Rhode Island’s Insurance Superintendent Joseph Torti III issued a bulletin last week that affirmed that punitive damages are not insurable under the state’s law.
“Punitive damages are not insurable under Rhode Island law. The department will, therefore, reject any form filing that includes insuring of punitive damages,” Torti stated in the March 28 bulletin (a PDF file).
Paula Pallozzi, chief property/casualty insurance rate analyst in the Rhode Island Department of Business Regulation, told Insurance Journal that the department has actually seen an increase in proposals to include punitive damages in policy forms, which prompted the department to issue the new bulletin affirming that punitive damages are not insurable in the state.
There is no statute on this subject in Rhode Island but this issue has been addressed by the Rhode Island Supreme Court, Superintendent Torti said.
In evaluating a claim for recovery of punitive damages from an insurer, the Rhode Island Supreme Court has acknowledged in the case of Allen v. Simmons, 522 A.2d 541 (R.I. 1987) a split between jurisdictions but concluded that the sounder approach bars the wrongdoer from shifting the punitive damages to the insurer, Superintendent Torti said.
Therefore, the superintendent said, until such time as a statute is enacted specifically permitting an insurer to assume the obligation for punitive damages or the state’s Supreme Court revisits the policy expressed in Allen v. Simmons, policy forms which include indemnification for punitive damages will not be approved for use in Rhode Island.
Insurers that have had forms previously approved that contradict this bulletin should withdraw those forms and file compliant forms no later than June 1, 2013, Superintendent Torti said.
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