LAWSUIT: Lloyd’s ‘Steered’ Hawai‘i Homeowners Away From Effective Insurance Coverage

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Lloyd’s of London has found itself in trouble again in the Aloha State, according to a press release issued by Foster Law Offices LLLC, a Kealakekua firm.  A federal class action lawsuit alleges that Lloyd’s and its affiliated insurance brokers “steered” Hawaiian homeowners throughout the state away from comprehensive home insurance coverage established by the State of Hawai‘i.

The lawsuit states that Lloyd’s and its agents deceived consumers, offering Lloyd’s surplus lines insurance without performing the due diligence required under Hawai‘i law to place surplus lines insurance.

Surplus lines insurance policies are made available only when no other home insurance coverage is available.

Lloyd’s and its agents knew that they were not allowed to place surplus lines insurance unless other insurance was not available and the insurance coverage amounts exceeded the coverage available through traditional insurance carriers, including the government-established insurance coverage offered through the Hawai‘i Property Insurance Association (HPIA), Foster Law Offices’ press release said.


Consumers could have qualified for HPIA-sponsored insurance, but Lloyd’s and its agents deceived them by artificially inflating coverage limits beyond the $350,000 dwelling coverage limit offered through HPIA, the suit alleges, the press release said.

One policyholder saw his dwelling coverage limit increased to $351,000, according to the complaint, exactly $1,000 over the government’s coverage limit of $350,000. The policyholder was never told about the government-established coverage known as HPIA (Hawai‘i Property Insurance Association); the policyholder’s home was destroyed after the Kīlauea eruption in May and his claim was denied by Lloyd’s of London, according to the suit.

In addition, the lawsuit alleges that insurance brokers “received kickbacks from Lloyd’s for steering homeowners to the Lloyd’s surplus lines policies in the form of increased commissions.”


The complaint, filed Dec. 21, 2018, alleges that Hawaiian homeowners were steered “into purchasing Lloyd’s surplus lines homeowner’s insurance to insure their homes against peril. These Lloyd’s surplus lines insurance policies, which contained numerous exclusions, including a lava exclusion, are essentially worthless—amounting to no coverage at all.”

Lloyd’s is the top writer of surplus lines insurance in the United States—writing 23% of the U.S. surplus lines policies nationwide in 2017, totaling $10.3 billion in premiums. According to the National Association of Insurance Commissioners and the Center for Insurance Policy and Research, in 2017, Lloyd’s syndicates wrote approximately $52 million in surplus lines premiums in Hawai‘i.

The 60-page lawsuit alleges that the kickback scheme was set up so that “commissions were directly tied to the amount of premium steered to Lloyd’s, thereby incentivizing the Broker Defendants to maximize the amount of surplus lines insurance placed with Lloyd’s.”


A copy of lawsuit can be found online. Homeowners in Hawai‘i seeking further information can reach Foster Law Offices by going online or calling (808) 348-7800, or by contacting Scott+Scott Attorneys at Law online or calling (800) 404-7770.

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