Insurance Handbook - Alaska Department of Community and ...

Updates at www.iii.org/issues_updates Insurance Topics
Residual Auto Insurance Markets
Residual Market Plan Mergers: In 2002 Florida’s two residual market
organizations, the JUA and the Florida Windstorm Underwriting Association,
merged to become the Citizens’ Property Insurance Corporation (CPIC). The
Florida CPIC, known as Citizens, has a tax-exempt status. This feature enables it
to finance loss payments in the event of a major disaster by issuing tax-exempt
bonds that carry low interest rates, thus reducing financing costs over the years
by hundreds of millions of dollars. In Louisiana, following Florida’s model, the
FAIR Plan and the Coastal Plan became the Louisiana Citizens Property Insurance
Corporation in 2004.
Other Residual Market Entities
JUAs for Other Lines of Insurance: JUAs are not limited to automobile
insurance. At various times, there have been JUAs for residential insurance and
workers compensation. A number of states have medical malpractice JUAs, most
of which were set up in the 1970s or 1980s when the line was beset by high
losses.
Market Assistance Plans (MAPs): A MAP is a temporary, voluntary clearinghouse
and referral system designed to put people looking for insurance in
touch with insurance companies. They are organized when something happens
to cause insurance companies to cut back on the amount of insurance they are
willing to provide. MAPs are generally administered by agents’ associations,
which assign insurance applications to a group of insurers doing business in a
state. These companies have agreed to take their share of applicants on a rotating
basis.
MAPs may be organized for a single line of insurance, such as daycare
liability or homeowners insurance, or for a broad range of liability coverages.
Homeowners insurance MAPs have been formed in several East Coast states,
including Connecticut and Texas, and medical malpractice MAPs were created
in states such as Washington, when the medical community had difficulty finding
malpractice insurance.
Workers Compensation Assigned Risk Plans and Pools:
The mechanism used to handle the workers compensation residual market varies
from state to state. In the four remaining states with a monopolistic state
workers compensation fund (North Dakota, Ohio, Washington and Wyoming
switched to a competitive market in July 2008), all businesses are insured
through that fund. In most states with a competitive state fund (an entity that
competes for business with private insurers), the fund accepts all risks rejected
I.I.I. Insurance Handbook www.iii.org/insurancehandbook 67