The SC General Assembly adjourned for the 2019 session on May 9, but not before finalizing a major overhaul of the medical malpractice joint underwriting association (JUA).

The South Carolina JUA was created in 1975 when private insurance carriers were not writing or offering medical malpractice insurance to the medical community. Over the years, the JUA in combination with the Patients Compensation Fund (PCF)  became the primary market for med mal coverage in South Carolina. However, the private insurance market has returned for med mal coverage  putting a strain on the JUA and PCF to remain stable. Today, the combined unfunded liabilities of the JUA and PCF are estimated to be about $88 million.

The reform effort was initiated by the Department of Insurance and ultimately H 3760 was passed by both the House and Senate after extensive debate and amendments. The bill is on the Governors desk for signature  which is expected.

Key components of the legislation are:

1. A one-time assessment on insurers who write bodily injury liability insurance, other than automobile, homeowners, and farm owners equal to their share of 20% of the accumulated deficit of the JUA (estimated to be about $46 million).
   
   
2. Once this one-time assessment has been paid, the insurer may apply for withdrawal as a member of the JUA, and therefore would no longer be responsible for additional assessments or the JUAs ongoing unfunded liabilities. Only insurers that do NOT write medical malpractice insurance would be eligible to withdraw from future assessments.
   
   
3. On January 1, 2020, the JUA and PCF will be combined into a new association and a new board established.
   
   
4. All medical malpractice insurers, captives and self-insureds will be members of the new association. Non-admitted insurers are not included  but brokers that place business through non-admitted medical malpractice insurers will be affected.
   
   
5. Also beginning January 1, 2020, assessments for the accumulated deficits begin on the association members  between 2% and 6% each year until the deficit is retired.
   
   
6. Association policyholders will pay a surcharge on premium that goes to deficit retirement.
   
   
7. Surplus lines producers and brokers will collect a premium surcharge on non-admitted policies.
   
   
8. Ultimately, the new association will turn into a true residual market  raising rates above the voluntary market.