Why should punitive damage awards be allowed?
If a person commits insurance fraud, that person might go to jail. However, insurance companies cannot go to jail when they commit fraud, they can only be punished monetarily. Thus, the only way to deter an insurance company’s wrongful conduct after it has made millions or billions of dollars in annual insurance revenue is to financially punish the insurance company by taking some of its profits. Amazingly, most punitive damage awards represent only a tiny fraction of a company’s surplus.
