In a remarkably rapid decision, the Hawaii Supreme Court has ruled that insurance companies cannot block the $4 billion settlement intended for victims of the Maui wildfire. This ruling clears the way for the Maui Circuit Court to begin distributing payments to survivors and the families of those who perished in the disaster.
The legal battle revolved around whether insurance companies should have the right to pursue separate claims against the defendants, which include Hawaiian Electric, the state of Hawaii, Maui County, and Kamehameha Schools. The insurers, who have already paid out over $2.3 billion in property damage claims and expect to pay an additional $1 billion, argued that they should be able to seek reimbursement beyond the settlement amount. However, the court’s decision upholds a provision that bars them from doing so, limiting their recoupment to the existing $4 billion pool.
The wildfire, which devastated Lahaina in August 2023, was the deadliest in the US in over a century, killing more than 100 people and causing an estimated $5.5 billion in damages. Lawsuits quickly followed, with victims seeking accountability from various entities believed to have played a role in the disaster. The $4 billion settlement was announced in mid-2024 as a means to resolve thousands of claims and avoid prolonged litigation.
Despite acknowledging that the settlement falls short of fully compensating victims for their losses, attorneys for the plaintiffs deemed it necessary to prevent Hawaiian Electric – the primary defendant – from facing financial collapse. “Ultimately, we didn’t start the fire. We’re the people who start paying moneys immediately when the claims start coming in,” insurance industry attorney Adam Romney told HawaiiNewsNow, emphasizing the insurers’ role in providing immediate relief to affected policyholders.
However, insurers contended that the ruling is unfair and could lead to increased costs for future policyholders. Their legal representatives argued that subrogation – a process allowing insurers to recoup funds from those found liable – should apply in this case.
“We will have to pay more than the people who actually caused the damage, and that is fundamentally inequitable,” Romney said.
The court’s decision was influenced by concerns over whether state laws governing health care insurance reimbursement also apply to casualty and property insurance. While insurance companies argued for their right to seek additional recovery, Gov. Josh Green has been a vocal critic of subrogation in cases of catastrophic loss. “It’s fundamentally unfair, and they call it subrogation,” he previously stated, noting that insurers do not return excess profits to policyholders in years without major disasters.
With the court ruling in favor of finalizing the settlement, victims may soon begin receiving compensation. However, delays could still arise if the insurers pursue further legal challenges, including an appeal to the US Supreme Court. For now, the decision marks a significant step toward bringing closure to those affected by the devastating fire.
