New Jersey’s Banking and Insurance Commissioner Holly C. Bakke has issued an order to reactivate the state’s long-disused Medical Malpractice Reinsurance Association (MMRA) in order to “assure continued access to health care” by making reinsurance available to the state’s medical malpractice liability carriers.
“Reactivation is a necessary step in the Department’s ongoing efforts to assure the availability of coverage for New Jersey doctors, so they can continue to do what they do best – serve patients,” Bakke stated.
The MMRA was established in 1976 by the legislature to “to assure the availability of medical malpractice coverage by providing medical malpractice insurers with the necessary financial backstop, i.e. reinsurance, they need to expand their writing of coverage in difficult market situations,” said the announcement.
It described the decision to reactivate the Association as the result of a hearing held Aug. 6 to determine whether medical malpractice reinsurance was available in the New Jersey marketplace. “Based on the testimony presented, the Commissioner determined that reinsurance was not ‘readily available’ and that the reactivation of the Association was both a necessary and prudent regulatory measure in order to keep direct coverage available,” the bulletin continued.
Bakke’s Department has been trying to solve New Jersey’s medical malpractice insurance coverage crisis. So far the DOBI has licensed three new companies Conventus, NJPURE, and MIIX Advantage; has put in place a “Marketplace Assistance Program,” designed to help doctors who are having difficulty finding coverage, and has issued “an order to show cause that required insurance carriers to offer doctors options in coverage to provide some premium relief in the short term nationally challenged medical malpractice marketplace.” Reactivating MMRA is another step in assuring continuing med mal coverage.
The Commissioner stressed that the MMRA would be governed by the market. “The reactivation of the Association will be solely for the purpose of providing reinsurance,” she stated. “In my order, I have set forth the cooperative measures the Department and the Association will undertake to ensure that the Association is activated in a responsible and measured manner.”
The directives were summarized as follows:
— The Association must operate within commercial reinsurance standards and at commercially reasonable terms.
— The Department will approve all terms and conditions of reinsurance agreements to verify that rates and terms are commercially reasonable.
— Reinsurance contracts will be issued for a maximum of a one-year period and will be subject to Department approval.
— To avoid any conflicts of interest, company representatives sitting on the board of the Association cannot vote on issues where that company is affected.
According to a report from the Star-Ledger the MMRA already has between $3 and $4 million, and intends to be self-supporting from the payments it receives in exchange for reinsurance coverage.
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