By Peter D. Maynard
This article is partly based on a paper on the insurance law project of the Caribbean Law Institute presented by the author at the Miami conference on the Caribbean, at the Inter-Continental Hotel, on 30 November 1992.
After hurricanes Hugo, Gilbert and Andrew, the question of insurance law reform has come once more to the forefront in the Caribbean, although there were pressing issues beforehand. Insurance reform in a single country would be an immense task. However, the Caribbean Law Institute (CLI)—has joint project of the University of the West Indies and Florida State University, dedicated to the reform of commercial law in the region—has initiated a law-drafting exercise which covers all the 13 or more English-speaking common law countries of the Caribbean. The circumstances vary widely between countries even though they are all former or continuing dependencies of the UK. In some countries, insurance companies are almost completely unregulated; in others, such as Trinidad and Tobago, Barbados, Jamaica and the Bahamas, there is legislation which was extensively referred to in the project. Reference was also made to the legislation of Ontario, Nigeria, Australia and the UK among other countries.
Codification of the existing law is an important objective of the exercise. But the experts, drawn from more than half a dozen countries across the region to make up the CLI’s Insurance Law Advisory Committee (ILAC), also had reform harmonization of the law throughout the region is an important concern. The draft model insurance bill is designed to serve as a blueprint for a new legislative framework for insurance in all the countries of the region.
After five sessions during the last two years two draft bills have been produced:
i) a draft model insurance bill; and
ii) a draft motor insurance bill.
This article deals with some major reforms. It also gives an impression of the overall scope and content of each bill. The comments here are made subject to the usual caveat that they are my own views.
DRAFT MODEL INSURANCE BILL
The first and longer document, the draft model insurance bill, was considered at the last two meetings of the ILAC. The ILAC has left several technical provisions for a report by an actuary for the next session, and it would be premature to comment at length on those provisions.
The overall scope and content of the bill consists of 162 clauses contained in seven parts:
— preliminary;
— regulation of insurance companies;
— associations of underwriters;
— registration of insurance brokers, salesmen, agents and sub-agents;
— long-term insurance business;
— general insurance business;
— miscellaneous.
It also has a schedule relating to deposits.
Preliminary
The preliminary matters set out in the first part are unexceptional, but for three matters. Firstly, the bill introduces a new definition of spouse, husband and wife to include a partner in a common law union of five years or more. This definition accords with sociological realities as common law unions are now quite common. The period of five years ensures a degree of stability and is found, I understand, in the legislation of Jamaica. This provision is important particularly in respect of the designation of a spouse as a beneficiary of a life insurance policy.
Secondly, the scope of the Act is broad, extending to all insurers conducting business in any of the following classes of insurance business:
— ordinary long-term;
— industrial life;
— property;
— accident and sickness;
— liability;
— bond investment;
— motor vehicle;
— marine aviation and transit;
— all other classes.
It also noteworthy that the provisions of the bill apply to reinsurance, such as provided by Lloyd’s of London, except that such a company or association of underwriters is not required to make a deposit within the jurisdiction. This is perhaps an opening to deal with the perennial problems associated with reinsurance, in particular its exorbitant cost.
Indeed, after the devastation by hurricane Andrew in 1992, rates in 1993 for property insurance increased by more than 100 per cent, producing a strong vociferous reaction in the Bahamas by the general public and a call for a government investigation into the increases. The General Insurance Association stated that the hurricane losses had pushed up the cost of reinsurance, which had been passed on to the consumer in higher rates. Hurricane protection accounts for a significant part of the demand for property insurance.
Hence, the question of reinsurance is now squarely on the front burner. Although some consideration has been given to the question by the ILAC, it was felt that not a great deal could be done as most reinsurers are out of its jurisdiction. But it is quite evident that more innovative ideas are needed in this area of major public concern.
Thirdly, the bill creates in each country a supervisor of insurance, who is responsible for the administration of the bill. Although in some countries such a public office already exists, variously called ‘superintendent’ or ‘registrar’ or insurance, other countries in the region have no one in charge of insurance on a full-time basis. Instead, the responsibilities in this field are often subsumed—and invariably neglected—under a host of other responsibilities, such as finance or treasury.
This is therefore an important provision. However, the ILAC resisted attempts to cast the supervisor’s powers too broadly. In particular, a provision that the supervisor may act as an arbitrator in a dispute between an insurer and a policyholder was rejected. Similarly, alternative suggestions of ombudsman or good offices provisions were also rejected, in favour of leaving disputes to be resolved between the parties themselves, through adjusters or other industry-sponsored entities, or through the courts. The majority view is that the insurance industry should be largely self-policing.
Regulation of insurance companies
This is the longest part of the bill, as it consists of some 50 clauses. It is subdivided into the following topics:
— registration;
— deposits;
— investment;
— administrative and accounting requirements;
— investigations by the supervisor;
— judicial management and winding-up.
Registration
The other requirements for registration include: a minimum paid-up share capital to be specified by the country concerned, fully paid up in cash; and for a foreign company doing long-term insurance, a deposit. The supervisor may register the company after an appropriate enquiry if it fulfils the above conditions, is solvent, and has satisfied the usual conditions regarding the name of the company and the length of time it is in business. It has been suggested that the reinsurance arrangements for each class of business and policy documentation should be satisfactory and also that a fit and proper person is general manager of that company.
The supervisor is also empowered to cancel the registration of any company if registration is procured as a result of a misleading or false representation or incorrect information. Registration may also be cancelled if the company is insolvent, is not conducting its business in accordance with sound insurance principles and practice, has unsatisfactory reinsurance arrangements, unreasonably delays payment or settlement of any claim, contravenes that Act or has an unsatisfied final judgment against it for more than a month.
The supervisor can also summarily cancel registration if winding-up proceedings have commenced if the company has not begun business within two years of registration or has ceased to carry on business for more than a year, or if a liquidator or judicial manager or trustee so requests.
Deposits
A foreign company in long-term insurance is required to make a deposit with the supervisor of a specified amount. In general insurance, such a company must leave a deposit equal to 40 per cent of the premium income. Such a deposit may be either in cash or in prescribed securities or both. For example, in Barbados that amounts in B$200,000 in cash or securities or both.
Investment
Each insurer is required to invest and keep investment in securities or assets: (a) for long-term insurance, 100 per cent of the amount set apart for meeting liabilities to policyholders and (b) for general insurance, 100 per cent of the aggregate of reserves allocated for unearned premiums and meeting outstanding claims. The supervisor is to be informed of those who have custody of any certificate of title to these investments and the place where it is kept. No insurer may reduce its holding of prescribed securities or assets without the approval of the supervisor.
Administrative and accounting requirements
There are detailed provisions relating to the administrative and accounting requirements, in particular the preparation of annual accounts, the audit of accounts and the keeping of records by foreign companies.
Both foreign and local companies are required to make available to the supervisor all records of local policies and the aggregate amount of premiums on local policies. It is noteworthy that records of reinsurance arrangements have also been added in the course of the ILAC’s recent deliberations.
An investigation by an actuary into the company’s financial position, including a valuation of its liabilities, must take place every three years. The ILAC reduced the period from five years to three years and also added the proviso that such an investigation may be required at any time in the public interest.
There are other provisions relating to transfer acquisition and the amalgamation of insurance business and decisions of the supervisor and appeals against his decisions.
Investigations by the supervisor
The supervisor has broad powers to investigate a company. The company may be required to produce securities, books, accounts, documents, or statistics. He may examine current or former directors, auditors, officer, agents, servants or shareholders. Provision is made for confidentiality. Also, the supervisor must first issue a notice requiring the company to show cause within 30 days why it should not be investigated. The supervisor may issue such notice if it appears that the company is unable to meet its obligations, does not comply with the accounting requirements in the Act, has not provided information requested by the supervisor or where the supervisor has any information which calls for investigation.
Judicial management and winding-up
The judicial management provisions are straightforward. The supervisor may, as a result of an investigation, present a petition for a winding-up or judicial management. It is particularly noteworthy that provision is made in this part for companies to have an adequate margin of solvency. This opens up an important area which the ILAC has sent for an actuarial report for the next session. The margin of solvency is an important measure of the financial position of companies and will certainly play a more important role in the future legislation within the region.
Associations of underwriters
This part provides for the registration of underwriters’ associations such as Lloyd’s of London. Such provisions already exist in the legislation of some of the countries.
The bill provides that the association must apply to the supervisor for registration enclosing a copy of the statute of the association, the names and addresses of brokers or agents in the jurisdiction who place insurance business with the association and a certificate signed by the appropriate public authority in the country where it is constituted stating that it has existed for at least five years and that it is operating in accordance with legislation in that country. The names and addresses of persons resident in the jurisdiction who are authorized to accept service of legal process must also be supplied.
The supervisor, as with a single insurer’s application, must be satisfied that the conditions are met. Registration may be cancelled on various grounds. The ILAC added to the draft that the supervisor must be satisfied that fit and proper persons constitute members of the association and that new members indicated in the annual list must also be fit and proper persons.
Registration of insurance intermediaries
From the point of view of consumer protection, this part is important as it imposes restrictions and conditions for the registration of insurance intermediaries, namely brokers, sales representatives, agents and sub-agents.
In countries such as Barbados and the Bahamas an agent in long-term business may represent only one principal, whereas in Jamaica agents may register for up to three principals. A clause permitting multiple registration was deleted from the bill, thereby leaving it up to the particular country adopting the model bill. Apart from the usual good character requirements, the bill also requires the applicant to be sufficiently competent and knowledgeable to carry on business as an insurance intermediary. Another condition which may be amplified by each country is the requirement that the applicant must pass any examination required by regulations. In particular, the Insurance Association of the Caribbean has considered at length a system of Caribbean exams. Perhaps would-be intermediaries should be required to pass the Chartered Insurance Institute or similar examination. This provision permits a country to improve the training of sales representatives, agents and sub-agents in the interest of consumer protection.
Just as importantly, the bill reverses the common law position by deeming an agent or broker to be the agent of the insurer for the purpose of receiving any premium for a contract of insurance. The common law position is that the misappropriated by such individuals, the consumer is no longer left high and dry. At the same time the company must of necessity exercise greater supervision over its agents; failure to pay over premiums received on behalf of the insurer is also an offence.
It is prohibited to pay fees to finders or spotters of new business as they are not authorized to undertake insurance business. Compensation to unauthorized persons for placing or negotiating insurance is an offence. Similarly, misleading advertisements and price rebating other than shown in the policy are prohibited.
Long-term insurance business
Regarding long-term insurance, the draft bill is divided into the following sub-categories:
— issue of policies;
— protection of policies;
— paid-up policies, surrender values and non-forfeiture;
— payment of policy moneys;
— provisions relating to industrial life insurance business; and
— mutualisation.
Premium rates must be approved by an actuary and companies may not vary their rates without the consent of an actuary. These provisions are also subject to review by an actuary who is expected to report at the next session.
Every proposal form or policy should be approved by the supervisor. He is required not to approve any form if it is likely to mislead a policyholder.
Perhaps the most important reforms of the bill concern the designation of beneficiaries and the Married Women’s Property Act (the ‘MWPA’, adopted for most of the region in 1884 and 1895), as follows:
Privity
Although a beneficiary is named under a life insurance policy, the life insurance company may find itself unable to pay the named beneficiary in accordance with the intention of the deceased insured because the beneficiary was not a party to the insurance contract. Under the doctrine of privity of contract, the life company cannot enforce a benefit conferred on a beneficiary under the contract. Instead the insurer pays the proceeds to the estate of the insured, save for the exceptional situation where the court finds there is a trust in favour of the named beneficiary. Rajkumar v. First Federation Life Insurance Co. Ltd [1970] 16 WIR 447, Norris v. Norris [1977] 29 WIR 22, cf. Baird v Baird [1990] 2 All ER 300.
According to the draft bill, a beneficiary, or a trustee appointed by the policyholder for the beneficiary, may enforce the payment of moneys payable under a policy even though there is no privity of contract. But, the insurer may invoke against the beneficiary or trustee any defence available against the policyholder. Thus, the draft bill confers on a named beneficiary a right of action.
Trust in favour of a spouse or child
The creation of such a trust is provided by the MWPA. Where the named beneficiary is the spouse or child of the insured, the trust is automatic by virtue of the MWPA, but not for any other class of beneficiary (Re Clay’s Policy of Assurance [1973] 2 All ER 548).
The MWPA is limited to spouses and children and has a number of defects which are the subject of reform under the draft bill. The distinction between beneficiaries at common law and beneficiaries under the Married Women’s Property Act are abolished by the repeal of that legislation by the draft bill.
Contemporaneous declaration
A feature of the MWPA is that an insured must declare his wife or children as beneficiaries at the time he takes out the policy. A subsequent declaration will have no effect in invoking the Act. The requirement that an irrevocable declaration must be contemporaneous is preserved under the bill.
Vested interest of spouse
Also, under the MWPA, on a contemporaneous declaration the wife takes an immediate vested interest in the policy. Should she predeceased the husband, the trust does not come to an end, but is performed in favour of her personal representatives. The husband is not then free to treat the policy as his own. Cousins v. Sun Life Assurance Society [1933] 1 Ch. 126. Further, on divorce, the statutory trust does not come to an end, but application may be made to vary the policy as a post-nuptial settlement.
Under the draft bill, the insured may designate another beneficiary after his wife’s death. The original designation does not form part of the deceased wife’s estate. Consent to alter the designation is not required either where the beneficiary is a former spouse and the marriage ended in divorce, or the common law union came to an end.
Wills Act
The draft bill excludes the application of the Wills Act to defeat such a nomination. A designation by written declaration excludes a declaration by will.
Creditor proof
The insured is empowered by the draft statute to make an irrevocable declaration of trust on the proceeds of his life insurance policy which is creditor proof. On the death of the insured, the insurance money does not form part of the insured’s estate and is not subject to the claims of the insured’s creditors.
Irrevocable designation
An irrevocable designation may only be made in favour of a spouse or child, including one born out of wedlock. This provision preserves their special status.
It the insured were able to change the named beneficiary at any time in his lifetime, that designation would not be irrevocable. That would also create serious practical difficulties for insurers as their notations on the policy of the identity of the ‘irrevocable’ beneficiary must be contemporaneous with taking out the policy.
The policyholder may make an irrevocable designation in writing filed with the insurer at the time of effecting the policy. In that case, the policyholder may not during the named beneficiary’s lifetime alter or revoke the designation without the beneficiary’s consent.
An irrevocable declaration is unalterable except with the consent of the beneficiary.
To confine such a declaration to a husband, wife or child does not perhaps reflect the reality of present-day West Indian societies. Accordingly, such declarations can be made in favour of common law partners. The bill introduces a new definition of spouse, husband and wife to include a partner in common law union of five years or more. The provision is important particularly in respect of the designation of a spouse as a beneficiary of life insurance policy.
Estate as beneficiary
Either at the time of effecting the policy or any time after, a policyholder may designate a personal representative or a named person to be the beneficiary under a life insurance policy. ‘Heirs’, ‘next of kin’, ‘estate’ or similar terms are deemed to be the personal representative.
The bill also provides for the protection of policies. The property or interest or a person named in a policy is not liable to be applied or made available in payment of any judgment, order or process of any court.
As for paid-up policies, a policyholder may receive a paid-up policy if premiums have been paid for three or more years and the policy has a cash surrender value. Also, notwithstanding the terms of the policy, the policyholder may surrender the policy and receive the cash surrender values less any debt owed to the insurer. In addition, such a policy is not to be forfeited because of the non-payment of a premium, unless the company serves a 30-day notice on the policyholder.
The bill permits the payment of policy moneys, without the production of probate and letters of administration, to any person who satisfies the insurer that he or she is entitled to the property of the deceased.
The present text of the bill does not require an insurance company to oversee the application of any moneys paid by it. However, the ILAC spent considerable time discussing structured settlements, which would pay claimants over time and avoid large sums of insurance moneys being squandered. The bill does not appear to have a provision specifically for structured settlements.
In some countries, insurance companies accumulate large sums of unclaimed moneys. According to the bill, the company must deliver to the supervisor a statement of all unclaimed moneys within 60 days of the end of the financial year. The company is required to pay to the supervisor the total amount of any unclaimed moneys. The supervisor, when satisfied on the person to whom the moneys should be paid, pays those moneys to the company specifying the person. If the company no longer exists, the supervisor pays that person directly. On payment to the supervisor, the company is discharged from further liability. All moneys which continue to be unclaimed are paid into the government consolidated fund. Perhaps these provisions can be strengthened, providing for a diligent search and also advertisements by the company and the supervisor.
With industrial life insurance business, namely life insurance, the premiums are usually received by collectors. There are provisions which allow the policyholder to object and receive a refund of premium within 28 days of the delivery of the industrial life policy.
Demutualization appears to be the trend and there is an increasing use of stock companies instead of companies whose capital is owned by the policyholders. Therefore, the bill contains not only a provision for conversion into mutual companies, but also the ILAC has proposed that a provision be included in the bill for demutualisation.
General insurance business
This part, which applies to all classes of insurance business apart from long-term or life insurance or life insurance, is divided into two sub-categories: conditions and motor vehicle insurance.
At the last, session, the ILAC requested an actuarial report on the computation of reserves liability. The draft also stipulates that no dividend is to be paid while the company’s assets are below the required margin of solvency. Moreover, until the surplus equates or exceeds the liability for outstanding unmatured policies, the company must at the end of each year appropriate at least 25 per cent of profits.
Although it is a separate bill from the motor vehicle insurance, there are a few provisions in the general insurance bill on the subject, such as a provision requiring additional reserves, insurance of a certificate of insurance and the notification of the licensing authority and commissioner of police of vehicle damage amounting to a total loss.
Miscellaneous
The final part of the bill contains miscellaneous provisions dealing with the keeping of registers, replacing lost policies, jurisdiction of local courts over all policies issued in the jurisdiction, the payment of money into court where the life insurance company cannot otherwise obtain a sufficient discharge of their liability, the inspection of documents and statistics, offences and penalties. It is also provided that a policy is not avoided merely on the ground that the insured committed suicide or suffered capital punishment, if on the true construction of the policy, the company agreed to pay the sum insured in the events that have happened.
To conclude this presentation of the general insurance bill, major reforms include the following:
a) Most of all, the bill introduces or improves the regulatory framework for the insurance industry in the region. The ramifications of this reform are immense as you will see in the more detailed treatment which follows. Not only does the bill fill the void where there is inadequate or no framework, but it will also help to harmonise the regimes for each participating country in the region.
b) The bill sets standards for the registration of insurance companies. A particularly useful criterion for the initial registration and for the annual renewal of it is the margin of solvency concept. An actuary is to report on the requirement that a company should be sufficiently solvent and able to pay its debts in order to obtain and maintain its registration. While there are requirements for deposits and minimum paid-up share capital in many countries, the bill also introduces the margin of solvency concept principally for judicial management and winding-up but also in the context of maintaining a company’s registration.
c) The bill sets standards for the registration of insurance intermediaries, including brokers, salespersons, agents and sub-agents. This is an area where there are frequent complaints from consumers and where additional improvements relating to education and training may still be needed in the draft.
d) At common law, the insurance agent is an agent of the insured and not of the insurer. The customer incorrectly assumes that the agent can take decisions on behalf of the company. Not so. The bill reverses this situation to the extent that, in relation to the payment of a premium, the agent is indeed the agent of the insurance company.
e) Very importantly, the bill sets out a clear, new regime for the designation of beneficiaries of a life insurance policy. The provisions deal with the problems arising from the Married Women’s Property Acts which apply throughout the region.
f) Reinsurance is an area which will require much additional consideration. The dramatically increased cost of hurricane protection is a major public concern.
DRAFT MOTOR VEHICLE INSURANCE BILL
The motor vehicle insurance bill has not yet been discussed by the ILAC. It was drafted separately from the general insurance bill because the motor bill fits more conveniently into road traffic legislation in the region. This draft bill is much shorter than the general insurance bill and consists of only 25 clauses.
Third party risks
This bill forbids a person from using or permitting the use of a motor vehicle on a public road unless there is a valid policy of insurance for third party risks or such security which complies with the bill. In my opinion the words ‘or such security’ should be deleted because they are a reference to the outmoded practice of leaving a deposit instead of taking out a policy. Claims are now so large for death, bodily injury or property damage that a security would not be satisfactory or practical.
Under the bill, a policy of insurance must insure against all sums up to the limit prescribed by the minister in respect of a) death or bodily injury and b) property damage. The latter requirement of insuring against third party property damage is not compulsory in many countries. This provision is therefore an important reform.
Death or bodily injury
The typical existing Road Traffic Act policy provides that the injured third party should get some compensation. However, the maximum limits of such compensation, both for personal injury and property damage, where available, are unrealistically low in some jurisdictions. Barbados and the Bahamas are the only countries in the region with unlimited compulsory cover for third party death or bodily injury. The limits in other countries in the region are unrealistically low, ranging from $4,800 in St Kitts-Nevis and $5,000 in Guyana to $200,000 in Trinidad and Tobago and Jamaica.
Because of the hardening reinsurance market, unlimited liability is regarded as a requirement which may push up premiums significantly. As a result, in the Bahamas, for example, a liability limit of $5m. has been proposed.
Indeed, all countries should bring the quantum of compulsory cover into line with the highest awards and the responsible minister should be empowered to adjust the quantum upwards from time to time to take account of inflation and new higher awards.
The problem is largely one of rates. Unlimited liability as in Barbados poses a serious reinsurance problem. Reinsurers are said to be quite unwilling to touch unlimited liability for personal injury. Therefore, a maximum limit should be set. The Trinidad limit seems reasonable, but reference should be made to the case law. The criterion should be the highest relevant court award in the region, with periodic adjustments as new cases are decided.
Moreover, according to the present draft bill, an insurance policy is not required to cover liability for the death of or injury to persons carried in or entering or alighting from a motor vehicle at the time of the accident except for a taxi or motor vehicle in which passengers are carried for hire or reward or in the course of employment. In my opinion, such a loophole should not remain. In other words, if a passenger opens the door of a private vehicle and a cyclist slams into it, the cyclist should be covered by the policy of the insurance for the vehicle. Under the present draft, he or she would not be covered.
Third party property damage
The Bahamas is among those countries which require compulsory motor insurance for third party property damage. This should be the norm throughout the region. In the Bahamas, a limit of liability of $150,000 has recently been proposed. Consideration should be given here to whether there should be a limit and if so, what that limit should be.
In some Caribbean countries, while compulsory cover is provided for death or personal injury to third parties in a motor accident. Road Traffic Act insurance leaves the third party property owners high and dry.
The rationale was said to be that the lower premiums made driving more accessible to everyone. But this situation has become increasingly unsatisfactory, particularly as many of the victims who suffer property loss and damage are themselves ordinary people whom the law is supposed to protect. Even if the victims are able to afford an expensive court action, the culprits are often men of straw who do not pay damages.
A $50,000 limit for property damage, as in Barbados, seems reasonable. But, again, the limit should be based on the same criterion as above. Insureds should be told of the limits, as they will be responsible for any excess.
No fault insurance, which is not yet available in the region, found its genesis in compulsory third party insurance. Even with no fault insurance, maximum limits may be fixed so that insurers know what is payable and can find suitable reinsurance for those risks.
All countries in the region should require compulsory insurance for third party property damage, and this reform appears to be adopted by the bill.
Passenger liability
The bill would enact compulsory passenger liability insurance which applies to all passengers whether the vehicle is used for reward or otherwise, notwithstanding any agreement to the contrary.
In many Commonwealth Caribbean jurisdictions passengers obtain compensation only if they were carried either for hire or reward in a licensed taxi or were carrying out a contract of employment.
However, insurance cover should be compulsory for passenger liability in general, regardless of whether the passenger is fare-paying or not. There should be no exemption based on classification of the passenger. The legislation of Barbados was probably used as a model for the draft clause. The Bahamas’ government is presently considering widening the compulsory insurance provisions of its Road Traffic Act, including a proposal of full passenger liability. However, there are ruminations of appreciable repercussions on premium levels.
It should not be assumed that these suggestions will result in significant increases in rates. Apart from no fault insurance, significant increases are not anticipated. Indeed, new rates should be monitored and reviewed, so as to afford greater protection to pedestrians, passengers, property owners, drivers and the insurers themselves.
Securities
The bill sets out the requirements for securities. A security, according to the draft, must consist of an undertaking to make good any failure by the owner of the motor vehicle, or such other persons specified by the insurance, to discharge any liability covered by the insurance policy. The security must be given by the insurer. A certificate of security is issued containing the conditions under which the security is issued. As previously stated, a system of securities is not an effective reform of motor vehicle insurance.
Furthermore, certain policy conditions are of no effect; in particular, a condition that no liability arises or that liability ceases after the event giving rise to the claim for property damage.
In addition, a duty is imposed on insurers to satisfy judgments in respect of third party risks. In the event of bankruptcy of the insured, his rights against the insurer are transferred to or vested in the third party for whom the liability was incurred.
A duty is imposed on a bankruptcy, debtor, personal representative of the deceased debtor, company, trustee in bankruptcy, trustee liquidator, receiver, manager or person in possession of the property, to give any information that may be reasonably required by a claimant for ascertaining the transfer of any rights and for enforcing those rights. In the situation of a bankruptcy or a winding-up, the lack of an agreement between the insurer and the insured after the liability has been incurred to a third party may defeat or affect the rights transferred to the third party. Bankruptcy of the insured does not effect liability and the right of a third party against the insurer.
A policy is void insofar as it purports to restrict the insurance of persons by reference to age, physical or mental condition, condition of the vehicle, number of passengers, weight or physical characteristics or goods carried, the horse power or value of the vehicle, carrying of any particular apparatus and any particular means of identification. A contract for hire or reward is also void insofar as it purports to negate or restrict the liability of any person in respect of death or bodily injury to passengers while entering or alighting from a motor vehicle.
Persons against whom claims are made are required to give information about the insurance. When a policy is cancelled, a person is required to surrender the certificate within seven days of cancellation. The medical practitioner and the hospital must be paid for emergency treatment to casualties arising from the use of the motor vehicle.
Various common regulations and offences are reiterated, namely that a driver must produce proof of insurance before registering a vehicle; and that a driver must produce a certificate of insurance and give his or her name and address and the name and address or the owner of the vehicle, if required by a policemen to do so; that refusal to give one’s name and address or giving a false name and address to a police officer is an offence. All offences under the bill can be summarily tried.
To conclude, some major reforms in the motor vehicle insurance bill are as follows:
a) The bill and the preparatory work encourage realistic maximum limits for compensation for death or bodily injury to third parties. The door is left open for the setting of such limits by executive order.
b) The bill requires compulsory cover for third party property damage. It has modernized Road Act insurance which contained no such cover.
c) It requires compulsory passenger liability insurance for all classes of passengers, not just taxi passengers.
CONCLUSION
The Caribbean countries are very diverse. The reforms needed in one country may be different from those required in others. Nevertheless, the two draft bills identify common features needed in all the countries of the region and provide a solid regulatory framework on which to build and expand the insurance sector.
The insurance project is not far from completion. The general insurance bill has already been considered by the ILAC and the shorter motor vehicle insurance bill is expected to be completed at the next session in early to mid 1993.
The ILAC has already made an impact on insurance law reform and it is apparent that in future sessions as the work is completed and disseminated, that impact will be even more considerable. Accordingly, a new legislative framework is emerging for insurance in the Caribbean.
