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The COVID-19 Pandemic: Opportunities and Implications for Captive Insurance

The COVID-19 Pandemic: Opportunities and Implications for Captive Insurance

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The COVID-19 Pandemic: Opportunities and Implications for Captive Insurance explores the challenges presented by today's business and economic upheaval, as well as the hardening insurance market, and what it means for the captive insurance industry.

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Underwriting Note: Another State Invalidates Caps on Some Punitive Damages

Supreme-Court-building-permission
September 17, 2014
Last week a 7-0 Missouri Supreme Court decision invalidated the state cap on some punitive damages.

The Supreme Court restored the judgment of a lower court because the plaintiff had filed a claim as a common law fraud, which existed in Missouri since the first state constitution was written. For that reason the $500,000 cap established by the Legislature’s tort reform in 2005 did not limit a jury’s ability to set punitive damage amounts. A subsequent Kansas City Star report indicates that punitive damage caps remain in place for causes of action created by the Legislature, such as human rights cases and awards for some deceptive merchandising practices. Punitive damage caps are an underwriting consideration in states where risk retention groups and fronted captives write business.

States that have completely outlawed punitive damages include Louisiana, Massachusetts, Nebraska, New Hampshire, and Washington, according to Legal Match.com. The website also indicates that Alabama, Alaska, and Florida impose a punitive damage limit of $500,000 or three times compensatory damages; Virginia and New Jersey limit punitive damages to $350,000 or five times compensatory damages; and Georgia, North Carolina, and North Dakota have a punitive damage limit of $250,000 or two to three times compensatory damages. The California Supreme Court has held that a reasonable range is between three and 10 times compensatory damages.
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