Pennsylvania Finally Gets Its $200M Slice of Insurance Association’s Surplus Pie

Pennsylvania Attorney General Dave Sunday recently announced a $200 million transfer of funds from the Professional Liability Joint Underwriting Association (JUA) into the state’s general fund.

The transfer was the result of the Attorney General’s victory in years-long litigation against the JUA over whether a multi-million dollar surplus balance carried by the JUA belongs to the public or to the private insurers behind the JUA.

Since 2017, the Attorney General’s Civil Litigation Section has been engaged in an argument over the surplus with the JUA, which was created by legislators in 1975 as an insurance option for high-risk medical providers.

The Attorney General argued that the JUA — being created by the General Assembly — is a public, not private, entity. A federal court finally agreed last December, clearing the way for the transfer of $200 million to the general fund.

“It has been a long road, and I commend our civil litigators for seeing it through to this end result — a monumental victory for Pennsylvanians,” Sunday said.

The impetus for the litigation was legislation passed in 2017 that ordered the transfer of $200 million from JUA to the Commonwealth general fund. The JUA then filed suit against the Governor and Insurance Commissioner, who the Attorney General has represented in the matter.

After years of litigation, the Third Circuit Court of Appeals last December ruled that the JUA is a public agency, not a private entity,

The ruling opened the door for the state to access the JUA’s budget surplus, which actually totals $300 million, and which regulators say is far in excess of what the JUA needs for reserves to cover potential claims. The state maintained it has the right to access the funds for the good of the public. The JUA had successfully thwarted the state’s attempts to access its funds for years

The state created the JUA almost 50 years ago to act as a professional liability insurer of last resort for high-risk medical providers. It is funded by premiums paid by policyholders and investment returns on its funds. The JUA does not receive funding from its member companies or from the Commonwealth. All medical professional liability insurers writing in the state must join. The JUA has never paid any dividends or distributions to its policyholders; nor can it do so by law. Since its inception, it has amassed through investments its total surplus of about $300 million.

Topics Excess Surplus Pennsylvania