High Court Rules Against Insurers. Now It’s Time To Divvy Up $4B
Among the questions: how much will Maui wildfire victims and their lawyers get from the huge settlement, and how will Hawaiʻi’s insurance market react?
Maui wildfire victims seeking their share of a $4.04 billion settlement reached a milestone this week when the Hawaiʻi Supreme Court issued its formal opinion prohibiting insurers from suing the parties responsible for the 2023 fire.
The court’s formal 80-page decision issued Monday follows a concise order issued in early February that was needed for the proposed landmark settlement to be made final. The opinion closes the loop, spelling out state law as it relates to insurers’ ability to recoup claims paid out to victims, as is commonplace in wildfire litigation in other states.
The sprawling litigation over the Lahaina disaster now enters a new phase, in which more than a thousand victims and their lawyers will have to divide up the $4 billion.
The high court ruling means insurers can’t go directly after Hawaiian Electric Industries, the parent company of Hawaiian Electric Co., and other parties at fault for the fire who agreed to fund the settlement. Instead, the insurers will have to seek liens against policyholders who get a cut of the $4 billion — the “insurer’s exclusive remedy” to recoup money from its customers, the court ruled Monday.
What this means for the public isn’t clear. The insurers, including 192 firms spanning the globe, have paid out more than $2.3 billion to home and business owners so far. They had hoped to recoup some of that money by filing lawsuits against parties such as Hawaiian Electric Co., whose equipment was found to have started the fire that killed 102 people and destroyed much of Lahaina in 2023. Kamehameha Schools, the state’s largest landowner, and other landowners also contributed to the settlement because of their role in allowing the fire to spread.
The insurance industry argued in vain that Hawaiʻi law allowed them to sue the wrongdoers, but the court ruling now means the insurers’ so-called right of subrogation is limited. Insurance industry officials have said this could affect policy premiums.
Adam Romney, a lawyer for the industry, declined to comment on the court’s ruling, saying his clients were still analyzing the lengthy opinion. Three lead lawyers for individual fire victims — Jan Apo, Jesse Creed and Jacob Lowenthal — did not return calls. Jim Kelly, a spokesperson for Hawaiian Electric Co., declined comment.
Barring an unexpected move by the insurers, the cases now go back to Maui Circuit Court Judge Peter Cahill to oversee proceedings to finalize and distribute the settlement.
The victims and their lawyers will have to privately work out how much each victim will receive from the settlement. Also outstanding is how much the victims’ lawyers will receive; their fees could amount to about a third of the settlement, or more than $1 billion.
A separate class action settlement designed to tie up any loose ends — such as victims who haven’t sued and thus were not part of the settlement — will have to be worked out before Cahill as well.
There’s also the question of how insurers might pursue liens against policyholders — a move that would likely be unpopular with their customers. It is also unclear how the Supreme Court’s ruling will impact insurance rates in Hawaiʻi — and whether insurers will pull out of Hawaiʻi as they have from other fire-prone states.
Page 1 of Maui Wildfire Supreme Court
