- Report Published -
|Report on the Activation of a Medical Malpractice Joint Underwriting Association|
|State Corporation Commission; Bureau of Insurance|
|Chapter 1026 (Regular Session, 2003)|
|In 2003, the General Assembly enacted Senate Bill No. 1316 (Chapter 1026 of the 2003 Acts of Assembly), which included a provision requiring the State Corporation Commission (SCC) to commence an investigation of the voluntary market for medical malpractice insurance as provided for in § 38.2-2801 of the Code of Virginia. Section 38.2-2801 states that the State Corporation Commission shall activate a joint underwriting association (JUA) if, after investigation, notice, and hearing, it finds that medical malpractice insurance cannot be made reasonably available in the voluntary market for a significant number of any class, type, or group of providers of health care.|
The Bureau conducted five surveys in its investigation of the availability of medical malpractice insurance in the voluntary market in Virginia. Surveys were sent to physicians, hospitals, and nursing homes to determine if they were experiencing difficulty in obtaining medical malpractice insurance in Virginia. Surveys were also sent to insurance companies and insurance agencies to ascertain who was writing new business and what types of restrictions were being placed in the market. The Bureau also held meetings with physicians throughout the state to provide them with an opportunity to explain the problems they were having with regard to their medical malpractice insurance. Finally, as part of the study, the Bureau reviewed the number and types of complaints that had been received by the Bureau’s Property and Casualty Consumer Services Section from medical providers to determine how many consumer complaints involved the lack of available medical malpractice coverage.
The Bureau’s findings do not indicate that a significant number of any class, type, or group of health care providers cannot obtain medical malpractice coverage in the voluntary market. In fact, the most prevalent problem for health care providers appears to be affordability rather than the availability of coverage. Because the JUA is designed to be self-supporting (meaning that its policyholders would have to pay an actuarially sound premium as well as a stabilization reserve fund charge equal to one-third of the annual premium), the JUA would not necessarily make coverage affordable. In fact, in previous testimony before the Commission, it was stated that a JUA needs at least 500 policyholders to be self-supporting. Also, at the time the previous JUA was granted permission by the SCC to begin dissolution, approximately the same number of carriers were seeking to write new business for physicians as there are in today’s market. Therefore, the Bureau does not recommend that a JUA be activated at this time.
If the General Assembly were to determine that it would be in the public’s interest to have a JUA in operation for even a small number of providers, certain statutory changes would have to be made in Chapter 28 of Title 38.2 (§ 38.2-2800 et seq.) of the Code of Virginia. These would include:
(i) removing the requirement that coverage cannot be made reasonably available for a significant number of any class, type, or group of providers (in order to allow coverage to be made available for even a few health care providers);
(ii) removing the requirement that the JUA be self-supporting (and thus shifting at least some of the costs away from the JUA policyholders, eventually passing these costs on to the liability insurance carriers in the state and their insureds, in order to make coverage in the JUA more affordable) and addressing the nature and scope of any subsidization; and
(iii) removing reference to the provisions that require the JUA to be dissolved once the Commission determines that medical malpractice insurance can be made reasonably available in the voluntary market (in order to maintain the availability of coverage in the JUA at all times, and thus eliminate the delay in investigating the marketplace to determine when a JUA is needed).
This report also details the pros and cons of setting up a JUA.