Hawaii Supreme Court Rules on AIG Units’ Liability in Climate Change Litigation

The Hawaii Supreme Court ruled that AIG units are not required to defend a Sunoco LP subsidiary against lawsuits related to climate change risks, citing pollution exclusions in their policies. Aloha Petroleum’s alleged reckless behavior in promoting fossil fuels was recognized, but the court ultimately concluded that AIG’s insurance obligations were inapplicable due to intentional conduct by Aloha. This case reflects broader litigation trends regarding the fossil fuel industry and climate change accountability.

On Monday, the Hawaii Supreme Court ruled that certain units of American International Group Inc. (AIG) are not required to defend a Sunoco LP subsidiary based in Honolulu against two lawsuits accusing the company of misrepresenting the dangers posed by climate change due to fossil fuel usage. This ruling was based on the court’s interpretation that greenhouse gases qualify as pollutants that are excluded under the insurance policies issued by AIG, as they significantly disrupt the climate system for both present and future generations. The case at hand is known as Aloha Petroleum Ltd. v. National Union Fire Insurance Co. of Pittsburgh, Pennsylvania, et al. The court also noted that Aloha’s allegedly negligent conduct in the marketing and promotion of fossil fuels constituted an event that activated the insurance companies’ defense obligations. Aloha had previously filed suit against National Union Fire Insurance and American Home Assurance Co. to compel these companies to provide defense against lawsuits initiated by the counties of Honolulu and Maui. These counties argue that oil producers were aware as early as the 1960s that fossil fuel consumption would result in climate change, leading to property damage and increased costs for emergency preparedness in the face of severe weather events. The AIG units contended that their obligations to provide defense were negated since Aloha acted with intent in its promotion of fossil fuels, thereby invoking the pollution exclusions in their policies.

The context of this case involves ongoing legal disputes surrounding climate change and the responsibility of energy companies. Various jurisdictions have seen lawsuits filed by local governments against the fossil fuel industry, asserting that these companies are liable for damages resulting from climate change, which necessitates preventative and responsive measures to climate impacts. Notably, the Hawaii Supreme Court’s decision highlights the complexities of insurance coverage as it relates to pollution events, specifically greenhouse gas emissions, which are increasingly recognized as significant contributors to climate change. The outcomes of these cases can set impactful precedents for future litigation involving climate-related claims and the insurance industry’s role in covering damages arising from such claims.

The Hawaii Supreme Court’s decision establishes that AIG units are not obligated to defend against lawsuits relating to climate change risks attributed to fossil fuel usage, owing to policy exclusions for pollutants. Furthermore, the court distinguished between negligent and intentional actions, indicating that claims of recklessness in marketing fossil fuels may influence defense obligations. This ruling could have considerable implications for future cases involving similar allegations against fossil fuel companies and their insurance providers.

Original Source: www.businessinsurance.com