Insurance Companies Want Their Money Back For Lahaina Fire Claims
The global insurance industry has swept into Honolulu state court, seeking to collect reimbursements for claims paid to policyholders. Those total more than $1 billion in West Maui for residential property alone, according to the latest data from the Insurance Division of the Hawaii Department of Commerce and Consumer Affairs.
The plaintiffs include names familiar to Hawaii homeowners: insurers like State Farm Fire and Casualty Co., USAA Casualty Insurance Co., Island Insurance and Tradewind Insurance.
Also included are scores of additional companies, such as the French and Australian branches of the giant Swiss Re, Japan’s Mitsui Sumimoto Insurance, and Lloyd’s, the London-based marketplace known for insuring everything from ship cargo, fine art and space satellites to Bruce Springsteen’s voice.
According to the Hawaii Insurance Division, as of Nov. 30, insurers reported 3,947 claims for residential properties in West Maui, including 1,689 total losses. Estimated losses totaled $1.54 billion, of which insurers had paid $1.09 billion. (Kevin Fujii/Civil Beat/2023)
Defendants include Hawaiian Electric, Hawaiian Telcom, Kamehameha Schools and other unnamed parties the insurers allege were negligent in allowing the fires to start and spread.
It’s a predictable turn of events, says Robert Anderson, director of the Center for Risk Management Research at the University of California, Berkeley.
When a company like State Farm issues a policy to a homeowner, Anderson said in an email, State Farm typically buys reinsurance from another company like Swiss Re to cover the risk from catastrophic events, such as a hurricane hitting an urban area “or a wildfire that spreads and takes out a large number of homes, as happened in Lahaina.”
When such a catastrophe occurs, State Farm would typically pay claims to the insured property owners and get reimbursed by its reinsurers, Anderson said.
If the losses occurred because of negligence, the insurer and reinsurers can sue the negligent parties to recover the payments “in the same way that a health insurance company could seek to recover the costs of treating someone injured in an automobile accident,” he said.
Multiply that by thousands of claims, and it explains the enormous number of insurance company plaintiffs, spread out over 26 states and a half dozen countries, filing suit in Hawaii. It’s also a sign that the global insurance market is functioning adequately to spread the risk of a major catastrophe in Hawaii, said Sumner LaCroix, an economist with the University of Hawaii Economic Research Organization.
by Stewart Yerton, Honolulu Civil Beat | Read more:
Image: Kevin Fujii/Civil Beat/2023
[ed. Wonder where the affected local population rates in priority, and how long it'll be before they see anything (generations)?]
[ed. Wonder where the affected local population rates in priority, and how long it'll be before they see anything (generations)?]
