown data bases and could ®nd no relevant informationon IAQ-related claims. Ed Gorman of Reliance stated:

3 The protocol can be downloaded via the World Wide Webb:

http://www.ipmvp.org,.

A. Chen, E.L. Vine / Environmental Science & Policy 2 (1999) 457±464458

Generally, SBS issues are related to building con-struction materials and poor HVAC maintenance.We have done some air quality testing in buildingsto measure IAQ problems, but generally, IAQ isnot an issue in regards to direct cause of loss on theinsurance policy itself . . . During my career, I'veonly seen one or two cases of IAQ problems in thenortheastern states. (Gorman, 1997).

Although it does not address IAQ issues directly, arecent paper by Thomson o�ers indirect evidence ofIAQ's bottom-line impacts on insurance providers(Thomson, 1997). Thomson, an Assistant Vice Presi-dent with DPIC Companies, reports that DPIC paidout more than $24 million for claims related to heat-ing, ventilation and air conditioning (HVAC) between1989 and 1993 (Thomson, 1997). DPIC, a provider ofprofessional liability insurance to architects and con-sulting engineers, examined 44 claims related to faultyHVAC systems in buildings and found that theseclaims:

. . . represent $18.4 million paid out by and onbehalf of the mechanical consulting engineer andarchitect policyholders insured with DPIC. Thetotal amount of settlements for these claims was$25.7 million. The remaining $7 million was paid byother parties such as contractors, vendors, other de-sign professionals not insured by us. The averagesettlement . . . was $584,113, roughly one percent ofthe building construction value. (Thomson, 1997).

The claims involved HVAC systems that over- orunder-heated buildings, failed to cool buildings ade-quately, or failed to adequately ventilate whole build-ings, or portions of them. The four most commontypes of projects in these cases were commercial andindustrial buildings, schools and university buildings,condominiums and hospitals.

4. Four recent cases involving verdicts

4.1. DuPage County courthouse

A courthouse in DuPage County, IL, was the causeof a number of suits and countersuits involving hun-dreds of litigants. DuPage County, west of Chicago,constructed a complex of o�ce buildings to house itsgrowing sta�. In 1991, shortly after law enforcementand judicial sta� occupied the new building, the occu-pants began to su�er from symptoms characteristic ofsick building syndrome Ð headaches, nausea, dizzi-ness, respiratory irritation. In March 1992, severalbuilding occupants were removed by ambulance, andthe building was temporarily evacuated. As many as

450 others complained of some of these symptoms(Hirsch, 1996). The ®rst lawsuit was ®led by the occu-pants of the building against DuPage County to askfor a court order to close the building. Before the casewent to completion, the county decided to close thebuilding down itself, vacating it in September 1992.The county then rebuilt the ventilation system.

In 1992, a number of the building's occupants ®leda personal injury lawsuit against the architects, generalcontractors and HVAC contractors, alleging that theirillnesses were caused by the design of the ventilationsystem and the presence of volatile organic compounds(Lake County IL, No. 92L-1695). The county thensued the architects and contractors (Lake County IL,No. 92L-2345), seeking $3 million reimbursement for®xing the building's ventilation system. The countyalso sought a $1 million reimbursement for its esti-mated workers' compensation claims (Roberts andDu�y, 1994). Both the county and the personal injurysuits alleged that the fault lay with the design and con-struction of the building's ventilation system, an alle-gation which was denied by the designers and builders.A jury entered a verdict against the county of DuPagein 1994. The jury rejected the county's claim that theconstruction and design of the ventilation system wasthe problem, and found that the county's operation ofthe system contributed to the employee health pro-blems. As a result of this verdict, the county receivedno damages for the reconstruction of the ventilationsystem; no reimbursement for its workers' compen-sation expenses; no damages from the architects andengineers; and minimal recovery from the contractorsfor incomplete warranty work unrelated to indoor airquality.

Most of the claims from the individual suits weresettled out of court for undisclosed sums (Manko andCassidy, 1996). Of the many millions of dollars thatwere spent on the DuPage Court House cases, a sub-stantial portion was used for investigations of the pro-blem, legal fees, building renovation and workers'compensation costs. Because the county's workers'compensation program was self-funded, privateinsurers were not directly impacted in this case, butthe publicity generated by the problems in this build-ing and others provided incentives to insurers andbuilding owners to take sick building complaints moreseriously.

4.2. Polk County courthouse

A new Polk County, Florida courthouse was foundto cause a number of cases of sick building syndrome,allegedly because of fungi or other microbiologicalagents breeding in its HVAC system:

Following completion . . . building occupants alleg-

A. Chen, E.L. Vine / Environmental Science & Policy 2 (1999) 457±464 459

edly experienced extensive indoor air quality pro-blems, including personal ailments and buildingmaintenance problems. Rehabilitation costs andother damages have been estimated at $40 million.(Manko and Cassidy, 1996).

The county sued several parties including the build-ing's contractor, and in June 1995, a jury ordered Re-liance Insurance Co. to pay $25.8 million in damages(McGowan, 1996). The ®nal settlement in the case wasfor $35 million (due to the accrued interest after alengthy appeals process) (Dubarry, 1998; Katz, 1997).

4.3. Martin County courthouse

A courthouse in Martin County, Florida, con-structed in 1989, experienced IAQ problems resultingin:

. . . required rehabilitation that exceeded $24million, in large part because the South Floridahumidity supported the growth of molds, mildewand fungi on building materials, including vinylwallpaper. The construction of the courthouse as asealed building may also have contributed to theproblem. (Manko and Cassidy, 1996).

The jury in the trial (Martin County vs Frank Roo-ney) awarded damages amounting to a total of $13.7million to the county against a construction managerand three surety companies (Centex-Rooney Construc-tion Co., Inc., Seaboard Surety Company, St Paul Fireand Marine Insurance Company, and the AmericanInsurance Company) (Case No. 96-2537, Court ofAppeals of Florida, Fourth District). The county hadnamed other parties in its suit, including the project'sarchitect, mechanical engineer and various contractors,but settled with those parties, reportedly for close to$3 million (Kirsch and Edens, 1996). The cost of reha-bilitation exceeded the cost of construction, which was$11 million, and the county had to relocate the build-ing's employees for two years (Martin County, FL vsFrank J. Rooney et al. 95-274-CA, FL 19th Jud. Cir.)(1996). Given the uncertainty in estimating the actualcosts of damage, the appeals court upheld the lowercourt ruling and ruled:

Uncertainty as to the amount of damages or di�-culty in proving the exact amount will not preventrecovery where it is clear that substantial damageswere su�ered and there is a reasonable basis in theevidence for the amount awarded. Ultimately, thedegree of certainty simply required that the mind ofa prudent impartial person be satis®ed with thedamages. (Anonymous, 1998).

4.4. EPA headquarters building

The US EPA became embroiled in an IAQ-relatedcase when several of its employees alleged that renova-tions to its Waterside Mall headquarters in 1987±88caused respiratory problems (Bahura vs S.E.W. Inves-tors, 90-ca 10594):

In Spring 1987, EPA employee Joanne Bahurabegan to `experience respiratory problems', includ-ing a cough, scratchy throat, sinus infections, fati-gue and dizziness, according to court documents. InOctober 1987, she was relocated to another area ofthe building; her symptoms subsided. But they cameback when `renovations in this new area of thebuilding commenced' the documents say. (Foran,1997).

Five employees sued the Waterside Mall operator, alle-ging that exposure to organics from a new carpetcaused these symptoms. In December 1993, the juryawarded nearly $1 million in total to all of the ®veplainti�s. After further litigation, the court decided in1995 that the defendants only had to pay one of the®ve plainti�s, who was successful at proving physicalinjury caused by the IAQ problems (Foran, 1997).

5. Frequency of IAQ litigation

It is unclear whether the frequency of these cases isincreasing, but lawyers familiar with the ®eld believeso:

. . . more and more IAQ legal claims, especiallyones against property owners, are being ®led,[according to] Bret W. Reich, a senior environmen-tal attorney with Aon Environmental Risk Servicesin Houston. He and others . . . could not providenumerical evidence of a rising number of claims(Katz, 1997).

Owen McGowan of the law ®rm Mitchell, Heinleinand DeSimone also reports: ``Virtually unheard ofuntil the mid-1980s, problems with indoor air qualityare growing in frequency and severity'' (McGowan,1996). And Helen Zukin, who represented plainti�s inthe Call vs Prudential case (Section 4.2), notes:

We have not seen a tidal wave of litigation becausethese are expensive cases Ð the costs for experts arehigh . . . However, there is a steady stream of thesecases, they are slightly on the increase, [the numberis] higher than what we saw ®ve years ago. Thebuildings that are of most concern are commercialo�ce buildings, hospitals, medical buildings,

A. Chen, E.L. Vine / Environmental Science & Policy 2 (1999) 457±464460

schools, public buildings, and court houses. (Zukin,1998).

6. IAQ litigation and building type

One cannot infer from these few cases about build-ing types that are most prone to acute IAQ problems,but, drawing from past experience, a few lessons havebeen learned:

Building types especially susceptible to failureinclude schools, laboratories, hospitals and large,complex government buildings . . . These increasedfailure rates are usually the result of a combinationof several factors, including building usage, speci®cand unique code requirements and occupant suscep-tibility to IAQ pollutants. (Odom, 1996).

In addition, new buildings appear to be slightly moreprone to IAQ failure than old ones, since design pro-blems that cause episodes of poor indoor air qualitygenerally show up within a structure's ®rst year(Odom, 1996). It appears that specialized buildings(such as laboratory facilities, hospitals, and univer-sities) may be prone to IAQ problems because of theircomplicated and specialized HVAC systems. Also,buildings in the southeastern US have IAQ concernsbecause of the hot, humid climates and other harshconditions during the region's extended summer.Finally, it is important to note that changes in buildingusage density can also cause IAQ problems. Althoughthese changes alter heating and cooling load, theyoften take place without appropriate changes to theHVAC system.

7. Development of IAQ legal theory

The ®rst type of indoor air quality litigation con-cerned industrial settings and single-source contami-nant exposures. Prior to the ®rst IAQ claims in thecommercial sector, most building owners were moreconcerned with liabilities from asbestos, lead paint andother speci®c chemical hazards. In the residential sec-tor and, to a lesser degree, in commercial buildings, anumber of cases arose from exposure to formaldehydeemissions from building materials such as particleboard and insulation (Silberfeld, 1994). Faulty appli-ances leaking dangerous fumes such as carbon monox-ide were another source of lawsuits in the residentialsector (Kirsch and Hayle, 1997).

In the early 1980s, commercial building ownersrelied on insurance coverage for sudden, accidental

emissions of pollution for liability protection. Later,some courts began to ®nd that the language in thesepolicies referred only to ``traditional'' air pollution(i.e., outdoor air pollution), even though the policiestechnically covered all emissions to the atmosphere.Around 1986, insurance carriers began writing pol-lution exclusion clauses into their general liability pol-icies to avoid their contractual obligations. Theexclusion exempted coverage of emissions that mightcause various IAQ problems, including sick buildingsyndrome and general respiratory conditions caused bythe indoor environment, as well as asbestos-relatedhealth problems and lead paint (Anderson, 1995). Thisclause sometimes referred to as the ``absolute pollutionexclusion'' clause, was originally designed in responseto environmental pollution exposures; insurance com-panies later tried to include IAQ problems under thesame exclusion (Frazer, 1998). Although businessescan buy speci®c types of insurance to handle asbestosand lead paint problems, most insurance companiesnow write their commercial general liability policies ina way that excludes many IAQ-related claims. In spiteof the lack of data on how IAQ-related health pro-blems a�ect their business, the insurance industry hastaken the anecdotal evidence about their realityseriously enough to alter their policies in ways thathave lessened their exposure.

It is unclear to what extent courts in all jurisdictionswill allow insurance companies to use pollution exclu-sion clauses to refuse coverage of indoor pollution-re-lated problems. In some cases, courts have decided infavor of insurance companies; in other jurisdictions,courts have rejected the use of pollution exclusions todeny coverage in cases involving lead paint and ¯oorresurfacing chemicals. For example, the North Caro-lina Court of Appeals decided that a ¯oor resurfacingchemical was not a ``pollutant'' as de®ned under theabsolute pollutant exclusions Ð they are desired bythe property owner and intentionally introduced toform part of the building (Anderson, 1995). Irene Ble-del, CEO of Environmental Resource Process Manage-ment, notes that changes are occurring in severalareas:

Based on present case law, the courts are ruling infavor of the insured versus the insurance companies.Therefore, the `absolute pollution exclusion' is beingquestioned by the courts. It is not only the realestate developers, owners, investors, tenants, users,consultants, and service providers of commercialspace that have an IAQ/SBS liability exposure. Theinsurance companies are also at a potential loss Ða loss they have not documented or planned for intheir cross-disciplinary risk data management sys-tems and product cross-functional coverage ex-posure. (Bledel, 1998).

A. Chen, E.L. Vine / Environmental Science & Policy 2 (1999) 457±464 461

Pollution exclusions have given insurance companies alegal tool to limit their liability in many environmentalcases involving IAQ as well as lead paint, asbestos andurea formaldehyde foam insulation. When this toolfails and a court allows a case to go forward, manyinsurance companies will ®nd settling out-of-court pre-ferable to the possibility of a plainti� receiving a largeaward from the jury, as described by Jonathan Larsen,a lawyer with a San Francisco practice in toxic torts:``Until these pollution exclusions, insurance companiesprobably paid for most of the damages awardedduring litigation'' (Larsen, 1997).

Almost any party associated with building construc-tion or maintenance may be named as defendants in asuit, including building owners, managers, real estatedevelopers, architects, engineers, general and HVACcontractors, manufacturers of building products, IAQand energy management consultants and leasingagents. In the past, plainti�s were individuals seekingredress for single-contaminant exposures; today, plain-ti�s are most often commercial entities such as thetenants or owners of a commercial building (Kirschand Hayle, 1997).

Lawyers are escalating the ``legal arms race'', look-ing for other precedents on which to base IAQ suits(Silberfeld, 1994). The most common areas of law theyuse today are: (1) contracts and breach of lease; (2)professional malpractice or negligence; (3) strict liab-ility, generally used against product manufacturers; (4)fraud or misrepresentation; or (5) punitive damages,for punishing the defendants.

8. Summary and conclusions

8.1. IAQ awareness

The literature search and discussions with insuranceand risk management professionals turned up littlespeci®c information about the costs of IAQ-relatedproblems to insurance companies. However, those dis-cussions and certain articles in the insurance industrypress (e.g., rulings on the absolute pollution exclusionclause) indicate that there is a strong awareness andgrowing concern over the ``silent crisis'' of IAQ and itspotential to cause large industry losses. The source ofthese losses include both direct costs to insurers frompaying health insurance and professional liabilityclaims, as well as the cost of litigation.

The insurance industry as a whole does not yet seeIAQ as a major source of claims, as re¯ected in thestructure of its claims data bases: e.g., companies con-tacted for this report do not have data ®elds for anytype of IAQ-related condition. However, several insur-ance industry observers agree that IAQ costs may wellbe unrecognized, and instead ascribed to more conven-

tional and, therefore, easily reported medical con-ditions, such as respiratory ailments, allergies, andasthma. A substantive examination into the thousandsof claims reports on ®le at insurance companies mightreveal the building-related origins of these problems.

Although there are no ®gures for total costs due tounfavorable judgments in IAQ lawsuits (because somany of these suits are settled out of court and remaincon®dential), sizable awards in several recent casessuggest that defending parties, including insurancecompanies, could be liable for tens of millions of dol-lars per building. Although the insurance industry hasmade e�orts to limit IAQ losses through the use ofpollution exclusions, not all states have found theseexclusions valid, and lawyers are ®nding other legaltheories on which to base IAQ lawsuits. The fact thatinsurance companies began writing these exclusions inthe same timeframe as the growth in litigation onIAQ-related health problems suggest that they dorecognize potential problems for their business posedby poor IAQ.

8.2. Future activities

We conclude by brie¯y discussing four activities thatneed to be addressed in the near future: (1) quantifyingIAQ-related insurance costs by sector, (2) educatingthe insurance industry about the importance of IAQissues, (3) examining IAQ impacts on the insuranceindustry in the residential sector, and (4) evaluatingthe relationship between IAQ improvements and theirimpact on energy use.

8.2.1. Quantify IAQ-related insurance costs by sectorFuture work in quantifying insurance costs could

follow three tracks. First, to quantify IAQ costs moreaccurately, a few insurance companies with a largehealth insurance or commercial general liabilitybusiness could be approached and asked whether theywould be willing to open their claims forms toresearchers, or a company could be contacted to con-duct an internal claims-review study focused on IAQ(e.g., as DPIC examined its own HVAC-related pro-fessional liability claims, see Section 3.1). By workingthrough the individual reports, researchers might beable to identify which claims had an origin in an IAQ-related factor. This might provide an estimate of thepercentage of the insurance carrier's payments relatedto IAQ.

A second approach to quantifying these costs is towork with an organization like the Building Air Qual-ity Alliance or the Building Owners and Managers As-sociation to develop a data base of buildings, theirIAQ problems, and costs to building owners and theirinsurance carriers. These organizations could serve asgateways to building managers who are paying atten-

A. Chen, E.L. Vine / Environmental Science & Policy 2 (1999) 457±464462

tion to IAQ issues. The challenge is to access a large,robust sampling of commercial buildings Ð withoutthis, there is the potential to produce a biased statisti-cal representation of these costs.

A third method of characterizing insurance costs isto ®rst estimate the total health insurance cost ofadverse health e�ects that are in¯uenced by indoor airquality, and then estimate the proportion of thesecosts that are directly attributable to IAQ. Such anapproach would also require cooperation with theinsurance industry to pull data from health claimsdatabases and to draw on industry professionals' senseof the orders of magnitude of claims for various healthconditions.

8.2.2. Educate the insurance industry about theimportance of IAQ issues

In protocol and standards-related work, there is aneed to determine for the insurance industry whetheror not attention to IAQ problems will help their bot-tom line. Although there is a perception of increasingfrequency of IAQ litigation, only a few cases havegained media attention. Thus, there is a contradictoryperception among both insurance underwriters andbuilding owners that ``it won't happen to me''.

Working with the risk management and brokerage®rms, and professional societies, there is an opportu-nity to raise the awareness of the large insurance car-riers that IAQ issues can impact their bottom line, andthat there are steps they can take in such areas as stan-dards development to reduce that impact.

8.2.3. Examine IAQ impacts on the insurance industryin the residential sector

Future research is needed to examine IAQ impactson insurance claims in the residential sector, beginningwith a review of literature and the insurance industry'sknowledge of these impacts. In addition to the IAQ-health linkages shared with the commercial sector, theresidential sector could have unique linkages (e.g., ahigher rate of carbon monoxide poisonings caused byfaulty combustion appliances) (Ott and Roberts, 1998).

8.2.4. Evaluate the relationship between IAQimprovements and energy use

Research should not neglect the energy implicationsof improving IAQ to reduce insurance loss. Somemeasures that improve IAQ also increase energy e�-ciency. With careful optimization, building improve-ments can help raise both its IAQ and its energye�ciency.

Acknowledgements

We are especially grateful for the ®nancial and

moral support provided by Gregory Kats and ArtRosenfeld of the US Department of Energy. We areespecially indebted to Evan Mills at LBNL for his gui-dance, support and e�orts in developing this study.The authors also wish to thank the people who wereinterviewed for this study as well as Irene Bledel, BillBrowning, Rick Diamond, William Fisk, Tim Frazer,Cathy Ghandehari, Gregory Kats, Satish Kumar, HalLevin, Evan Mills, and Art Rosenfeld for their helpfulreviews on a larger report that formed the basis forthis paper. Support for this work was provided by theAssistant Secretary for Energy E�ciency and Renew-able Energy of the US Department of Energy underContract No. DE-AC03-76SF00098.

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US Department of Energy (DOE), 1997. International Performance

Measurement and Veri®cation Protocol. US Department of

Energy, Washington, DC.

Zellis, R., 1997. Royal Insurance Co. Personal communication. 23

October.

Zukin, H., 1998. Personal communication. 28 April.

Edward Vine is a sta� scientist at the Lawrence Berkeley National Lab-

oratory and has been involved in the evaluation of energy-e�ciency

programs and policies for over 20 years at LBNL. An a�liated faculty

member of the Energy and Resources Group at the University of Cali-

fornia, Berkeley, Dr. Vine earned his Ph.D in Ecology from the Univer-

sity of California, Davis. He recently completed a major study on the

bene®ts of energy-e�ciency and renewable energy projects for the insur-

ance industry entitled, ``Energy-E�ciency and Renewable Energy

Options for Risk Management and Insurance Loss Reduction: An

Inventory of Technologies, Research Capabilities, and Research Facili-

ties at the U.S. Department of Energy=92s National Laboratories.''

Allan Chen is an energy analyst in Lawrence Berkeley National Labor-

atory's Environmental Energy Technologies Division. He has an M.S.

in geophysics from Stanford University. He is one of the co-authors of

the report ``Energy-E�ciency and Renewable Energy Options for Risk

Management and Insurance Loss Reduction: An Inventory of Tech-

nologies, Research Capabilities, and Research Facilities at the U.S.

Department of Energy=92s National Laboratories.''

A. Chen, E.L. Vine / Environmental Science & Policy 2 (1999) 457±464464