Assembly Standing Committee on Insurance

Good morning, everyone. It's 09:02. If we could have insurance Committee Members please come to the Committee and or authors so we can get started. Thank you. Good morning. Welcome to the Assembly Committee on insurance. Today we're going to consider nine bills. The following Bill is recommended for consent file item number seven. AB 2983. Rodriguez we're going to begin as a Subcommitee until we have more Members. Actually, we actually have one author here. Excellent. Assemblywoman Reyes, would you like to present for Assemble Miss Cervantes?

Thank you so much. Good morning, Chair and Members. Thank you for allowing me to present AB 2167 on behalf of Assemblymember Sabrina Cervantes. This Bill makes our existing system of paid family leave more accessible to all eligible Californians. Current law allows an estimated 14.4 million workers who are covered by the paid family leave program to receive supplemental wages of 60% to 70% for up to eight weeks to bond with a newborn or adopted child.

The program is fully funded through employee payroll deductions and can be taken consecutively or throughout a 12 month period. However, there is only a 41 day window to apply for benefits through the program. This small window, which starts on the first day of leave, may restrict eligible individuals. Therefore, AB 2167 seeks to foster a more supportive process by offering more time for individuals and families to access paid family leave.

The Bill would allow for early submissions of up to 60 days prior to the first day of leave and would adjust the deadline and appeals process. It would extend the window to apply for benefits from 41 to 60 days and adjust the deadline for appeals from 30 days to 120 days. The Bill will also improve the online and paper application process. Paid family leave benefits are available to all Californians, regardless of immigration status.

AB 2167 will ensure that all individuals who would like to use the online application process to do so with their Social Security number or with an ITIN number. Finally, the Bill will make all relevant application forms available to be downloaded online and designed to be PDF forms. Assembly Bill 2167 is in response to a number of stories of individuals who struggled immensely to apply for the benefits they deserved.

Thank you. Do you have a witness in support? You may go ahead. Okay. Do we have any opposition? Okay. Any public comment? Okay, we'll bring back to the Committee. Do you have any questions for the Assembly Member? No. Okay. Would you like to close?

Thank you. Madam Chair and colleagues, I respectfully ask for your aye vote on AB 2167.

Thank you. Do we have a motion? Oh, we can't. We're a set of Committee. Okay. We'll take it up at the appropriate time.

Thank you.

Thank you so much.

Whenever you're ready, Madam Chair.

Thank you, Vice Chair. Oh, he's not here. Members of the Committee, this Bill will establish a limited lines insurance agent license for the purpose of selling home warranty products. This Bill is patterned after the six existing limited lines licenses in California. These licenses are designed to make it easier for businesses to sell these products incidental to their main business, while still requiring licensing, education, consumer protections and oversight by the Department of Insurance. Traditionally, home warranties have been sold as part of the real estate transaction.

However, the market has evolved and now more people are interested in buying home warranty products. Subsequent to the real estate transaction, people now seek out a home warranty to protect themselves against the unexpected expenses to repair their heating or air conditioning, refrigerator, dishwasher, water heater, or other appliances. These repairs can cost hundreds of dollars or more. As we know, there is a significant number of our constituents that are not in a position financially to handle such unexpected expenses.

A limited lines license for home warranty products will enable additional entities to sell these products, helping to make them more accessible to all consumers. I have John Norwood with me to provide some more background and context on this Bill.

Yes, Members, John Norwood, on behalf of Homeserve USA, under the National Association of Insurance Commissioners Model Home Warranty act, and in almost every other state, there's no license required to sell home warranties. Essentially, they're home warranties. They're not really insurance. And that's why when California established the Home Wardy Law 40 some years ago, the primary market was in the real estate transaction. And it basically, since it was transacting, there was a license requirement to get an insurance agent's license.

But ironically, real estate agents and direct sellers, as long as they weren't paid a Commission, were exempted from that law. So effectively, there was no licensing requirement. California, because the exceptions ate up the rule. As the author indicated, the home warranty markets changed now, especially in other states, but people are interested in buying that type of protection outside the real estate transaction. So rather than following other states, we have chosen to adopt the limited lines model.

Under that model, everyone in the transaction, the insurance insurance company, the broker agent, the limited lines holder, the endorsees, are all regulated by the Department of Insurance, come under its enforcement and consumer protection provisions, and so that's a very positive there.

And then, in addition, we've added other consumer protections, such as a 30 day free look, a prohibition on any solicitation or sales in home, and requirements that the insurer and the broker agent essentially be responsible for the conduct of the limited lines holder and their endorsees, and also responsible for the training materials, et cetera, that have to be developed. So we think that the limited lines model is perfect for this type of business.

These products are best sold incidental to other businesses, essentially just like the other six limited lines licenses. So with that, appreciate your I vote and be happy to answer any questions.

Thank you sir. Others in support, just your name and organization please.

Of the American Property Casualty Insurance Association in support. Thank you.

Ryan Flanagan, on behalf of CNA Insurance in support.

Thank you. Is there any opposition to the Bill?

Good morning Committee. Claudia Mildner, I'm sorry. Assistant to Chief Deputy Legislative Director, California Department of Insurance. We have no formal opposition to this Bill at this time. However, we have expressed our concerns to Committee and to the author and the sponsor, and we look forward to continuing conversations to move forward. Thank you.

Thank you.

Good morning Mister Chair Members. Robert Harrell, Executive Director of the Consumer Federation of California. We do not have an official position on this Bill. I'd like to make that clear. I would just note for the Committee that historically there's been a lot of fraud in this area where consumers don't know what's covered and what's not. You may collectively think about a full licensing requirement here, given the historic nature of fraud without, as Mister Norwood indicated, the exception that ate up the rule going back decades.

If you do go to licensing, our general view on all licensing regimes is that there be rigorous pre licensing checks. For example, if you look into the background of some of the companies involved, many times you'll be able to see some problems. And it's sort of the 8020 rule, right? 20% of the companies create 80% of the problems. It's a good way to keep folks out of the regime if there's going to be enforcement issues. We do like the 30 day free look, and that's foreshadowing for a comment I'll make later on. Thank you very much.

All right, thank you. Anyone else in opposition or in between? Seeing none, we'll bring it back to the Committee for questions or comments from the Committee. Okay, seeing none. Madam Chair, would you like to close?

Yeah, if I may for a second. This client, home server USA, is new, but for some 25 years I've represented another home warranty company and in all that time I've never seen one piece of legislation, significant piece of legislation, on home warranty products in California. At the same time, I have not seen any type of outcry or attention from the Department of Insurance on this business. So that would lead me to indicate that most of these companies are doing a pretty good job.

Okay. Thank you, Madam Chair.

Yes, thank you. And at the appropriate time, I respectfully ask for a vote.

Very well. Thank you, John.

Thank you very much.

Okay, we're looking for authors. If you have a Bill up and Assembly Insurance Committee, please come to the Committee room, train it.

Good morning, everyone. Madam Chair and Members of the Committee, I am here to present Assembly Bill 2743. I want to start by thanking the committee staff for all their hard work on this bill. I also want to thank the insurance commissioner and the department insurance staff for their extensive feedback and time spent on this bill. AB 2743 provides an appropriate adjustment in financial responsibility for peer-to-peer car sharing.

The bill reflects months of conversations with the opposition and good faith attempts to mitigate their concerns and provides important clarity on the bill's intent, which is to one, set financial responsibility limits in 2025 to 45k-90k for bodily injury and 15,000 for property damage. Increase the financial responsibility limit three times for 2035, require new robust consumer disclosures, create new penalty provisions, include savings clause language requested by the consumer attorneys of California.

AB 2743 strikes a balance between regulation and growth, ensuring that peer to peer sharing remains viable and beneficial for users and providers. With me today to testify in support of AB 2743 are Larisa Cespedes on behalf of Turo, and Andrea Deveau on behalf of TechNet, and I'll hand it over to my witnesses.

Good morning chair and Members. Larisa Cespedes here on behalf of Turo, sponsor of this legislation. I want to express our sincere gratitude to the Committee staff, to the Department of Insurance staff, and to all the stakeholders that have been involved over the year and a half long conversations on this issue. Turo is headquartered in California, based in San Francisco, and we have over 19,000 hosts that have their vehicles on their platform.

The insurance, third party insurance liability mandate is unique for peer to peer car sharing and this Bill ensures that our hosts, our guests and all the mobility options that are available to California will continue through 2025. We understand that this does not address all of the concerns raised by the opponents and we sincerely appreciate their feedback as well.

And because of that 2035 3x requirement, we will be back again to ensure that there is data and information that is provided to the Department to ensure that whatever rates we have in the future reflect that information. Thank you.

Good morning, Madam Chair and Members. My name is Andrea Deveau. I'm here today representing TechNet. TechNet's diverse membership includes dynamic American businesses ranging from startups to the most iconic companies on the planet, representing over 5 million employees and countless customers.

And we're here today proudly in support of AB 2743. Thank the author for her work. Happy birthday. Likewise, as Larisa has described with the efforts of Turo, TechNet also has been equally involved. And thank the author and the Committee, most importantly, for all the incredible work. AB 2743 includes robust consumer notices, penalty provisions that ensure and penalty provisions, ensuring that Californians who take advantage of these services and innovations remain protected and well informed when driving in California. We respectfully ask for your aye vote. Thank you.

Do we have any witnesses in opposition?

Good morning. I'm Nancy Peverini with the Consumer Attorneys of California. We do have an opposed and less amended position, and we appreciate all the work of staff and the sponsors in the author's office. The heart of the issue is what should the limits be to protect people who are injured or killed in these types of accidents? And the current law is three times the minimum financial responsibility limits.

And to be frank, there's not a lot of legislative history on why that was chosen. That being said, we have varying information. What we have from consumer attorneys is what I call 'the boots on the ground'. You know, what our Members are seeing in these collisions, whether or not there's adequate insurance. They don't think there is. We don't have the Department of Insurance information, and Turo, Getaround, they have their information, but it's not public.

And so really for you, as policy decision makers, you need to have the information on what the limits should be based on data, and we just don't have that yet. So we do understand there will have to be some type of data given because otherwise you can't make informed decisions on what the limits should be. So our opposition is based on two things. One, the current limits are three times. The Bill has one and a half. We offered two.

So we were trying to find a middle ground that was not accepted. The second thing that we've asked for is some type of information from the Department, for you, as policymakers, so you can actually determine what the limits should be, and that's not included in the Bill. We do understand, you know, 2035, if any of us are still here, it's going to have to be dealt with. But until then, we do have an opposed and less amended position because we just don't have the data.

So that's the basis of our opposition.

Thank you. Do we have any public comment?

Thank you, Madam Chair. Robert Herrell with the consumer. Robert Herrell.

Robert Herrell with the Consumer Federation of California. We have no official position on the Bill, and we also have no position particularly on the limits, although it's interesting to hear the back and forth. What we do think is something that harkens to what Miss Pepperini just said a moment ago. Independently looking at this, we think you need the data. So our belief is that this Bill ought to be amended to include an obligation on CDI to collect that data.

I know that they have the General authority to do data calls, but I think in an area like this, it probably would be very helpful because us policymakers can't make the decision without good data. You need to know the incidents information. We would assert that that ought to be amended into this Bill. Thank you.

Good morning. Jaime Huff with the Civil Justice Association of California in strong support of the Bill. Thank you.

Good morning. Tammy Bowie, on behalf of the more than 2,000 Turo community members who submitted a letter of testimony and support.

Thank you. Okay. I'll bring it back to the Committee if you have any questions for the author.

So I heart data, which is no news, I think, to anybody in the room. And so I guess my question sort of follows up, and I don't know if you want to come back up for this conversation, but with, if we don't have the data yet, why are we acting now? And I guess that's where I'll start.

Thank you for the question. Assemblymember through the Chair. I think the question is the fullness of the data that we have.

We spent again the last year providing data to the Department of Insurance and worked with travelers, our insurance third party insurance provider, to give data that actually justify even a lower rate than 1.5x on the bodily damage. But there was this question of a scope of data that was not captured by us, of potentially individuals who were in accidents where the third party liability insurance didn't come into play. And so I think there is a small data gap there.

And the issue we have is how do we compel the Department to collect that data? How, currently insurers are not collecting data when you're in an accident that's in a vehicle that's not your own. And I won't speak for the insurers, but this is their feedback. They are not currently asking, were you driving a Hertz rental car? Were you driving a Turo, were you driving your mother's car?

So there's some more granular data that we need to, to receive in order to provide, I think, the full scope of what the consumer attorneys were asking for in their testimony. Now to why we need this fix by 2025. That's because that 3x limit that was put into law that Miss Peverini referenced back in 2010 was a number pulled out of thin air.

And with the Senator Dodd's Bill that passed two years ago, our rates would go exponentially higher, which would drive the cost of operating for Turo, for Getaround and others operating in California so significantly high that would threaten our ability to exist in California and provide services in California.

And so what this Bill represents is an adjustment for 2025 so that we don't have this fatal unintended impact and a commitment to come back and make sure that when we do adjust rates for 2035 or even prior to then, that we have the data that we need and we have more time to ensure that it's actually being collected. I hope that answers your question.

Yeah. Thank you.

And then I just one follow up question, because I recall the Dodd Bill and the discussions around the Dodd Bill. I guess what I struggle with on this is what is the difference? Right? I mean, if I'm driving a rental car versus a Turo, the risk is not distinguishable. Right? So I guess help me understand the logic.

Excellent question. Our position is that there is no distinguishable difference in risk when you're driving a rental car, a Turo, or your family member's car. And if you were to look at the rental car statue right now, there is currently no mandate for them to provide third party liability insurance. And so, you know, if this was everything that Turo, if this Bill reflected everything which Turo asked for, we would be striking the third party liability insurance mandate. So. Good point. But, you know, we do need to get the data to inform and ensure that what we assume that there is no difference in risk is actually there.

We all love data.

I would just say, and again, I'm not an expert in the differences. However, I would just point out that there are differences. Rental car companies, they have inspections every time a car goes out. That doesn't happen with a peer-to-peer. Most rental car companies don't rent to somebody under 25. That doesn't occur. And then again, with the lack of data, what our folks tell us is that these are being used more by younger drivers and inexperienced drivers and uninsured drivers.

So that, you know, I would be more likely to get a rental car if my son or daughter would probably be more likely, with very little experience to get a peer-to-peer. Again, we just don't have the data. And so one of our proposals in our letter was to require the Department to collect that data. And so we'd like to see that as we move forward, because to your point, exactly what should the limits be.

And I totally agree that the three times, there's no ledge history on it. It's a Dave Jones Bill and there is no ledge history. But with the increased costs of medical care and everything else, that's why the Legislature chose to increase the minimum financial responsibility limits two years ago at the Dodd Bill. So we really do need the data, and we've been talking a lot about how to get that data. We don't think it could just be the companies themselves saying, here's our data.

It has to be through the Department.

Got it. Now, I apologize. This is probably in the analysis. I had a very long day yesterday, for anybody watching on TV. I assume all of your cars are insured, that you have to be insured to rent on Turo and Getaround?

So, yes, if you want to chime in. And just a difference here is that Turo is a third party, so we don't own our vehicles. Right. It's up. Whereas-

Right but would require your renters to have insurance. That's what I'm asking.

Yes. The people who use your platform, if you will. Yes. Okay. That's helpful information. And then, so I will say I have used Turo as a cost savings technique, and I am well above the age of 25, sadly, and consider myself a pretty responsible driver. But. So I don't know the answer to who uses this. And I actually didn't know you could rent these when you can't rent a rental car. But I appreciate what you're trying to do here.

I do think it has. When there was an absence of rental cars, this really did allow the market to become healthier and allow people to make some extra money when they need it off of an asset they have. That has been beneficial, I think, to the users. So I do think we need to get it right. I appreciate the data. I think that. I hope the conversation will continue about what robust data we will get as we face 2035. So that we can make.

Not me, aye don't think, but others can make a good decision. Thank you.

So we're going to take a pause here and establish a quorum Committee secretary. Please call the roll.

Calderon. Present. Calderon? Here. Chen, Alvarez. Bauer? Cahan? Barking hand. Here. Berman? Gibson? Joan Sawyer? Lowenthal? Lowenthal? Here. Ortega? Ortega. Here. Joe Patterson. Petrie? Norris? Petrie? Norris? Here. Rubio? Rubio? Here. Valencia? Valencia. Here. Willis Wallace? Wallace. Here. Wood? Wood. Here.

Consent calendar. Do I have a motion? Thank you. Please call the roll.

[Roll Call]

Thank you. Okay. Do we have any other questions for the author? We have a second. Thank you. Would you like to close?

Yes. So this bill, we've been working hard on this bill, months of conversations, and so I respectfully ask for your aye vote.

Thank you. Secretary, please call the roll.

[Roll Call]

Okay. Thank you. That bill gets out.

Thank you very much.

Thank you. 1883. Yes. Thank you. Thank you. Please call the roll.

[Roll Call]

Secretary, please call the roll.

[Roll Call]

Thank you. Assemblyman Connolly, would you like to present AB 2416? Come on up.

Thank you, Madam Chair and members. Good morning. Would like to begin by thanking the committee staff for their tireless work on this bill, and I will be accepting the committee amendments. I'm proud today to present AB 2416 a bill that would require the California Department of Insurance to review the Safer from Wildfire regulations every three years, starting on or before December 31, 2027.

CDI, in consultation with Cal OES, the Office of Planning and Research, and CAL FIRE, would evaluate if additional building hardening measures and community-level wildfire mitigation programs should be included in the Safer from Wildfires program. This is an issue that is near and dear to communities throughout the state where wildfire risks are high. I don't need to tell you that. And insurance is increasingly unaffordable and absent.

My district specifically has experienced some of the worst wildfires in recent history and I look to my good friend from Healdsburg representing the adjacent district that has suffered immensely and I'm constantly talking to folks who are doing everything they can with their own money to protect their homes and communities from the next disaster. The Safer from Wildfires program is the only avenue open to consumers to receive direct discounts for hardening their homes and neighborhoods.

These insurance discounts are a great incentive and it costs the state nothing to offer it. It's precisely what we want folks to be doing with their own homes and their own communities. Right now, there is no requirement for CDI to open up the regulations for evaluation. As new and safer building materials come to market and wildfire prevention methods evolve, it is important that we periodically revisit the regulations and evaluate if they capture the best mitigation practices available and if the regulations are offering as much relief as possible to the people who are doing the right thing.

We have made significant amendments to the bill to address the concerns of the industry, including a three-year delay to allow for ongoing efforts to shore up the insurance market to finish and for CDI to clear its current approval backlog. In fact, in the previous version of this bill, we were specifically calling out the insurance industry as stakeholders that CDI must consult with when reviewing the regulations. We have also worked to ensure that there is no Prop 103 issue with this bill.

Again, all this bill does is require CDA to periodically evaluate whether or not these regulations need to be updated to reflect future needs of consumers and the industry. The final say will be left with the insurance commissioner. While CDA works on other strategies to improve the insurance market in California, AB 2416 we would submit is a reasonable step the Legislature can take to help consumers save money on their insurance bills and reduce the risk of disaster for vulnerable communities and the families that live there. So with me to testify today is Melanie law with the North American Insulation Manufacturer Manufacturers Association. Melanie.

Thank you, Assemblymember Connolly. Madam Chair and committee members, as mentioned, my name is Melanie Law here on behalf of the North American Insulation Manufacturers Association, in support of AB 2416. NAIMA is the trade association for North American manufacturers of fiberglass, stone wool, and slag wool insulation products. As part of our role, we support policies that promote passive fire protection strategies in wildland-urban interface areas to help reduce fire spread severity and loss of life and property.

As Assemblymember Connolly mentioned, AB 2416 would require CDI to review the Safer from Wildfire regulations every three years and determine if additional building hardening measures and community-level wildfire mitigation programs should be adopted to further incentivize California consumers to adopt home hardening measures that will reduce their wildfire risk. The first evaluation will take place three years from now under the next insurance commissioner.

As part of CDI's first evaluation, they are required to consider integrating fire-safe building materials, such as those on the state fire marshal's building materials listing these fire safe building materials on the BML have all been tested and certified by state fire marshal accredited laboratories for their fire safety performance. The most stringent and fire-protective building materials on the BML are categorized as non-combustible. We support the author's efforts to encourage CDI to add non-combustible building materials to the safer from wildfire regulations.

This will help accelerate the adoption of BML-certified building materials in wildfire-prone areas. Reviewing the Safer from Wildfire regulations every three years will give consumers, fire service professionals, and insurance providers an opportunity to examine the effectiveness of the regulations and make necessary changes that will further the intent of the regulations to incentivize consumers to reduce their wildfire risk. For these reasons, we encourage your support and respectfully ask for an aye vote.

Thank you. Do we have any additional support in the room? Okay, do we have any opposition? Please come forward.

Thank you. Good morning, Madam Chair and members. Seren Taylor on behalf of the Personal Insurance Federation of California. And we do appreciate the efforts of the author and the committee to refine the bill, but unfortunately, our concerns remain and we are still opposed. AB 2416 as you heard, seeks to include non-combustible construction materials included by the Office of the State Fire Marshal on the building materials list as part of the newly adopted safer from wildfire regulations.

However, the safer from wildfire regulations are not intended to be a place for listing products approved by the state fire marshal. It's supposed to reflect a system of parcel-level mitigation that has been demonstrated by fire science to result in meaningful reduction in risk and loss that can be actuarially justified. We're concerned that AB 2416 would open the door for many products that will seek to be added, regardless of their efficacy in reducing wildfire losses or an insurer's ability to assess their worth.

This will significantly diminish the value of the mitigation regulations and undermine the consistent approach to risk reduction that is critical for success. Further, we're concerned that any additions to the regulations will result in the current wildfire risk models being subject to a lengthy and complex model review process under these newly proposed CDI catastrophe risk modeling regulations. Now, this will negatively impact an insurer's ability to use the models and interfere with their capacity to make timely rate filings that increase insurance availability.

Thus, while we do agree there's merit to CDI engaging in periodic updates to the Safer from Wildfire regulations that reflect innovations in fire science, it's important we first provide stability to address the current insurance crisis. And we really do need to see how these new regulations are going to interact with the new cap model regulations because anything that changes in the wildfire, in the safer from wildfire regulations can trigger this really complex review, and then we're not able to use those models and we don't even understand how that's going to interact yet. So in any case, respectfully ask for a no vote. And thank you.

Mark Sektnan with American Property Casualty Insurance Association. I want to say that the insurance industry is strongly in support of mitigation standards. The Institute for Home Building Safety, which is sponsored by the insurance industry, is the leading scientifically-based mitigation standard developer. And so we do adhere to those.

I think the problem with this bill is as much a process one, and if we look at what's going on with the current regulations at CDI, I think we can see what some of the issues might be. Currently, the department adopted regulations last April after giving companies 180 days to comply with the new regulations. It is almost a year out. Only two of the rate filings in compliance with those regulations have been adopted.

So you can see what the huge delay will be now when you start laying in a three-year cycle and then add that to the changes that have to be made to the catastrophe model. What you're going to end up with, I think, is a lot of churning and an inability of insurers to use these models, which they desperately need. The Department of Insurance already has the ability to update their regulations when they feel they're important.

Another important standard of the regulations as the department adopted them is they wanted to make sure that these were mitigation standards that people could readily accept and readily do that weren't terribly onerous. Now, we do have problems with the wildfire regulations because we believe, as IBHS has said, that mitigation needs to be a suite of activities. You can't pick and choose. It's not a menu. And the regulations would allow that.

And by now adding components and such like that, you only continue that belief that a homeowner can pick and choose something and get an insurance discount. We're still in the standard of not yet having the actual data to understand where wildfire mitigation comes from. Remember, wildfire mitigation science is relatively young. It's only been around for five or six years since we had the major wildfires in 2017, 2018. Thank you.

Thank you. Do we have any public comment in the room?

Good morning, Chair and Members. Naomi Padron, on behalf of the Pacific Association of Domestic Insurance Companies in respectful opposition.

Thank you. Okay, we're going to bring it back to the Committee for questions. Assemblymember Bauer-Kahan.

Thank you, Assemblymember, for this bill. I know you and I, last week with Assemblymember Pellerin, took the brunt of the non-renewals that occurred in the Bay Area. And over half my city was non-renewed last week. In a city where we have the strongest wildfire mitigation ordinances in the state, I have a fire chief who goes house to house and measures the height of the trees, the distance from the house to ensure that the houses are protected from wildfire risk.

And they were all, half of them were non-renewed. So I appreciate the insurance industry being here talking about parcel-level wildfire mitigation, since I'm seeing firsthand that that doesn't appear to be what matters. But I know that what you're looking at here is what we're being told in wildfire risk neighborhoods, which is that the parcel level matters, that you should be doing those things, trimming the tree up, moving back from the house, all of it cleaning your gutters. I know. Cause I do it.

But that also, what matters is what your roof is made of and that the sparks can't fly in through the grates, that there are things that you can do on the home level that will also prevent your house from burning down.

And I think that what our communities have been asked, which is fair on the wildland-urban interface, is to do that work and to make our houses safer so that our communities withstand the climate change caused and other caused wildfires that are happening across the wildland-urban interface and in the wildland. And so I think this bill, it sounds like the opposition wants to make sure they can use the models while there is reevaluation.

I guess I want to ask you, because I know you, like me, want our constituents to have insurance, are not trying to stop them from using those models while reevaluation happens. I don't think there should be anything that stops the continued use of a model while we're reevaluating for a future model. But I'm sure you can address that.

And in addition, I don't think that what you want here is to include things that are not scientifically proven to cause, to not prevent wildfires, which also seems like an easy fix. So I guess I want you to address that because I think that what you're trying to do in this bill, which is give us real answers of what we can do to retain insurance to protect our communities is actually valuable.

Thank you for that opportunity, and I could not have said it better and appreciate that you and your communities are suffering from some of the same things. First of all, to dispel any notion that somehow we're trying to suggest we should move away from community-level approaches. We're not doing that. The bill says nothing in that regard. I was also struck by the industry's apparent view, as expressed in their letter, that somehow individual-level actions do not make a difference or enough of a difference.

Not only does that fly in the face of some of the policy direction we're trying to push, it flies in the face of reality. I'll never forget that I personally took a tour of the aftermath of the glass fire in east Santa Rosa several years ago, and it was astounding that you could walk through a neighborhood where the fire had swept through.

One house would be standing essentially unaffected while next to it was a house burned down, the next one untouched, and so on and so forth. Guess what the x factor was for those homes. They had done the vegetation management, they had done the work on their roofs and eaves. So you're not going to be able to convince me, as seems to be suggested here, that somehow individual-level actions don't make a difference, they do.

This frankly and with respect, I don't know what version of the bill we're talking about at this point. We literally amended out any reference to specific building materials. Okay, so that's a nonissue at this point. This is really now essentially, let's have the review, let's bring the stakeholders to the table. Let's have best practices on building materials which we know change over time. That's the premise of the bill. And let's get serious about this.

And we would like to have the industry at the table. To me, this seems like just an effort to oppose any change.

Assemblymember Petrie-Norris, you have a question.

And thank you, Assemblymember, for, for that response. Because while I wholeheartedly support what you are trying to do with this bill, I think it's super important for us to find ways to incentivize Californians to do what we know will keep their homes and our communities safe and that we need to ensure that they are then rewarded for that. And that's reflected in rates.

I do, the opposition's concerns around potential inconsistencies and the opportunity for new mandates to add confusion to what is already very confusing situation. That concern does resonate with me. So if you could sort of speak to that and I guess speak to how can we move this bill forward in a way that doesn't just layer, add a layer of confusion to what we're trying to do with insurance right now.

The premise of now delaying for three years is that I would like to believe the Department of Insurance can clear up any rate backlog. This safer from wildfire is part of the strategy. This is narrowly addressing that. We are also, as we all know, considering catastrophe modeling, the integration of reinsurance costs and due rates. We're all open to that.

Again, that's why it's surprising to me that there's pushback, particularly given the amendments where, and as was noted, actually this will be a new Insurance Commissioner by then as well. So hopefully we can work through a lot of the backlogs, continue to refine the overall set of solutions that we're all looking at. But we got to give something to consumers at the end of the, I was on the working group last year and frankly, all these issues were on the table.

But I think this body and the members of that working group at the end of the day felt that there needs to be some movement toward recognizing the consumer piece of this. And if people are actually doing the things we're asking them to do with their homes, that they should be rewarded with discounts, let alone ideally just keeping their insurance, perhaps. Yeah, thank you. I was just going to go there. Just let me throw it out there.

Maybe they also ought to be able to keep their insurance if they're doing this as well. So I think this is a good move toward continuing to strengthen a consumer piece of the equation, and that is a safer from wildfires discount program. I frankly would like to go further. I think there should be a move towards some sort of recognition that those consumers doing that should not lose their insurance as well. But that's for another day.

Assemblyman Wood.

First of all, thank you Assemblymember Connolly I think as the Member who's lost the most number of homes had the largest number of acres burned in wildfires in recent years, I share some of your concerns and frustrations. From my perspective, the efforts by consumers towards home hardening isn't happening fast enough, and it certainly doesn't appear to be happening as much at the community level as we ought to see. And I'll just give you an example in my neighborhood.

I walk with my wife and my dog on a regular basis past three homes that sit perched on a hill. And two of the homes have done an amazing job in wildfire protection. It's fabulous what they've done. A third home hasn't done hardly anything. Now, if I'm an insurer and I'm looking at that whole overall situation, those two homes are those folks that did everything potentially possible. They're still at significant risk.

And so until we get our arms around and get consumers to really embrace community home hardening, we're going to have continued risk. I find myself driving whenever I drive anywhere, I'm looking at wildfire risk. I'm looking at dense vegetation. And frankly, I'm concerned that even with the incredible losses that we have had in our area, when I visit family in Southern California, it feels like they haven't really been aware that there's a crisis and that they need to do anything about that.

So I wish I could share your belief that the backlog of rate filings would be solved. I think we still have about 95 that are languishing in that same 90. That number was consistent back in September.

So one of my concerns, and I wanted to say I absolutely appreciate what you're doing and I'm support what you're doing here, and I do appreciate that you're pushing back the date because I think it is important as I start to, we start to look at what's going to happen here as the new regulations move forward. And I will say this at a glacial pace at which we are waiting for this.

I'm really, really frustrated that we are now several months and we only have one of these regulations in front of us. Once these regulations are all in place, a lot of insurers are going to be asking for a rate filing all at once, potentially. And you think the backlog is bad now? Wait till you see that. So I don't see, see relief for consumers until 2026, maybe, or maybe insurers will say, hey, we're comfortable with way things are going. We're going to loosen things up here.

And they might want to, but they may not be able to do that because of the glacial pace at which the rate filings are moving forward. And I just want to say this is not directed at the Insurance Commissioner. I think he is pushing forward on this and I appreciate his efforts there, but I'm disappointed with what we're seeing or the lack of progress. I don't know, quite frankly. How long does it take to write a regulation, for crying out loud? Seriously?

Too long, apparently. It's like I don't understand. This is a crisis and we need to be treating it as a crisis. And I appreciate what you're doing here because you recognize, as I do, the challenges we face here. But it appears we have an agency that doesn't, and I'm really frustrated by that.

So sorry, this has probably gone beyond the scope of your legislation here, but even in some of the, there was even a budget item around money that was allocated through oes for community wildfire mitigation that hasn't been spent. It's like, why haven't we, why wasn't that spent? So that is going to be clawed back, that's going to be clogged back. And it's like what? We had opportunities last year. There wasn't much going on.

Why hasn't some of the resources that we've allocated here to move forward on these projects not been spent? We have ample opportunity to do that. So I guess I'm frustrated on many levels. I guess I'll get off my soapbox here, support your bill. Wish I had the faith that the backlog was going to happen faster. And we need to focus on community as well as individual home hardening. So thank you.

Okay, do we have any other questions for the author from the Committee? Sure.

And I appreciate what you're trying to do. I mean, when I worked for the City of Los Angeles and the Planning Department of people would come to me and they want to build their homes on the side of a hill, a cliff overlooking the ocean, beautiful and everything, but there was a very good chance it was going to fall up into the ocean, and they would say, we don't have to do this in Mississippi, we don't have to do this in New York.

All these regulations at the Department of Building Safety, fire department, public works, all those requirements that they would put on them, they really didn't understand it was for their safety and the safety of everybody around them. And it was really difficult to get, especially private owners to understand that, because what they wanted, what they wanted, they wanted to build a mega-mansion. They wanted to build what they wanted to build.

And thank God that as the planning deputy, the departments pushed back on me when I said, is there anything we could do? And they pushed back. And I think the, the State of Los Angeles is a lot safer now because of those individuals doing their job. I think identifying things that building owners can use to ensure that their homes don't add to the problems that are out there I think is admirable.

And it may, I know some word that it won't solve the backlog and the problems of that, but it is a first step, and I think it's the first step where we start maybe one day building things that are indestructible. Wow. Wouldn't that be a novel idea? What would happen if we could get to that point?

What would the insurance rates be like if we had, if we had hardened our facilities to a point where they are almost indestructible from even catching fire or even spreading wildfires or even just spreading fires at all? Wouldn't that be great? So, again, I thank you for beginning with this.

Assemblymember Alvarez.

Thank you. I apologize. I was presenting a bill, so I might be asking questions you've already discussed, but. So in some of the testimony or documents on the opposition and Assemblymember, I think you addressed this. But just please clarify for me. There's a concern that the bill, and maybe it was a previous version, as you clarified earlier, essentially listed some of the pardoning and building material the way. So the bill that I'm reading that's before us does outline building material, but I believe that's in line with what is already in the California building standard.

It is, but that was amended out.

Okay.

So there's no specific calling out of building materials now.

Okay. And then the other, I was gonna ask one other question as it relates to. I should have written it down, but I had it while you were speaking. I guess the question then would be to what, to some of the concerns that you've heard. What do you anticipate being sort of next steps to refine where you want to take this in terms of ensuring that we approach this the right way, giving some of the feedback you've heard from some of the colleagues.

Yeah. So the questions were great. I think the amendment sought. The other big issue was the backlog of rate cases, and that's why we've extended the date significantly by three years.

Okay.

So this would actually be a new Commissioner.

Okay.

That would be doing it.

Just, just to make sure I'm not missing anything in terms of, from the opposition. On the issue of the, my first question, which is the building materials, do you recognize now that the bill does not include that, or do you still have questions about that?

Well, I think our point on that was, you know, it still says to go look at these, at the, what's going on at the state fire marshals list. Is it all that out? Because we just saw this yesterday. So I just want to make sure the way it's amended, it's saying now that there's no reference to any building materials or any individual mitigations.

Because our point has been that the way this needs to be approached is as a suite of mitigations, not one-off steps in individual products. So that's the first thing. The second issue is there's a new, there is the backlog of applications, but there's also this interaction with these new cap model regulations, which we don't know how that's going to interact with these regulations, with the existing regulations. So what happens with the cap model regulations?

It says anything that gets new added to this list automatically triggers, all your models have to go back through this extensive review process. That's a years-long process right now. And so I think while we appreciate that you're saying, hey, we'll look at this three years from now, we right now don't know how that is going to interact.

So anytime any new product, material, mitigation action gets added to these new mitigation regs, that is going to, under the current proposal from the Department, that is going to trigger all those wildfire risk models. And I don't think this is the author's intent at all. So that wasn't earlier as a question. I don't think that was at all the author's intent. I think much like we don't know how these regs are going to play out, the author can't know that yet either.

And so what we're saying is, until we know that right now, the way it looks is you add anything to the safer from wildfires list and that's going to trigger all these wildfire risk models, go back into this pre-application review process, which is like a years-long trial with depositions and a model advisor and experts.

And so while the three years wait and see is nice right now, if that comes to pass, all these models are then going to get pulled back into this process every time it gets even a single update.

So as the bill moves forward, we're sort of doing this dance of trying to figure out what do the cap model regs look like, and then what do we need to do to make sure that this bill does not then pull every model back into a review process every time they consider a new mitigation.

I don't believe that to be the intent of the author.

No, I don't think that's the intent of the author at all either.

That would be supported. I mean, there's enough delays the way it is. So with that understanding. Thank you very much. Appreciate it.

Okay, if we have no further questions, would you like to close?

Yeah. Great discussion. Covered a lot of ground. There'll be a lot of ongoing discussions. This does interact with all the other strategies that we're looking at. I think we all share the same goals of confronting this insurance crisis that our state is facing. So I would respectfully ask for an aye vote.

Okay. Secretary, call the roll.

File item three, AB 2416 Connolly. Motion is do pass as amended to Appropriations. [Roll Call]

That gets out.

Thank you.

Now, we're going to call up Ms. Rubio to present AB 2735 please.

He wanted to be be first.

Miss Rubio, you have a motion and a second. Please proceed with your Bill.

Thank you, Mr. Chair and members for the opportunity to present AB 2735. This bill arises out of clear need to protect both consumers and our water providers from uncertainty posed by the current State of California's insurance market. This committee is no stranger to the uncertainty faced by the insurance market and the impact of its ratepayers. Sources estimate that there is 20% less availability for insurance options than there were just a year ago.

AB 2735 looks to provide stability for the existing market by establishing an alternative insurance option for our states. Joint Powers Authority is basically the companies are going to pull to provide insurance. With that, I will entertain questions. I got the message.

Well, that's fine. Your witnesses.

Hi, Jennifer Capitolo. I'm the executive director of the California Water Association. We are the statewide association of the water utilities that are regulated by the California Public Utilities Commission. Here in California, we have three main types of water utilities. We have investor-owned utilities, those that are regulated by the commission, we have mutual water companies who you'll hear from today, and then we have public agencies, which is what folks are most familiar with. 85% of the state is served by public agencies.

Public agencies have this amazing opportunity to pool for their insurance, and it provides a much more affordable option for those public agency water utilities than what's available in the private insurance market. We heard a lot today of these earlier bills about homeowners insurance, but we're talking about property insurance for water utilities. So I just want to give you a quick example. We have a water utility up in the Lake Tahoe area. They were impacted by the Caldor fire back in 2021.

In 2020, they were paying $43,000 a year for insurance. Today, in 2024, their quote came back at $279,000 a year for insurance. So we're talking about a significant increase that directly impacts water affordability. And they're having to make these decisions about whether they insure themselves or they go forward and do these fire-hardening projects. This utility that I'm talking about in Tahoe just last month, in February, they sent a letter to their ratepayers.

$21 they're increasing their rates going forward just to be able to pay for property insurance. That's not all the other comprehensive insurance that that water utility needs to exist. So I just want to say this bill is entirely permissive. If any of these risk pools don't want to take our water utilities, they don't have to. They sort of get two bites at the apple in deciding whether they want us to participate.

First, they can just have their regular old bylaws say they only want to serve public agencies, but secondarily, they get another bite at the apple when they evaluate each utility company by company of whether they want to allow them into their risk pool or not. So I know we're insurance here today, but I really want to stress this is a significant water utility affordability strategy, and that's why our association is coming forward today to address this issue for our members. Thank you.

Thank you.

My name is Susan Allen, and I am with California Association of Mutual Water Companies and California Association of Mutual Water Companies Joint Powers Risk and Insurance Authority. Fundamentally, what CalMutuals does is we support about 500 very, very small systems, probably from 15 to 500 connections across the state. And we actually introduced and supported the legislation that's being amended here with this requested legislation to be able to solve a crisis six years ago where mutual water companies were having difficulty finding insurance.

We've really enjoyed the opportunity of the last six years to help systems. They're very tiny with their unique needs, and we also have enjoyed the opportunity to reinvest a portion of the income that we earn in providing resources to assist and support small systems, and that's a commitment that this legislation maintains. We basically, fundamentally, our bottom line is small systems need support for their unique needs. We are now seeing that small IOUs are no different than mutual water companies and that if help is needed, we'd like to be able to make it available. So we ask for an aye vote on this bill.

Thank you. Others in support, please come forward. Just your name and organization that you represent.

Thank you. Faith Conley with the Weideman Group, on behalf of Cal Water Service, in support.

Thank you.

Good morning, committee. Marina West, general manager, Bighorn-Desert View Water Agency, and treasurer of the Joint Powers Risk and Insurance Management Authority, JPRIMA, in strong support of the insurance options that maintain cost competitiveness. On behalf of our members now and in the future, small and large, and especially for all water and wastewater entities, public and private, which helps us maintain affordable rates for all those entities. Thank you so much.

Thank you.

Jim Champ on behalf of the Public Water Agencies Group, in support.

Thank you. Is there opposition to the bill? Seeing none. Anybody in opposition? No formal. Okay, we'll bring it back to the committee for questions or comments. Mr. Valencia.

Thank you, Mr. Chair. Just a question regarding outcomes of this potential bill. Right. Appreciative that the intent is to save the ratepayer some dollars by lowering insurance costs to cover these potential agencies. How do you ensure that the ratepayer is the one who is going to be receiving these savings when its investor-owned utilities that have stakeholders to respond to?

Yeah, the insurance is interesting. At the Public Utilities Commission, it's truly viewed as a pass-through. There's not a lot of opportunity to go out and negotiate lower insurance rates. It sort of is what it is in the marketplace. So when we apply for our general rate cases, it's a forward-looking process and we determine those costs based on the past year's insurance, on expenses. And that is directly passed on to ratepayers at whatever that insurance rate is. So there's no opportunity to earn.

I'm happy to talk to you more about investor-owned utilities, but how they earn their rate of return, how their shareholders are reimbursed for their investment, is on infrastructure investment. It has nothing to do with the other costs that are associated with providing utility service.

Thank you for clarifying that. Just wanted to ensure that that wasn't going to be a byproduct of this potential.

Right. Well, and I sat on a waterboard, which is different than what we're talking about, and we participated in a JPA on the school board. We had a JPA for, and I know cities have joint pirates authorities. What the, obviously, the goal is to make sure that we can obtain insurance at lower premiums, especially with the insurance crisis right now.

And so the goal is that these companies have the ability to, to join a pool, no pun intended on that one, but join the pool and so that they don't have to go out to the open marketplace where the rates are increasing exponentially and the burden would be on the ratepayers. So that's the goal, is to provide another avenue for these small water companies to be able to get insurance without having to go into the public marketplace.

Thank you. Assemblymember Bauer-Kahan.

Yeah. I want to thank the author for this bill. I just the other day was hearing that CAL FIRE is not able to insure their properties in a lot of the state. That's the state of things in California. Our own people who protect us from wildfires can't get insurance. And so I guess I'm curious how this wound up working. It's permissive. So I'm happy to support it today.

But I think as we see more and more people who are unable to get insurance and are in these high risk, trying to jump into these things may not be successful because they may not want the risk, but again, the bill doesn't require it by any means.

And so I do think the only reason I say that is I do think these JPAs are really powerful in helping to spread risk, and we should think more deeply about how we help make that a healthy economy rather than everybody who's high risk trying to get in together, you know, and I don't know if there's a way to do that, but something to think more broadly about. So thank you.

Thank you. Anyone else seeing? No one. I didn't hear a motion. Did I hear them again?

Yes, they were fighting.

So, okay, I apologize.

A motion by Miss Bauer-Kahan, second by Mr. Gipson. Madam Secretary, please call the roll.

It was her.

[Roll Call]

Assemblymember Rubio. Assemblymember Low, please, you have two bills before the Committee. We start with AB 2358.

Thank you very much, Mr. Chair and colleagues, for allowing me to present Assembly Bill 2358 with respect to accountability and transparency and increased accessibility within EDD and respectfully ask for your aye vote. And with me today for our technical questions. To answer any technical questions only is Norlyn Asprec with the Policy and Economic Research Council.

Good morning Chair and Members, Norlyn Asprec representing the Policy and Economic Research Council. The Policy and Economic Research Council is in strong support of AB 2358.

The Policy and Economic Research Council is a 501c nonprofit policy research organization focused on the relationship between information solutions and social and economic outcomes, and it is also a partner organization to the US Consumer Financial Protection Bureau. AB 2358 will allow Californians to effectively use and benefit from their income and employment history data maintained by EDD to gain access to more opportunity, better jobs, housing, and improved credit terms.

The bill will help improve access to lower costs mainstream credit for millions of Californians, especially to 20% of adult Californians who are deemed credit invisibles. The credit invisible, with fewer lower-cost credit options, often rely on high-cost lending, such as payday loans to to meet their credit needs. Barriers to credit disproportionately impacts lower-income members of minority communities and immigrants.

Additionally, AB 2358 will improve the functioning of the California labor market by making it much easier for job applicants to demonstrate and verify their employment history. This is particularly needed for those who have worked many jobs, have been out of the labor force for a few years or more, and or have worked at jobs where their employer is no longer in operation or is difficult to contact.

It will also speed up the time to hire by replacing a slow manual process with data that is nearly instantly available. AB 2358 is a common-sense bill whereby the state can proactively act to lower prices in a way that costs nothing to the state and can even return revenue to the state simply by using data that it already maintains. We respectfully ask an aye vote.

Thank you. Others in support please come forward. Just your name and organization you represent.

Thank you, Members. Dan Seaman, on behalf of End Poverty in California, EPIC, in strong support.

Is there any opposition to the bill? A tweener okay.

Good morning Mr. Chair and Members. Robert Horrell, Executive Director of the Consumer Federation in California. We agree with the goal with the bill, have no problem with that. We just want to make sure, make two quick points. We want to make sure that the data security in any interaction with EDD is of paramount importance. I don't need to tell this Committee that that hasn't exactly been the best historically.

And then the other point is when you have an opt-in, we appreciate that it's an opt-in and not an opt-out. You want to make sure that the opt-in is clear, understandable, and that people know what they're getting into. I think most people, if they understand what they are getting into here, will probably be interested or may be interested. But those in were the two points. So thank you very much.

Very well. Thank you. Bring me back to the Committee. Questions or comments from the Committee? Would you like to close?

I'm sorry, we had a motion by Mr. Chen. A second by Mr. Gibson. Motion is do pass. Madam Secretary, please call the roll.

File item number four AB 2358 Low. Motion is do pass to Appropriations. [Roll Call]

Count is eight. The gut count is 80. The Bill is out of Committee. We'll leave the roll open for others to add on. Moving on to AB 2892 also by Mister Low.

Thank you very much Mister Chair and colleagues. This is Assembly Bill 2892 to help assist in transportation companies stabilize increasing insurance costs. With me today are additional witnesses to testify in support as briefly as possible and respectfully ask for your aye vote.

Please go ahead.

Assemblymember Low, thank you for your leadership. Members of the Committee, thank you for the opportunity to testify. My name is Michael Ralsky and I'm the Vice President of external affairs for MV Transportation. MV Transportation was founded in 1975 in San Francisco by husband and wife who found that their disabled neighbors had frequent need of transportation services to doctors and other vital appointments. Responding to the unmet need, they decided to start a one vehicle paratransit service.

In the intervening 49 years, MV has grown tremendously and has emerged as a true American success story. MV is one of the largest minority owned private companies in the US and the largest American owned provider of para and public transit services in North America. We manage 64 public agency contracts in 47 locations across California and we proudly employ more than 4,400 people in the state. Approximately 80% of our workforce in California is racially diverse and 85% unionized, primarily through the ATU and the Teamsters.

In addition, MV operates the largest all electric bus fleet in the nation, in Antelope Valley with more than 90 vehicles. And we are working with our public agency partners to help them make the transition to zero emissions. It's important to note that in its 49 year history, MV has never not paid an insurance claim. And I respectfully ask for your support for AB 2892. Andrew.

Andrew Governar, Lobbyist, on behalf of MV Transportation. Chair, Members of the Committee, first of all I want to thank Committee staff for their patience and assistance on this measure. It is appreciated. There is no opposition right now to the Bill. We also took concerns and satisfied concerns from the credit unions and the Consumer Attorneys of California. MV transportation has been successfully operating for 49 years and had self insurance for 47 of those years.

Due to several write downs in their business, however, over $40 million, they aren't able to achieve the net valuation requirement or net worth requirement. The DMV for transportation companies over 25. Currently, right now, more than 1000 companies and individuals utilize it for under 24. Under 25 vehicles. This Bill would simply extend that policy to allow cash a surety bond to be used for companies over 25 vehicles. With that, we ask for your aye vote. Thank you.

Thank you. Do we have any opposition in the room? With us very quickly on this Bill, sorry with the mic. We are not opposed. We thank the author and sponsor for working with us and the Committee for the Amendments. Thank you. Thank you.

Good morning, Madam Chair. Robert Herrell with the Consumer Federation California. No position on this which is note appreciate the recommended Committee amendment on page three of the analysis, our preference would be that the company go with an admitted insurer. We have seen, particularly in the personal space, but also even in the commercial space.

If you venture out into the surplus lines market or the non admitted insurer, you do not have regulation and protection from CDI at anywhere near the same level and consumers have been left holding the bag. So as the Bill moves forward, I think that's something that should be contemplated and perhaps that's already the case for the company in question. Thank you.

Thank you. Okay, I'm going to bring it back to the Committee for questions. Assemblymember Bauer-Kahan, do you have a question?

I do. I just want clarification because I think I was confused. So is this something the DMV already does?

For companies that under 25 vehicles they. Yes, they already do.

They already do it. So how much more. So, my concern about the Bill fundamentally is I don't think any Californian thinks the DMV is doing a great job with their current responsibilities. And so I'm always concerned about giving agencies additional responsibilities who we really need to get good at what they're currently charged with, which I'm sure the author understands that concern. So I guess I just am.

That's what if you could address that, like how much more responsibility is this such that we should be concerned they'll never get the Real IDs out?

Actually, this really puts us in line with where other states are. In the 26 other states we do business, they actually more closely align it to ability to pay, which is why a cash or a surety bond is used. So really right now the DMV already accepts cash and utilizes it for more than 1,000 individuals. So really from a policy perspective, there really wouldn't be much more for the DMV to do than they already do right now.

It simply would be able to accept cash from companies now that are over 25 versus right now when it's under 25.

Just to share the Echo, the same mechanic comments as fellow colleagues on insurances, on the utility of the DMV, and share that concern too. And we'll keep that in mind should this Bill move forward as well.

Okay. Thank you, Mister Low.

Do we have any other questions? Oh, I'm sorry.

Yeah. Madam Chair Members, I had no interest whatsoever in this Bill and have not read it until about 2 seconds ago. But I now have a little bit of interest following the last comments. And that is, I represent the California Insurance Wholesalers Association and the Surplus Lines Association. Both of those associations do business with the non admitted or surplus lines market. I just want to make a comment that the surplus lines market actually has a better solvency rate than the admitted market.

And historically that's been true. So when we look at the ability to get insurance, having the options of using both markets is really the best way to go. Thank you very much.

Okay, so before you close, I just want to clarify, are you taking the amendments?

Yes.

Yes.

Thank you very much.

Committee amendments. Okay, thank you. Would you like to close?

Yes. With accepting the amendments from the Committee analysis as reflecting Committee analysis and respectfully asked for aye vote.

Thank you. Secretary. Call the roll, please.

File item.

Move the Bill. Thank you.

File item number five. AB 2892 Low motion is do pass as amended to transportation. [Roll Call]

Okay, thank you. That bill gets out. Okay, Assemblymember Valencia, would you like to present 31 AB 3104. Whenever you're ready, Assemblyman. And welcome, Assemblman d Cooley. It's nice to see you here.

Wonderful and buenos dias, Madam Chair and Members, I'd like to thank the Committee Chair and also her team for their wonderful work on AB 3104. And also acknowledge my team members, Aaron Ryberg and also Sarah Bridges, who have done a diligent job on this. The current regulatory structure of the travel insurance market in California has left consumers with less competitive market, thereby negatively impacting prices and limiting coverage options.

AB 3104 adds model language from the National Association of Insurance Commissioners and the National Conference of Insurance Legislators, which follows 35 other states. California consumers would benefit from the consumer protections industry uniformity and regulatory clarity that enacting the Model Act would bring. AB 3104 is a step in that direction.

So it also seeks to increase transparency and public trust in the purchasing process by requiring specific disclosures be made in the policies, adding in consumer protections as mentioned, and clarifying and updating the definitions and components of travel insurance to bring uniformity to the market as a whole. With me today, I have to provide some testimony. Former Assemblymember and past President of the National Council of Insurance Legislators, Mr. Ken Cooley, and then also for any technical questions, John Wegner with the US Travel Association.

Good morning, colleagues. It's indeed an honor to be here in support of this bill. I'm here as an officious intermeddler. I'm not here as a compensated advocate, but I actually feel this is a very important bill because the elements it puts forward of a subject matter that is not common, although it's very important to consumers and one that the National Association of Insurance Commissioners has weighed in on.

Historically here in the State of California, actually for 150 years, the rule of law has been 12921 of the insurance code, the Commissioner shall perform all duties imposed upon the Commissioner by the provisions of this code, meaning insurance code or other provisions regulated business of insurance. Insurance is regulated exclusively at the state level. And that means if you are a lawmaker sitting on this panel, you set the table for insurance. And the role of the NAIC is actually the 50 states.

The regulators get together to discuss common issues of insurance and come up with recommendations, but they do have to come back out to the state. Some of you may know this. Probably not. I started dealing with the subject matter of insurance for the Legislature 47 years ago last Thursday. I came up here as the top eight of the rules Chairman, who was an independent insurance agent, Diane Papin's dad.

I eventually, under Willie Brown, was the chief counsel running the banking insurance Committee in the late 1980s for this House and eventually the State Senate, nine years ago last Saturday, asked me to jump in and run the Senate Insurance Committee because at deadline time they lost their analyst. I want to acknowledge Claire's analysis of the bill, which is excellent. I've seen many an analysis in my career and written many analysis. It's very well done.

So this bill reflects insights of the National Association of Insurance Commissioners in response to a bill that my trade Association, National Council of Insurance legislators first brought forward. And something for you as lawmakers to take note of. Regulators are like us. If constituents in their state are unhappy with some face of insurance, they cry foul. And if you just reflect for a moment on travel, so much of travel today is done by people who are retired. They spend a lot of money on travel.

If they're buying travel insurance products, if they don't perform the way they expect them perform, they're going to scream. And so it is extremely important for you to know that this bill is patterned on something that came out of the scrutiny of the NAIC, the C Committee dealing with property and casualty, which over the years I've attended many times, and it's designed to kind of present a common approach to travel across the nation.

I want to say to you that the bill has some language dealing with tax, but we, insurance companies are basically exempt from taxation. They pay a gross premium tax. It's paid upon people that have a connection to the state all this bill does, it doesn't touch the revenue tax code that deals with these matters. And the tax is actually in the constitution. All it does is it makes clear who the incidents of the tax, they're already going to pay the tax.

It just explains the incidence of the tax. That's actually, clarity is always good. And any event, I just think this bill is actually terrific. It provided additional disclosures. It provides an opportunity for people to review it for up to 15 days and decide they don't want it to get a full refund. It provides clarity for what are the provisions you've got. It covers repatriation of remains, which is not a, not something anyone really wants to think about.

But actually, if you're a family in that situation, that's vitally important to know in advance. And anyway, I just am here because I think the bill is important. Improving the experience of consumers in California. Travel is very important in our state. That's another reason to take note of it. But really, as I say, this starts educating this Committee Members on the relationship of us, the NAIC, our role in setting the table for insurance in the state.

And in that sense, I just feel it's an outstanding bill. So honored to be here with my colleague, Mr. Valencia.

Thank you. Do we have any additional support in the room?

Members, John Winger with Sloat, Higgins, Jensen, and Associates. One of our clients is a member of the US Travel Insurance Association, which is the sponsor of the bill. They wanted me to convey their strong support for the bill. Thank you.

Thank you.

Mark Sektnan with the American Property Casualty Insurance Association in support of the bill.

Thank you. Do we have any opposition in the room?

Just comment. No position on theb. Robert Harrell with the Consumer Federation of California. As someone who's attended more NAIC meetings than I care to recall, and even a few NCOILs, though I'm sure not nearly as many as Professor Cooley has, I would just note that there's a few provisions specifically in the bill that we think could be strengthened up a bit. For example, I think the 15-day free look, we had a bill, Madam Chair, you had a bill earlier in this Committee.

The standard usually is 30-day free look. I think there's a way to write that to expand the 15-day to 30-day unless the trip is imminent. We would like that to be explored. We would just note that while there always are exceptions, historically, the NEIC models, and to a certain extent the NCOIL models, have not quite been as consumer-protective as what states like California have wanted to do to protect consumers in the insurance marketplace.

To that end, we would want to make sure that we like that. The fact that it's an opt-in, not an opt-out. Something I mentioned on another bill earlier today, Madam Chair, we would want that to be prominent and clear. So again, if people understand, then they get it. In a practical matter, Members of the Committee, the way that people tend to buy travel insurance is literally when you complete the transaction, it's right there.

You scroll down, there's an exclusivity there that is antithetical to a free and open marketplace. I think that is the bigger challenge and problem here that faces consumers. They don't know that they have other options. They just see the option right there which has a deal with the airline or whoever you just booked something with. I think that's the bigger challenge here, longer term. Thank you.

Thank you.

Hello Chair and Committee Members, Claudia Mildner, Assistant Chief Deputy Legislative Director at California Department of Insurance. We are not formally opposed to this bill. However, we have been talking to the sponsor extensively on this. We've shared our concerns, they are working with us, and we look forward to continue working together. Thank you.

Thank you. Okay, now I'm going to bring it back to the Committee to see if we have any questions for the author. Mr. Alvarez.

Maybe just an opportunity to respond on the concerns on the 15 days, 30 days, just your take on that and then. Yeah, as a consumer, I think we've all seen that ability to check that when you're doing your flight. And your thoughts on that. Just curious.

Absolutely happy and open to continuing the discussion on those topics. I pride myself in ensuring that the California public has transparent and equitable information. So happy to address that and figure out what's the best approach to this bill.

Okay, seeing no other questions, would you like to close Assemblyman?

Thank you Madam Chair. In a time when we are dealing with an insurance crisis, I think it's pertinent that we figure out within the insurance sector a way to be efficient and a way to have parity throughout the market. And I think this is one step in that direction when it comes to travel insurance. So with that, I respectfully ask for an aye vote. Thank you.

Thank you. We've already had a motion and a second, so Secretary, please call the roll.

File item number nine, AB 3104 Valencia. Motion is do pass to Appropriations. [Roll Call]

Okay, congratulations, that gets out. And it was very nice to see you, Mr. Cooley. Okay, at this time we're going to allow Members to add on.

[Roll Call]

Thanks for coming back. The Assembly Committee is adjourned.