“We try to prevent insurance companies from collecting money from workers and not able to meet their obligation,” she said, as she denied that the Department of Labor is being indiscriminate in accepting bonds from “questionable” insurance companies.
An insurance or bonding company transacting business with Labor must be certified by a certified public accountant to prove that it is financially solvent, Kaipat said.
Labor will determine, based on the insurance company’s financial statement, how many clients it can afford to indemnify, she added.
An insurance company will only pay three months salary and repatriation ticket for the claims of a guest worker if the employer failed to fulfill its obligations.
Kaipat said the Office of the Insurance Commissioner of the Department of Commerce has already furnished Labor with list of insurance companies whose surety bonds should not be honored.
She cannot determine the number of insurance companies barred from transacting business with Labor, but added, “I would imagine some have gone out of business already and Labor is not dealing with them anymore.”
According to Kaipat, Labor is careful when dealing with insurance companies.
Moreover, Commerce and other government regulating agencies have been coordinating with Labor, she added.
Human rights advocate Wendy Doromal said the problem with bonding companies not paying workers unpaid wages and repatriation tickets has been occurring in the CNMI since the 1990’s
In Feb. 2007, Doromal said she attended a U.S. Senate hearing and testified that most bonding companies were insolvent and unable to pay the workers their unpaid wages or repatriate them even after their companies had already shut down.
Doromal said these guest workers have been cheated of wages that they earned.
Labor, for its part, failed to enforce its administrative orders and judgments, Doromal said in her e-mail to Variety.
“The employers know that it is unlikely that they will ever have to honor the orders, and I imagine bonding companies feel the same way,” she said. “There is no incentive to honor orders or judgments if there is little consequence for failing to do so. [Labor] should be aware of which companies are and are not insolvent and should be working with them to collect unpaid wages on behalf of cheated employees.”
The former Rota teacher said no insurance or bonding company that is insolvent should be allowed to renew its license, adding that “there should be accountability and oversight on those companies, including records to show which claims were and were not paid, and how much money has flowed in and out, and how much money is available to pay unpaid wages and repatriate workers.”
She said it is not clear how the CNMI regulates these companies.
“To tell workers to go to bonding companies and to small claims court to collect back wages from bankrupt employers and insurance companies makes no sense. The CNMI labor system doesn’t work in regard to cheated employees. It never has,” she said.
In 2005, seven of the 15 licensed domestic insurance companies in the CNMI filed “negative” financial reports with the Office of the Insurance Commissioner of the Department of Commerce.
Kaipat said Public Law 15-108 ensures that bonding and insurance companies must meet their financial obligation with the guest workers.
“We see a lot of things that people don’t see and they think that Labor is harsh with bonding companies. We are harsh because we have a different perspective,” Kaipat said.
