South Carolina PolicyOwners and the JUA: What You Need to Know

What happened?
In 2019, the South Carolina General Assembly passed bill H.3760, which impacts statewide medical professional liability insurance. The bill was enacted in response to a combined $105 million deficit accumulated by the South Carolina Joint Underwriting Association (JUA) and the South Carolina Patients’ Compensation Fund (PCF). 

What does the bill do?
The bill combines the JUA and PCF into a new organization called the South Carolina Medical Malpractice Association (the “Association”) and enacts several changes designed to eliminate the Association’s accumulated deficit and restructure its governance and operations. While the majority of the changes from the bill impact the Association and its policyholders, there is one significant provision impacting all medical professional liability policyholders in the state.

How does this affect me?
The bill requires medical professional liability insurers and their policyholders to pay a significant portion of the $105M accumulated deficit. Specifically, all medical professional liability insurers in South Carolina (including the Association) must pay a uniform assessment on direct written premium that will range between 2 and 6%.  That assessment amount will be added to your policy premium.  The assessment will remain in place until the accumulated deficit is paid off, which could be as late as 2035.  

Beginning in 2021, the Association must charge its own policyholders an additional 1% premium surcharge per year for 10 years, resulting in a maximum 10% surcharge on top of the 2-6% assessment.  MagMutual PolicyOwners are not subject to this additional surcharge.

Why did this happen?
This happened because the JUA and PCF took on more risk than they could cover, with pricing that wasn’t sufficient to cover their policyholders’ claims.   

How much will my cost increase?
The Association’s Board meets annually to determine the assessment for following year. In 2021, the assessment is 6%.   

What premiums does the assessment apply to?
The bill requires the assessment be applied to all premium for medical professional liability insurance written in South Carolina in 2020 and beyond. This includes:

• All physician and organization medical professional liability premium
• The professional liability portion of hospital professional liability policies and healthcare facility policies
• Tail premiums for any of the above including departing physicians

Where will I see this charge?
MagMutual will note this charge on your policy’s declaration page under the description “South Carolina JUA and PCF Deficit Assessment.”

If I cancel coverage after being assessed, will I receive a return on my assessment?
Yes. If you were assessed for your premium, the assessment will apply to your final earned premium.  Any additional amounts that have been paid will be returned to you.

If there is a change to my policy that affects the premium after binding, will the assessment be revised to reflect the new amount?
Yes. The assessment will apply to the adjusted final premium. If a larger premium was assessed, a credit will be issued to reflect the lower amount. 

How much of the assessment goes to MagMutual?
None. The amount of the assessment is decided by the state, and we pass it entirely on to them. MagMutual does not retain any portion of it.

Does this assessment apply to surplus lines policies?
Yes. Any agent placing surplus lines business for medical professional liability insurance will be required to collect the same assessment percentage for the surplus lines medical professional liability insurance liability they place. The net cost will be the same for both admitted and surplus lines policyholders.

What happens if the Association acquires more debt? Will I have another assessment?
No. Per the bill, any future deficits accumulated by the Association will be covered exclusively by rate increases on the Association’s policyholders.