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Lloyd’s of London “Steered” Hawaii Homeowners by Artificially Inflating Coverage in Kickback Scheme, Federal Lawsuit Alleges
News Source: Globe Newswire
HILO, Hawaii, Jan. 09, 2019 (GLOBE NEWSWIRE) — A federal class action lawsuit filed on December 21, 2018, accuses Lloyd’s of London and its affiliated insurance brokers of misleading Hawaiian homeowners and steering them away from comprehensive home insurance coverage established by the State of Hawaii. The lawsuit alleges that Lloyd’s and its agents deceived consumers by offering surplus lines insurance without conducting the necessary due diligence required by Hawaii law. Surplus lines insurance is only allowed when other insurance is unavailable and coverage amounts exceed those offered by traditional carriers like the Hawaii Property Insurance Association (HPIA).
The complaint further claims that Lloyd’s and its agents artificially inflated coverage limits beyond the $350,000 dwelling coverage limit offered by HPIA. One policyholder, whose dwelling coverage was increased to $351,000, was not informed about the government-established coverage through HPIA. Consequently, when his home was destroyed in the Kilauea eruption, Lloyd’s denied his claim.
Additionally, the lawsuit alleges that insurance brokers received kickbacks from Lloyd’s for steering homeowners towards Lloyd’s surplus lines policies, in the form of increased commissions. These policies, according to the complaint, are essentially worthless as they contain numerous exclusions, including a Lava Exclusion.
Lloyd’s is the top writer of surplus lines insurance in the U.S., writing 23% of the country’s surplus lines policies in 2017, totaling $10.3 billion in premiums. In Hawaii, Lloyd’s syndicates wrote approximately $52 million in surplus lines premiums in 2017.
The lawsuit alleges that the kickback scheme was designed to tie commissions directly to the amount of premium steered to Lloyd’s, incentivizing brokers to maximize the amount of surplus lines insurance placed with Lloyd’s.
Homeowners seeking further information can contact Foster Law Offices at PunaClaims.com or by calling 808-348-7800.
