A $4.04 billion agreement to resolve Maui wildfire lawsuits can move forward despite objections from the insurance industry, the Hawaiʻi Supreme Court ruled Monday, allowing the historic settlement to begin flowing to more than 1,000 home and business owners, as well as survivors of some of the 102 people killed in the fire.

The blaze destroyed more than 2,200 structures and leveled much of Lahaina in August 2023, and prompted waves of litigation, including claims by individuals, class actions and a massive suit by the insurance industry.

The court’s three-page order blocks a legal strategy by the insurers of the lost homes and businesses to sue Hawaiian Electric Co., the state and other parties who shared blame for the fire’s origin and spread.

The ruling is a victory not just for HECO — the utility suggested it might have declared bankruptcy if the court had ruled against it — but also for fire victims and their lawyers. About a third of the $4.04 billion settlement is expected to go to the victims’ lawyers.

The order is also a victory for Gov. Josh Green, who helped broker the settlement and openly criticized insurers for choosing to file their own lawsuits rather than go along with the deal.

The insurers, including 192 firms spanning the globe, have paid out more than $2.3 billion to home and business owners so far. They looked to recoup that money with lawsuits against HECO and others, including Kamehameha Schools — the state’s largest landowner — which allegedly allowed the fire to spread by not tending to its fire-prone grass.

Such so-called subrogation lawsuits are a common part of the insurance business, but the Supreme Court’s order makes clear those kinds of suits won’t be allowed in Hawaiʻi in the context of a settlement. 

Insurers still might be able to recoup some of the money they’ve paid, the court said. But the companies will have to claw the money back from their policyholders rather than go after the alleged wrongdoers.

Shares of Hawaiian Electric Industries, the parent company for HECO, shot up 10% after the court released its order. 

Jim Kelly, HECO’s vice president for government and community relations and corporate communications, said the ruling will allow the utility “to fulfill our commitment to thousands of individuals and our community as the collaborative work to rebuild continues.”

“It also provides greater clarity for all parties, including Hawaiian Electric, helping to reestablish the financial stability needed to invest in a resilient and sustainable future for our customers and our state,” he said in a statement. “That includes advancing our wildfire safety strategy and strengthening Hawaiʻi’s infrastructure to ensure the reliability and resilience of the grid.”

Jesse Creed, a plaintiffs’ lawyer who served as the lead counsel for the settling parties, said the order makes clear what is already laid out in Hawaiʻi statutes.

“The Supreme Court simply followed clear Hawaiʻi law that mainland subrogation insurers refused to acknowledge,” Creed said. ”This is the next step in getting relief to the plaintiffs who are the true victims of the Maui fires.”

The case dates back to August 2024, when the parties that played a role in the fire’s origin or spread joined with victims and announced a “global settlement,” putting to rest hundreds of lawsuits. But with the insurers not on board, the settling parties needed a court order to block the subrogation suits.

The consequences for Hawaiʻi’s insurance market are still to be determined, and insurance industry lawyers declined to comment. But an industry representative said last week that a loss at the Supreme Court could hurt consumers broadly.

A loss “undermines (insurers’) ability to offer competitive rates and sustain doing business in the state,” said Paul Martin, a vice president at the National Association of Mutual Insurance Cos. “This could lead to higher rates for consumers in the short term and fewer choices of providers in the long term.”

On Monday, the Property Insurers for Hawaiʻi, a trade organization, echoed those remarks in a prepared statement.

“Subrogation allows insurers to hold the at-fault parties legally accountable and financially responsible for their negligence when it results in property damage and personal injury losses,” the statement said. “Subrogation is vital to a healthy and stable insurance market.”

Jerry Bump, Hawaiʻi’s acting insurance commissioner, declined to comment.

The $4.04 billion deal includes $1.99 billion from HECO, $872.5 million from Kamehameha Schools, about $800 million from the state and $10 million from Maui County, which also was accused of allowing the fire to spread. The rest is to come from West Maui landowners and telecommunications companies such as Hawaiian Telcom and Spectrum, which loaded equipment onto a utility pole that broke and allowed a power line to fall onto the ground, where it sparked the fire.

The matter now goes to Maui Circuit Court Judge Peter Cahill to approve the settlement.