But members of the House of Assembly on Wednesday passed a bill to place a cap on the amount of money re-insurers would have to pay out in these cases.
The amended Road Traffic Act would place the cap at $2.5 million for a single claim and $30 million for all claims related to a single incident.
Explaining the amendment, Transport and Aviation Minister Glenys Hanna-Martin pointed out that the limitations are ﾓwell above any award ever made in the country and higher than most jurisdictions, particularly in the Caribbean.ﾒ
According to a recent actuarial study ﾖ a report that aided in the amendmentﾴs substantial delay to Parliament over the years – the largest claim paid out in the history of The Bahamas was $1.6 million.
The insurance industry first proposed the amendment to the government in 1990, discussions that continued on and off until the Free National Movement (FNM) government prepared a draft amendment in 1999.
Talks resumed almost four years later, particularly following the global shift to remove unlimited liability in the wake of various catastrophic events like the train derailment in the United Kingdom in February 2001 and the September 11th terrorist attacks on the World Trade Center (WTC) in the United States that same year.
The 9/11 tragedy reportedly resulted in the largest insurance claim in the history of any country.
Bahamas General Insurance Agency (BGIA) also pointed to the need to move ahead with the amendment considering the insurance industryﾴs limited financial resources.
ﾓThe concern of re-insurers is that being companies with limited and defined assets, they cannot continue exposure of an unlimited nature,ﾒ Minister Hanna-Martin said.
ﾓIn The Bahamas, insurance companies are facing the prospect of an inability to purchase unlimited liability insurance and therefore, eventually would be unable to comply with the Road Traffic Act.ﾒ
According to Minister Hanna-Martin, the Bahamas is not the only Caribbean country making the shift toward limited liability.
In the Cayman Islands, limitations of $1.2 million per person and $6 million per event have become law; while in Jamaica, limits of $51,000 per person and $86,000 per event have been implemented.
Other Caribbean islands, the United Kingdom, Europe and Asia have also followed the trend.
Re-insurers had set a January 1, 2004 deadline for the change to be made in the Bahamas. That deadline was later extended to June 30, 2004.
Citing the actuarial study, Minister Hanna-Martin stressed that the amendment should not increase premium rates.
ﾓIf all else were to remain the same with the auto insurance environment, with no change other than a reduction in third party limits, premiums should at minimum stay the same and at best decrease to reflect the losses that will be eliminated from the system,ﾒ she said.
Supporting the bill, Financial Services and Investments Minister, Allyson Maynard-Gibson pointed out that because insurance and re-insurance companies do not have unlimited funds at their disposal, the promise of unlimited cover to an insured person is ﾓundeliverable should worst come to worst.ﾒ
Although agreeing with the concept, independent Member of Parliament Tennyson Wells questioned whether the new caps of $2.5 million and $30 million were sufficient considering the escalating costs of medical care in The Bahamas.
Mr. Wells proposed a minimum figure of $5 million or $7 ? million for a single claim.
The House of Assembly has adjourned until July 7 at 10am.
Macushla N. Pinder, The Bahama Journal
