Capping compensation awards

The bill moved by the Minister of Justice in parliament to establish a monetary limit on awards for death or injury from traffic accidents is a step in the right direction.

Although our courts have so far been very prudent when deciding awards for compensation, we have had the odd case with too high an award or an award in unlikely circumstances. There is therefore a real danger of creating an uncertain situation for insurance companies to continue to provide cover for such awards.

Unfortunately, from your report of the parliamentary sitting (February 13), the remarks made by opposition spokesmen on this bill leave a lot to be desired.

One MP went so far as to call the bill vili (vile) when he knows, or should know, that in a modern society such as ours no person can be held responsible for an accident without limitations. I would like to express my own objective criticism of the bill hoping for some improvements.

Let me state at the outset that I am not a lawyer and my interest and limited knowledge in this matter arises from my experience as an insurance practitioner.

As such I have been privy to the difficulties faced by insurers with the open-ended system of calculating awards which we have had so far. (My comments will be based on the report carried in The Times of February 13 because I was unable to obtain a copy of the bill from the Ministry of Justice's website as this was last updated on December 16, 2002!).

The first area where the bill treads dangerous ground is when it attempts to define too rigidly dependants of the victim of an accident. The term "dependant" and "relative" are not mutually exclusive and a person can be dependant on another even if he is not a relative.

This would be especially the case today where cohabitation is common because of split marriages. From my reading of your report, the bill assumes that a "dependant" must be "a spouse, descendent or ascendant of the deceased and the brothers and sisters of the deceased".

Is this correct ? If so, is it acceptable in our society? Would it not be better for the bill simply to require the claimants to prove that at the time of death they were being maintained by the deceased person and to what extent?

From there on, the courts should be allowed to consider whether the claimants have brought sufficient proof to justify their claim.

The setting of a limit on the compensation which may be awarded is certainly the greatest benefit of this bill. Without such a limit, as is the case today, any citizen is theoretically unlimitedly responsible for accidentally causing death or damage to another citizen.

True to say that in the case of traffic accidents there is compulsory motor insurance but what about those areas where there is no insurance covering the accident ?

Even where insurance companies cover such risks, they cannot be expected to provide "unlimited" cover because their own means are limited by their capital, their reserves and their reinsurance arrangements.

Therefore, the setting of a maximum limit is certainly a desirable feature of the bill. It is the monetary amount itself which I would call into question.

Is Lm250,000 sufficient considering the standards of living we enjoy today? Would it be sufficient in five years' time? It is commonplace for such court cases to drag on for years and the claimant may find that while at the time of the accident Lm250,000 may seem sufficient it is well possible that by the time the case is decided such figure would be too low. What then?

Is the minister expected to raise the limit retroactively or is the claimant who waited five years for his claim to be liquidated to suffer a further injustice?

What effect will the raising of the limit by the minister have? Will it be applied to all decisions taken by the courts after the limit was increased or will it be applied only for accidents occurring after the limit was increased?

The setting of a limit which in certain cases would be very close to the actual amount of awards that are justifiable can also be a double-edged sword. Would it not raise the risk of courts simply going for the maximum once too often?

In my opinion, the monetary limit should be considered simply a "notional" limit on which insurance policies and other instruments could be based in order to satisfy the need for certainty when providing such cover.

The judgment of the courts must still be relied upon to provide fair compensation without exaggeration and the minister should not have the power to raise this limit when he deems it inadequate.

There is a fine line between justice and the exigencies of society and this line must be treaded upon warily. Therefore, the bill should set a much higher limit to satisfy the clear need for such a limit, but without restricting the judiciary's freedom to dispense justice.

The bill moved by the minister of justice is timely and necessary. In principle, it takes into consideration the need for just awards to be dispensed and provides a stable and certain framework in which insurance companies, like all other business, need to work to cover such awards.

Hopefully, the opposition and government members will make more valid contributions towards its improvement for the benefit of society.

Mr Said is a chartered insurance practitioner