House puts cap on insurance damages

The House of Representatives has passed a bill that addresses the current absence of policy limiting the amount of insurance damages as well as the lack of insurance coverage for people and businesses. The bill now goes to the Senate for similar passage.

In recommending the passage of the bill, the House Committee on Commerce and Tourism, chaired by Rep. Martin Ada, said that House Substitute Bill 14-240 would further the Commonwealth’s interests in maintaining the availability of liability insurance in the CNMI.

Known as Injury Compensation Act, the bill aims to place a ceiling on the amount of non-economic damages that a party could be awarded in a personal injury or wrongful death action.

The bill provides for a $300,000 cap on awards for non-economic damages such as pain, suffering, inconvenience, mental suffering, emotional distress, loss of consortium, loss of society and companionship, humiliation, and injury to reputation.

This, the committee said, would “preserve a legal environment of fairness to plaintiffs, defendants and insurers.”

Providing a cap would “dissuade insurers from discontinuing the provision of liability insurance in the Commonwealth, reduce the significant rise of premiums, and increase the types and amount of coverage available for CNMI risks.”

The bill does not provide for a ceiling on economic damage awards.

Economic damages refer to monetary losses including medical and health care expenses, loss of earnings, burial expenses, property damage, loss of use of property, costs of repair or replacement, costs of obtaining substitute domestic services, and loss of business or employment opportunities.

The committee cited that at present, the CNMI has no policy that would limit the amount of damages that one party could be awarded in a personal injury or wrongful death action.

“This is problematic and discourages many businesses from maintaining their businesses in the CNMI as well as dissuades business from investing in the CNMI,” the committee report said.

It further cited that businesses have been subjected to excessive monetary awards and have opted to relocate elsewhere.

Not having a limitation on non-economic damage awards had led to higher premiums or no coverage at all for business and consumers, it said.

Consequently, these individuals and businesses are left vulnerable and defenseless because of the lack of availability of insurance coverage, it noted.

The committee believes that the measure would foster competition in the insurance market, reduce the cost of liability insurance, increase the types and scope of liability coverage, encourage the widespread acquisition of liability insurance by individuals and businesses, increase sources of compensation for victims of personal injuries, and preserve commercial and economic stability in the CNMI.