Gov. Josh Green doubts that Hawaii’s insurance market will suffer from a Monday court decision supporting a tentative $4 billion Maui wildfire settlement, but he still sees merit in sharing settlement proceeds with insurers.

Green, in an interview Tuesday, said room remains for a compromise that provides insurers with a “modest” share of the settlement pie in return for waiving a right to recover any compensation that a policyholder receives through the settlement and insurance in excess of the value of a policyholder’s loss.

More than 17,000 individuals or entities represented by attorneys have claims from the Aug. 8, 2023, fire that killed 102 people in Lahaina and destroyed most of the West Maui town as a second fire the same day destroyed property in Upcountry Maui.

Insurers, which have paid about $2.3 billion in claims so far to fire victims and expect to pay over $1 billion more, had a standing offer to receive several hundred million dollars previously from the settlement arranged by independent mediators, but instead wanted $1.6 billion, according to Green.

The governor said he is still open to a compromise.

“If they accept significantly less so that there’s no pressure on each of the individual insured families that lost, then that’s good,” Green said. “Our mediators may be able to work out a settlement within, or under the umbrella of, the global settlement … so that (the insurers) don’t have to go after individual policyholders.”

Green also said he does not believe that Monday’s ruling by the Hawaii Supreme Court, which validated the underpinning of a state Circuit Court ruling in August that limits how insurers can obtain reimbursement for claims they paid to policyholders, compromises what representatives of 192 insurance companies involved in the case described as vital to a healthy and stable insurance market.

Hawaii’s high court said state law does not allow subrogation, which is the ability for insurers to sue and recover compensation from parties that are responsible for damage that leads to insurance claim payouts, when there is a settlement between the insured and those deemed responsible for the damage.

The coalition of insurance companies did not describe what the fallout could be from the ruling, but said in a statement Monday, “Preserving the rights of insurers to utilize subrogation is of importance to the insurance industry, and is ultimately beneficial to all policyholders and residents statewide.”

On Thursday, after the Supreme Court heard oral arguments on the issue, Mark Grotefeld, lead liaison counsel for the insurers coalition, called subrogation a safety net for policyholders.

“If you remove that safety net for insureds, that becomes a very difficult situation for the citizens of Hawaii, and we are working very hard to prevent that from happening,” he said. “We want that safety net to be maintained.”

Grotefeld said Tuesday in a statement that the insurers are unable to comment further because they are engaged in confidential mediation negotiations over the wildfire litigation.

Paul Martin, vice president of state affairs for the National Association of Mutual Insurance Companies, said in a statement Tuesday that the ruling is a “lose-lose” for Hawaii residents and threatens the health of the state’s insurance market.

“If insurers cannot recover payments for losses caused by others, it undermines their ability to offer competitive rates and sustain doing business in the state,” Martin said. “This could lead to higher rates for consumers in the short term and fewer choices of providers in the long term.”

Green disagrees. “If some (insurers) want to leave, that would be disappointing,” he said. “But I’m certain that others will fill the void.”

The governor said Hawaii has been lucrative for insurers, which he said collected $38 billion in premiums while paying out $14 billion in claims over the past 20 years.

“There have been a lot of good years for the industry, and this is a tough one, but their responsibility as part of our ohana (family) is to pay to help people recover,” he said.

Green added that the cost of global reinsurance is much more of a factor on local insurance rates, and he believes Hawaii is now a safer place from a wildfire risk standpoint.

“If you look at what we’re doing as far as safety — all the things that have come out of (Hawaiian Electric), out of the state — frankly, our rates should go down, really,” he said. “That may sound crazy, but we’ve already spent more than $20 billion on premiums than we ever received (over two decades), and we’ve had an extra-safe year this last year. We have to have stable rates.”

The settlement is still subject to approval by Maui Circuit Judge Peter Cahill.

If finalized, the settlement would be paid out over four years by Hawaiian Electric, the state, Kamehameha Schools, Spectrum Oceanic LLC, Hawaiian Telcom and affiliates of West Maui Land Co.

Hawaiian Electric has agreed to cover the biggest piece of the settlement, at $1.99 billion. A company power line damaged in high wind was found to be the cause of a fire that raged through Lahaina after reigniting.

The state and Kamehameha Schools, owners of land with vegetation that allowed the Lahaina fire to spread, agreed to pay $872.5 million each. The roughly $300 million balance is to be paid by the telecom companies, which share utility infrastructure with Hawaiian Electric, and West Maui Land affiliates.

The settlement payers already have contributed $175 million to a victim compensation fund led by the state that will be credited to settlement funding.

This One ‘Ohana Fund offered to pay surviving family members who lost loved ones $1.5 million, and less than that amount to people who suffered severe injuries if recipients forwent litigation.