OIC Study: JUA Could Address Availability for Some Child‑Care Providers but Not High Historic Claim Costs

Office of the Insurance Commissioner senior policy advisor David Fort briefed the committee on a December feasibility study that evaluated whether a Joint Underwriting Association (JUA) could address insurance availability problems for child‑care related services.

Fort said a JUA — a legislatively created nonprofit insurer of last resort — can address availability but cannot by itself absorb long‑tail, high‑cost claims. The study focused on childcare centers, in‑home daycare, child‑placing agencies, and group foster homes because other "child and youth services" categories were too broad to assess within the study's short timeline.

Data review and stakeholder interviews showed that in‑home daycares generally had coverage available (often via homeowner endorsements), childcare centers face rising costs but still have some market options, while group foster homes and child‑placing agencies face an availability crisis driven largely by frequent, historic sexual‑assault claims that insurers treat as a hard market risk. Fort said possible responses include contract reforms, temporary safe harbors for the most affected providers, creation of a victims fund, and long‑term structural options; he said the hard market may ease somewhat in the coming six months for commercial lines but the historical assault claims remain the key constraint.

Lawmakers questioned whether training, hiring and background‑check improvements, and risk‑management practices could reduce costs; OIC staff said such risk‑management tools could be part of long‑term strategies but would not retroactively change past claims that continue to affect insurer appetite. The committee did not enact formal action after the briefing.