It is a scenario that has become all too familiar. The state once again finds itself facing a crisis in the property market, this time in the commercial market where the evidence points to a lack of affordable, available, and sufficient coverage. Although the Financial Services Commission and regulators would prefer to take the long view in working out the problem, they don't have the luxury to wait for lawmakers and the industry to hammer out a solution. Faced with the need for an immediate safety net, the commission and regulators reached back into history, and an almost forgotten part of the law, to reactivate one of those entities they know well: another joint underwriting association. As the commission and regulators move quickly to reopen the association, they trigger a number of well worn public debates such as whether the residual market will prove to be a short term solution until the private market regains its footing, or whether the association will morph into another permanent fixture like Citizens Property Insurance Corporation. Those and other questions remain to be answered. But if history provides any guide, it indicates that once the government wades into the insurance business, it's hard to get out.

Another Shortage

The FSC recently approved an emergency rule issued by Insurance Commissioner Kevin McCarty to reactivate a residual market for commercial property. The rule is based on a 1986 law that sets out the regulations for the residual market and has the benefit of not requiring legislative approval to become operational. McCarty said that the JUA is a necessary step to bring stability to the market and that it would be available to companies as of Sept. 1.