Attorneys told about 35 people who packed a conference room Wednesday at the Grand Naniloa Hotel in Hilo there will be more lawsuits filed against Lloyd’s of London and its associated agents, brokers and adjusters.
“Right now, there are five lawsuits filed with 28 individual cases in those five lawsuits. Those are on file,” Kirk Wood, an Alabama attorney working with Kona attorney Jeffrey Foster said. “We should have two additional (lawsuits) within the next 10 days that will have as many as 25 to 28 people.”
Foster said the individual cases in Hilo Circuit Court concerning homeowners whose lava-related insurance claims were denied are now in the discovery phases.
“We are pounding pretty hard right now trying to get information out of (defendants),” Foster said. “But the big-picture goal here is to do everything we can to get everyone paid what you should’ve been paid and for these folks to do what they should’ve done six, seven, eight months ago. Because they didn’t. There’s a reason why everyone’s here today. There’s a reason why we’re here. There’s a reason why we have the number of cases we have. And there’s a reason why we’re pushing so hard. Because we don’t think people were dealt with the way they should’ve been dealt with for the amount of money you folks are paying for your insurance policies.”
Foster explained that Lloyd’s “contrary to popular belief, is not an insurance company.”
“What Lloyd’s of London is, is a marketplace,” Foster said. “It’s a place where people go to create policies to sell in high-risk areas, to extract high premiums from people. Lloyd’s of London is not an insurance company. So the quote, unquote underwriters are actually other investors, insurance companies, corporations that contribute.”
Those types of policies are known as surplus lines insurance or excess lines insurance. Surplus lines allow customers to seek coverage from out-of-state carriers — which aren’t covered by the state’s insurance guaranty fund — for a risk that standard or traditional insurers are unwilling or unable to assume.
Wood said surplus lines underwriters also aren’t subject to regulation by the state’s insurance commissioner.
A number of individuals brought up a federal class-action lawsuit, also filed by Foster’s law firm, against Lloyd’s and its underwriters and adjusters.
“It is a case that deals with anti-competitive pricing and unfair trade practices, basically … how Lloyd’s worked to control the surplus lines market in this area,” Wood said. “A class case is a lot different than an individual case. A class case is when you have a large group of similarly situated individuals with similar facts and issues … against the same defendant. It’s a technique you use when you have a lot of claims but they may not be huge claims. This case is in the early states. … It will deal with issues of how the actual … insurance product is sold and how they … priced it.
“Generally speaking, those people that are here, anybody who bought a (Lloyd’s) policy will be in this class. The class case does not preclude an individual case.”
Wood said a motion has been filed in Hilo Circuit Court to consolidate the individual cases.
“That allows us to take all the cases and bring them in to one judge … so we can prosecute them in a more efficient manner,” he said.
More than one meeting attendee said they know of homeowners whose homes were not destroyed and who haven’t filed claims, but who are required to have insurance by mortgage lenders, whose policies are not being renewed by Lloyd’s and its underwriters.
Foster replied that insurance policies are contracts and are subject to yearly reviews while Wood said that the non-renewal, while unfortunate, is probably not legally actionable.
Yvette Taylor, who identified herself as a property manager, said after she evacuated her lower Puna home and her claim was subsequently denied, she found a neighbor’s claim was paid. Taylor added she had stopped keeping receipts for rent and issues with the evacuated home after the denial.
Foster replied that homeowners, as well as insurers, have contractual obligations associated with their policies.
“If your local broker denies your claim, either over the phone or in an email, don’t stop there,” Foster said.
Added Wood, “It’s a marathon, not a sprint.”
One homeowner said the condition of her home, which wasn’t destroyed, continues to deteriorate. She attributed the deterioration to sulphur dioxide (SO2) and acid rain.
Taylor told the Tribune-Herald afterwards she’s noted the same deterioration in properties she manages, not just in Leilani Estates, but in other areas of Puna, as well.
“Starting about Dec. 15, so many things started breaking down in my properties,” Taylor said. “It’s toilets, the chains, the innards of toilets. It’s the acid rain that was coming down from Leilani. The plumbing’s starting to go. And because the volcano is over, people aren’t making the association. A big thing happened on a property in (Hawaiian Paradise Park), all these pipes bursting and stuff. It’s the aftermath of the volcano.”
Foster and Wood have brought in a team led by professional engineer George Inglis, to inspect and document the condition of claimants’ homes.
Inglis said SO2 can have a progressively corrosive effect on drywall, concrete, electrical outlets, plumbing and other fixtures and added he’s sure the noxious gas “was there in spades” during the lower East Rift Zone eruption of Kilauea that started in May.
“And so, the question now would be, then, how much of that (deterioration) is still going on? Is it still doing damage? And that’s something, I think, we need to look at a little bit more,” Inglis said. “I don’t believe for a minute that the answer is just to clean a roof, clean some outlets. If you have an issue with an outlet, then it connects with an electric wire. How is the electric wire? If you have a plumbing fixture and you turn the valves on, you look down, there are fittings. How are those? We took samples from some of those materials, and we’ll see where that goes.”
Philip and Lanell Haysmer were the first homeowners to file suit against Lloyd’s. Philip Haysmer said there “might have been six people” at the first meeting held by Foster.
“It’s grown exponentially since,” Haysmer said. “The list of things they’re dealing with has grown, as well. It’s been an educational process for them as well as us. It has gotten extremely complicated. And both of these guys now have the experts behind them to pursue this as best as it could possibly be pursued.”
Interested homeowners can contact Foster’s firm at PunaClaims.com or by calling 348-7800.
Email John Burnett at jburnett@hawaiitribune-herald.com.