Insurance DOI Complaint and Bad-Faith Demand — Hawaii

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Insurance DOI Complaint and Bad-Faith Demand (HAWAII)

Quick-Reference Summary

Part A — DOI Complaint Cover Letter

[SENDER / LAW FIRM NAME]
[________________________________]
[Street Address]
[________________________________]
[City], Hawaii [ZIP]
Telephone: [________________________________]
Email: [________________________________]
Hawaii Bar No.: [____________] (if attorney)

Date: [__/__/____]

VIA NAIC ONLINE PORTAL (https://sbs.naic.org/solar-web/pages/public/onlineComplaintForm/onlineComplaintForm.jsf?state=HI)
AND VIA CERTIFIED MAIL, RETURN RECEIPT REQUESTED

TO:
Hawaii Insurance Division
Department of Commerce and Consumer Affairs
ATTN: Insurance Investigations Branch
P.O. Box 3614
Honolulu, HI 96811
Email: [email protected]

Re: Consumer Complaint — Unfair Claim Settlement Practices

Complainant / Insured: [________________________________]
Insurance Company (NAIC #): [________________________________]
Policy Number: [________________________________]
Claim Number: [________________________________]
Date of Loss: [__/__/____]
Amount in Dispute: $[____________]

Aloha Insurance Investigations Branch:

I respectfully submit this complaint under HRS § 431:13-103 against the above-named insurer. I acknowledge that the Insurance Division is a regulatory agency and does not order claim payment, decide fault, or provide legal advice. I request that the Division investigate the carrier's claim-handling practices and Hawaii market conduct.

1. Factual Summary

[________________________________________________________________
________________________________________________________________
________________________________________________________________]

2. Specific HRS § 431:13-103(a)(11) Violations Alleged

The insurer committed the following acts with such frequency as to indicate a general business practice:

• ☐ § 431:13-103(a)(11)(A) — Misrepresenting pertinent facts or policy provisions
• ☐ § 431:13-103(a)(11)(B) — Failing to acknowledge and act reasonably promptly upon communications
• ☐ § 431:13-103(a)(11)(C) — Failing to adopt and implement reasonable standards for prompt investigation
• ☐ § 431:13-103(a)(11)(D) — Refusing to pay claims without conducting a reasonable investigation
• ☐ § 431:13-103(a)(11)(E) — Failing to affirm or deny coverage within a reasonable time after proof of loss
• ☐ § 431:13-103(a)(11)(H) — Not attempting in good faith to effectuate prompt, fair, and equitable settlements where liability is reasonably clear
• ☐ § 431:13-103(a)(11)(I) — Compelling insureds to institute litigation by offering substantially less than ultimately recovered
• ☐ § 431:13-103(a)(11)(M) — Multiple, duplicative claim forms
• ☐ § 431:13-103(a)(11)(O) — Failing to promptly settle one portion of coverage to influence settlement of other portions
• ☐ § 431:13-103(a)(11)(P) — Failing to promptly provide reasonable explanation of basis for denial
• ☐ HAR § 16-23-93 (auto total-loss valuation methodology — local market area, dealer quotations, itemized dollar-specified deductions)
• ☐ Other: [________________________________]

3. Attached Documentation

• ☐ Declarations page and policy
• ☐ Sworn proof of loss / claim submission ([__/__/____])
• ☐ Carrier denial / reservation-of-rights letter ([__/__/____])
• ☐ Estimate, appraisal, or expert report supporting amount in dispute
• ☐ Claim-handling correspondence and call logs
• ☐ Auto cases: CCC ONE valuation report and local-market dealer comparables

4. Requested Regulatory Action

I respectfully request that the Insurance Division: (a) open a case file and assign an investigator; (b) require a detailed carrier response; (c) determine whether the conduct constitutes a "general business practice" under § 431:13-103(a)(11); (d) preserve all complaint records for evidentiary use; and (e) refer the matter for market-conduct examination and possible administrative sanctions under HRS § 431:13-201.

Mahalo,

[________________________________]
[Complainant / Counsel of Record]

Part B — Bad-Faith Demand Letter to Carrier

[SENDER / LAW FIRM NAME]
[________________________________]
[Street Address]
[________________________________]
[City], Hawaii [ZIP]
Telephone: [________________________________]
Email: [________________________________]
Hawaii Bar No.: [____________] (if attorney)

Date: [__/__/____]

VIA CERTIFIED MAIL, RETURN RECEIPT REQUESTED
AND ELECTRONIC MAIL TO: [________________________________]

TO:
[Insurance Company Name]
ATTN: Bad Faith / Extra-Contractual Claims Unit
[Registered Agent for Service of Process — verify via Hawaii DCCA Business Registration at https://hbe.ehawaii.gov/documents/search.html]
[________________________________]
[Street Address]
[________________________________]
[City], [State] [ZIP]

Re: COMMON-LAW BAD-FAITH DEMAND UNDER BEST PLACE v. PENN AMERICAN

Insured: [________________________________]
Policy Number: [________________________________]
Claim Number: [________________________________]
Date of Loss: [__/__/____]
Time-Limited Settlement Demand: $[____________]
Response Deadline: [__/__/____] (30 days from date of this letter)

Dear Claims Counsel:

This office represents [________________________________] in connection with the above-referenced insurance claim. This letter constitutes formal demand for full policy benefits and provides notice of an impending bad-faith tort action under Best Place, Inc. v. Penn American Insurance Co., 82 Haw. 120, 920 P.2d 334 (1996), and Tran v. State Farm Fire & Casualty Co., 99 Haw. 226, 54 P.3d 393 (2002).

1. Coverage and Claim History

[________________________________________________________________
________________________________________________________________
________________________________________________________________]

2. Bad-Faith Liability Under Hawaii Law

(a) Common-Law First- and Third-Party Bad-Faith Tort — Best Place. Hawaii recognizes that every insurance contract carries an implied covenant of good faith and fair dealing, breach of which gives rise to an independent tort cause of action. Best Place, 82 Haw. at 132. The tort applies to both first-party and third-party contexts. Id.

(b) Objective "Unreasonable" Standard — Tran. Under Tran v. State Farm, 99 Haw. 226 (2002), the insured "need not show a conscious awareness of wrongdoing or unjustifiable conduct, nor an evil motive or intent to harm." Best Place, 82 Haw. at 133. The standard is objective: the carrier's conduct must be unreasonable.

(c) Reasonable Interpretation Defense — Miller. Conduct based on a reasonable interpretation of the policy does not constitute bad faith. Best Place, 82 Haw. at 133; Miller v. Hartford Life Ins. Co., 268 P.3d 418 (Haw. 2011). An erroneous decision alone is insufficient. The carrier's conduct here, however, is not reasonable because [the policy is unambiguous on coverage; / liability under the policy is reasonably clear; / the carrier's interpretation conflicts with Hawaii precedent; / the carrier failed to conduct a reasonable investigation].

(d) Statutory Evidence Under § 431:13-103(a)(11). Although Article 13 of Chapter 431 does not provide a private right of action, the carrier's violations of § 431:13-103(a)(11) and HAR § 16-23 (auto valuation rules) are admissible evidence of bad faith. A parallel DCCA Insurance Division complaint has been filed.

(e) Punitive Damages Available. Hawaii permits punitive damages in bad-faith tort cases on clear and convincing evidence of conduct that is "wanton, oppressive or with such malice as implies a spirit of mischief or criminal indifference to civil obligations." Masaki v. General Motors, 71 Haw. 1, 16-17 (1989); Best Place, 82 Haw. at 138.

3. Damages Demanded

4. Time-Limited Settlement Demand

The carrier has thirty (30) days from receipt of this letter to tender unconditional payment of policy benefits in the amount of $[____________]. Failure to do so will be objectively unreasonable under Tran and Best Place, exposing the carrier to consequential damages, emotional distress damages, and punitive damages — as well as the equitable-subrogation exposure recognized in St. Paul Fire & Marine v. Liberty Mutual, 135 Haw. 449 (2015), in third-party / excess contexts.

5. Auto Total-Loss Compliance (if applicable)

If this claim involves a Hawaii auto total loss, the carrier must comply with HAR § 16-23-93's requirement that all condition, mileage, prior-damage, or required-repair deductions be "measurable, discernible, itemized, and specified in dollar amounts," and that comparable vehicles be drawn from the local market area. Inter-island comparables without supporting market-equivalency analysis do not satisfy HAR § 16-23.

6. Preservation-of-Evidence Demand

The carrier and all claims handlers must immediately preserve: (a) the complete claim file (activity log, diary entries, supervisory review, reserve worksheets); (b) all ESI relating to the claim; (c) all underwriting and reinsurance communications; (d) training materials, claims manuals, and bonus/incentive plans applicable to the handling adjuster(s); (e) all DCCA market-conduct examination records; and (f) for auto cases, the complete CCC ONE valuation report including VINs, dealer addresses, and geographic-area parameter data.

7. Notice to DCCA

A parallel administrative complaint has been filed with the Hawaii Insurance Division Investigations Branch. Reference: [____________].

Mahalo for your prompt attention.

Sincerely,

[________________________________]
[Attorney for Insured]

Part C — Pre-Filing Checklist

Pre-Demand File Build

• ☐ Obtain certified copy of policy (declarations, endorsements, all forms)
• ☐ Confirm NAIC company code and HI-licensed status via DCCA Insurance Division
• ☐ Identify carrier's HI-registered agent for service (Hawaii DCCA Business Registration search)
• ☐ Calendar 6-year written-contract SOL (HRS § 657-1(1))
• ☐ Calendar 6-year bad-faith tort catch-all SOL (HRS § 657-1(4))
• ☐ Confirm posture (first-party or third-party — both recognized under Best Place)

Documentation

• ☐ Sworn proof of loss filed and acknowledged
• ☐ All claim correspondence indexed and Bates-numbered
• ☐ Independent expert estimate / appraisal completed
• ☐ Auto cases: full CCC ONE report obtained with local-market-area VINs and dealer addresses
• ☐ Insured's economic-loss calculation documented
• ☐ Emotional distress evidence (treating providers identified)

Best Place / Tran Tort Theory

• ☐ "Objective unreasonableness" facts marshaled
• ☐ Reasonable-interpretation defense rebutted (policy unambiguous; investigation deficient; precedent on coverage)
• ☐ § 431:13-103(a)(11) violations documented as evidence (not as cause of action)
• ☐ HAR § 16-23 violations (auto) documented if applicable

Masaki Punitive-Damages Predicate

• ☐ Clear-and-convincing evidence of wanton, oppressive, or malicious conduct identified
• ☐ Pattern violations / supervisor sign-offs / arbitrary denial documented
• ☐ Hawaii has no statutory punitive cap — full pre-trial planning advised

Procedural

• ☐ 30-day response deadline calendared
• ☐ DCCA Insurance Division complaint filed in parallel
• ☐ Litigation-hold / preservation letter sent
• ☐ Bad-faith expert and economist retained / on standby
• ☐ Equitable-subrogation analysis (excess insurer context — St. Paul Fire & Marine)

Service and Delivery

• ☐ Certified mail, return receipt requested to carrier
• ☐ Email confirmation to handling adjuster and supervisor
• ☐ Copy to insured's broker / agent
• ☐ All blocks removed from final letter

Sources and References

• HRS § 431:13-103 (Unfair methods of competition and unfair or deceptive acts): https://law.justia.com/codes/hawaii/title-24/chapter-431/section-431-13-103/
• Best Place, Inc. v. Penn American Ins. Co., 82 Haw. 120, 920 P.2d 334 (1996): https://law.justia.com/cases/hawaii/supreme-court/1996/18486-1.html
• Tran v. State Farm Fire & Cas. Co., 99 Haw. 226, 54 P.3d 393 (2002): https://law.justia.com/cases/hawaii/supreme-court/2002/23818.html
• Miller v. Hartford Life Ins. Co., 268 P.3d 418 (Haw. 2011): https://law.justia.com/cases/hawaii/supreme-court/2011/scwc-29396.html
• St. Paul Fire & Marine v. Liberty Mut. Ins. Co., 135 Haw. 449 (2015): https://law.justia.com/cases/hawaii/supreme-court/2015/scwc-13-0000183.html
• Masaki v. General Motors Corp., 71 Haw. 1, 780 P.2d 566 (1989): https://law.justia.com/cases/hawaii/supreme-court/1989/13404-1.html
• HAR § 16-23 (Motor Vehicle Insurance Law Regulations): https://cca.hawaii.gov/ins/files/2013/01/HAR16-23.pdf
• Hawaii Insurance Division — Filing a Complaint: https://cca.hawaii.gov/ins/filing-a-complaint/
• Hawaii Insurance Division — Home: https://cca.hawaii.gov/ins/
• NAIC SBS online complaint form (HI): https://sbs.naic.org/solar-web/pages/public/onlineComplaintForm/onlineComplaintForm.jsf?state=HI
• Hawaii DCCA Business Registration search: https://hbe.ehawaii.gov/documents/search.html