Senate Standing Committee on Insurance

The Senate Committee on insurance will come to order. Good afternoon, everyone. Thank you for joining us here today. We are holding our Committee hearing in the old street building. I ask all Members who are listening to please join us. It's going to be a short meeting. Hopefully we have two bills, but before we proceed, we're going to establish a quorum. Madam Assistant.

[Roll Call]

We have established a quorum as stated. We have two bills, so again, hopefully it will be short. And again, I'm encouraging all Members of the Committee to. To join us so we can leave quickly. First up, we have.

I don't see Mister Rodriguez, so we're going to welcome Assembly Member Blanca Pacheco, who will be presenting Bill AB 2743. Welcome. Assembly Woman and when you're ready, you may proceed.

Thank you, Madam Chair and Senators, 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 has received bipartisan support and provides an appropriate adjustment and financial responsibility limits for peer to peer car sharing platforms.

The current version of the Bill reflects months of conversations with the opposition and good faith attempts to mitigate their concerns and provide important clarity on the bill's intent, which is to set financial responsibility limits in 2025 to 45,090k for bodily injury and 15k for property damage.

Increase, three times the financial responsibility limit for 2035, require new robust consumer disclosures and create new penalty provisions. The Bill also includes the savings clause language requested by the consumer attorneys of California. AB 27. I can't even talk.

AB 2743 seeks to strike a balance between regulation and growth, ensuring that peer to peer car sharing remains viable and beneficial for both users and providers. With me today to testify in support of AB 2743 are Larissa Cespedes on behalf of TURO and Andrea Devoe on behalf of Technet.

When you're ready, can we bring them to the. When you're ready. Yeah, you can come into the front. You may begin. I'm going to allow up to four minutes for each side to present. Welcome, ladies. Whenever you're ready, you may begin.

Thank you. Can you hear me out? Yes. Can you hear me? Okay? Thank you. Chair and Members, Larisa Cespedes here on behalf of Turo. Turo is a peer to peer car sharing platform based in San Francisco with over 300 employees. Here in California.

We have 19,000 hosts, many of whom are in your district, who rely on the extra income that they earn from their ability to share their vehicle on this platform.

First, I want to express sincere thanks to all of the stakeholders who have been part of the conversation for the last year and a half, in particular the Department of Insurance.

And while we haven't the insurers and unfortunately we haven't addressed all of the stakeholders concerns, but we do hope that we can continue to work on this issue in particular because this deals with an immediate crisis for the industry with the increase of the limits in 2025 because of a Senator Dodd Bill passed by this Committee a couple years ago.

And the Bill also includes a 2035 trigger to increase our fr limits back to three times to ensure that we will be back at the table to address many of the issues, in particular the data that we think needs to be collected in order to inform a 2035 rate.

But at any rate, this is critically important for Turo and all of the hosting users here in California. We appreciate your support.

Thank you.

Thank you. Good afternoon, Madam Chair and Members. I will keep my remarks brief. My name is Andrea Deveau. I'm representing Technet. Technet's diverse membership includes dynamic American businesses ranging from startups to the most iconic companies on the planet, and represents over 5 million employees and countless customers.

We are here today in support of AB 2743 and thank Assemblymember Pacheco for her work on this policy in the Bill.

We fully agree with the testimony provided by my colleague here representing Turro and just want to underscore that AB 2743 includes robust customer notices and penalty provisions ensuring that Californians who take advantage of these car sharing services and innovations remain protected and well informed when driving in California.

We respectfully request your support of AB 2743 and thank you.

Thank you. Now, I would go up to anyone in this room in support of the Bill. You may come up to the podium. Thank you.

Jamie Huff, on behalf of the Civil Justice Association of California in strong support. Thank you.

Thank you.

Good afternoon, chair Members. Catherine Charles, on behalf of the Chamber of Progress and support, thank you.

Seeing no other support, I will now like to invite the lead opposition to join us. Join us in the front here. Thank you. I'll give you the same courtesy of 4 minutes. Thank you. You may proceed when you're ready. Thank you so much for being here.

No, now it's on. Thank you. Thank you, Madam Chair and Members. Robert Harrell, I'm the Executive Director of the Consumer Federation of California. We have an opposed, unless amended, position on this Bill. I want to thank the Committee. I think our, our logo got missed in the submission.

So I understand it's been resubmitted and is now accurately reflected in the analysis. The concern that we have here, and I should note that I had spent almost half a dozen years at the Department of Insurance as a deputy Commissioner, and so I'm not unfamiliar with the workings of the Department.

The problem here, as we see it, is a data gap problem you don't have. The Legislature is kind of being forced into an issue where when you opine on such a matter, you want to have good data. The Dodd Bill that the supporters referenced, which was many, many, many years in coming, it was rife with data.

Senator Dodd, we remember working on that issue. CFC historically has not taken a position on fr limits per se, but the data is the key here. And I think that the key thing that we think is missing in this Bill is the data element. This doesn't need to be solved in a Bill, necessarily.

Just have the Department of Insurance do a data call. And data calls are not a binary on off switch. It's not just, you do a data call or you don't do a data call. There are many, many iterations in between that can cover a broader scope, a narrower scope, obviously not the Department anymore.

But it strikes me that this is not the widest data call known to man, and it can be narrowly crafted in such a way so that before the Legislature acts, you have the relevant information to be able to make an informed policy decision. That's the heart of it.

I'm happy to answer any additional questions as it comes up, but we, while we continue to work on this, we would urge a no vote and urge the Committee to have the author and sponsor really tackle that data issue, or have the Department of Insurance tackle that data issue. Thank you, Madam Chair.

Thank you so much. Sir, would you like to proceed? Thank you.

Thank you. Madam Chair, my name is Connor Kelly. I'm here on behalf of the Consumer Attorneys of California. I have the privilege of representing individuals in personal injury and wrongful death cases, and unfortunately, my office has been involved in multiple cases involving peer to peer car sharing, with disastrous results. 2019 and 2020.

There were roughly 35 to 40 fatalities on San Francisco streets year wide in each of those years. There was one of the fate. One of the fatalities in both of those years involved a driver operating a vehicle that was procured through the peer to peer service.

There were commonalities that make this particular enterprise concerning for consumers, not that are renting the vehicles, but that are on city streets, like where I live, San Francisco. Vehicles that were performance vehicles. These were not sort of everyday, you know, Toyota Corolla type cars.

One involved the Porsche Cayenne, the other involved a supercharged Tesla going at high speeds on city streets, resulting in fatalities to other users of the roadways. The current system, as it's set up and was put in place, which is trying to be changed, involves a system where the minimum limits are three x. What people who are operating their own car requirements.

That is a small price to put on the companies who are operating these businesses and have multi $1.0 billion valuations as they try to go public, so that consumers who are on the roadways and are hurt, injured or killed by individuals who procure performance, high speed vehicles through these platforms, are protected to some degree from the disastrous results that can occur in these types of cases.

And CAOC has been more than hospitable in trying to offer amendments. We offered to agree and not oppose a reduction of the limits to two times, which is more than reasonable. Still not enough, given the type of harms that we're seeing on the ground, on city streets.

But that has been rejected and without further amendment and without further data, which, again, these companies who are pushing for this Bill possess about numbers of accidents, severity of accidents, numbers of claims, that is all data which is in the possession of the companies that are pushing this Bill forward.

Without further data, I don't see how this Committee can decide that the proposed one x limits are appropriate. We have a system in place of three x. There's a change that's being sought, and there's really been no data or explanation justifying that change.

I'm happy to answer any questions based on my experience, but I think the Committee should know that information.

Thank you for your testimony. Now, before questions, I will bring it back to anybody in opposition, and here in this room. You may come up to the podium. Okay, seeing none, I'll bring it back now to the Members. Any questions? Any questions from the Members, Mister Cortese?

I don't have questions on it. This is. The Bill itself is a close call. If it's appropriate this time, I would just indicate that I'm going to fall on the side of supporting it, because maybe this is from having been an author just long enough to realize that.

I think while these issues are very much linked in real life, they may just need to be dealt with in separate vehicles, in separate bills, because I think that the data issue is, has obviously proven to be just an enormous issue that needs to be resolved with its own deep dive and its own debate that probably needs to work its way individually through the Committee process here in the Legislature.

So that isn't, I just want to make it clear that it's not that I'm dismissive about what's going on there. I think it's important, it's critical and it needs to be addressed. But we're getting pretty late in the session to work it out.

I would hope it could be worked out if the parties could continue to talk somehow, but in the absence of that, I'd hate to lose what we do have at this point. And as I said, hopefully somebody comes back and does some more work in the future. Thank you.

Thank you. Senator Dodd, do you have some comments?

Yeah, just to be brief, I concur with the comments made by Senator Cortese. You know, we'd rather, we prefer that there be no deaths right on our city streets.

I'm not sure that one accident out of 50 in the City of San Francisco in a year or something that rises to the level of the kind of concern you're vetting on this. But that said, if that's a policy for down the line, I don't have a problem with it. So I'm going to support the Bill today.

Thank you Mister Dodd. Anybody else? Senator Alvarado. Gill. Thank you. oh, I'm sorry. You said move the Bill. Thank you. I want to just make really brief comments because I don't want any consumer walking away thinking that we're not focused on consumers and that we don't care about consumers.

So I do want a little bit more of an explanation here. And I did hear your comment about there was an incident with a fatality with high speed in a city street.

But I mean as Mister Dodd stated, I think this happens just generally we have irresponsible drivers, whether it's your car or someone else's car, it just boils down to that one driver.

So because I had concerns about the data just as well as you did, and so I just want to probe a little bit, bit more, if I may, because I know that we don't have that time to go deep into the data, but there are structural issues or rather technical difficulties in obtaining that data that's going to require a lot more conversation.

Can you talk about the challenges? So again, I want everyone to understand why right now in this moment it's not possible.

Absolutely. Madam Chair, I think Mister Kelly and Mister hall brought up some interest. You know, good points. One, the Department of Insurance could do a data call. I think if we included that data call in this Bill, we would in fact garner some opposition and there's some reasons to that. One, that data is not currently being collected.

So when you are in an accident, and I apologize for, I know there are some uninsurers that will probably explain this better than I will, but I'll just explain what they've told me, which is when you're in an accident and you're driving someone else's vehicle, there's no designation as to whether or not you are driving your mother's vehicle, a rental car or a car you secured through Turo.

So it's just General data about other cars being driven, not to the granular data about peer to peer. So we need to work on that.

Also, we understand that there's a lot of other major issues that are occupying insurers right now and the Department, and so I think we need some time to allow for them to focus on very critical issues for California consumers, not that this isn't one of them, but very critical issues.

So hopefully we can have some more time to do that. And that's why we have that 2035 figure in there, because we know that we cannot continue to operate after 2035 if we don't have that fixed. And so that's going to encourage us to come back to the table.

What you have is a Bill that was carefully crafted by some great work by, I forgot to thank the author of the Bill and also the Committee staff in the other house to try and try strike that balance of having the consumer protections that we all want and desire, but also ensuring that we can continue to have great mobility options and the option for these hosts to continue earning income in California.

Thank you for that. And I know just based on what the author stated, and I believe you reiterated, there has been good faith efforts in trying to resolve this. And by evidence that part opposition has now sort of stopped opposition unless anybody disagrees here. Right.

So it just speaks to the fact that you've been working on the Bill. So I appreciate it. And again, based on the conversations we've had, you know, it's just not easy to get to this point. And at this point either you move forward with what you have or the bill's going to die.

So I agree with both of my colleagues on my right that at this point it's something that we want you to continue to work down the line. And I appreciate the trigger, 2035 trigger. That means it's not something that's just going to disappear.

It'll force everyone back at the table in the process to get to a 2035 agreement, if you will. So with that, I'm going to turn it over to the author. Would you like to close?

Thank you, Madam Chair and Members, and thank you for allowing me to present this very important Bill. Conversations have been had. We're going to continue having conversations, and I also want to thank.

And don't normally do this, but I also want to thank my Legislative Director, Kira Paul, who's here also for all of her hard work as well, because multiple conversations have been held. And we are going to continue those conversations. And I respectfully ask for your. I vote.

File Item two, AB 2743 by Pacheco. Motion is do pass to Judiciary Committee. [Roll Call]

Thank you. Do we have a motion? zero, I think it was Alvarado-Gil. Please call the roll

The measure is six to one. We'll leave it open for those absent Members. Thank you very much. We will now move. Sorry, six to zero. My apologies. And I'll be on call for those Members that are absent. We will now move over to Assembly Member Rodriguez, who I see in the audience will be presenting AB 1505.

I invite those witnesses in support to join us up here, as well as those opposing the Bill. Welcome, Assemblymember Rodriguez. When you're ready, you may begin. Thank you.

Thank you, Madam Chair Members. Thank you for allowing me to present AB 1505. AB 1505 would establish a narrow expansion of closed session authority under the Bagley Keene Open Meeting act to allow the governing board of the California Earthquake Authority to meet in closed session when discussing competitive insurance strategies.

The Bagley Keene Open Meeting act requires meetings of state bodies to be agendized and made open and accessible to the public. This is generally good practice for transparency, but it also can lead to hinder the work of the state body. Like the California Earthquake Authority.

California Earthquake Authority is responsible for obtaining and managing earthquake insurance policies for its participating homeowner insurance companies. Insurance and reinsurance markets are competitive and expensive, and if CEA's governing board discusses negotiation strategies in public, they risk jeopardizing their ability to secure fair Low rates for their customers.

AB 1505 is modeled after similar exemptions provided to the California State Teachers Retirement System and the California Public Employees Retirement System. This Bill ensures that CEA can discuss reinsurance negotiations in private while still providing that for governmental transparency by requiring notice of what generally will be discussed in closed session, an opportunity for public comment.

With me to answer any technical questions are Tom Welsh, CEO of the California Earthquake Authority, and Susie Hernandez, Legislative Director for the California Earthquake Authority. With that respect, we ask for your aye vote.

Thank you. Welcome, both of you. You have up to four minutes if you choose to use them. We hope you don't, but thank you for being here. You may proceed when you're ready.

Madam Chair Members, thank you very much. We're happy to sponsor the Bill and appreciate the Assembly Members support. And we would ask for an aye vote.

I'm happy to answer any technical questions that you have about the Bill, but this is really about protecting policyholder interests for those customers who buy our insurance product and help themselves and their communities prepare for damaging earthquakes.

Thank you. How about yourself? You may proceed when you're ready.

Thank you for hearing our Bill, and we're just here to answer any questions you may have. Thank you.

Thank you for that. I'm looking for anyone wishing to speak in opposition to this bill.

Seeing none, anyone in the public that wishes to express their support for the bill may come up to the lectern. Thank you.

Dylan Elliott, on behalf of the San Francisco Board of Supervisors in support. Thank you.

Thank you. Anyone else wishing to speak in support now I'll go to the opposition. Anybody wishing to oppose the Bill? Okay, thank you. I will now turn it over to the Members. Any questions? Okay. Seeing no interest. Thank you so much, Assemblymember Rodriguez. I will just turn it over for closing.

With that said, I respectfully ask for an aye vote. Thank you.

Thank you very much. We'll now call the roll, please. Thank you. Oh, wait. I think it was Mister Cortese. Yes, moved by Mister Cortese. Please call the roll.

File Item one, Assembly Bill 1505 by Assemblymember Rodriguez. Motion is due past judiciary. [Roll Call]

The measure has six. We'll leave it open for those absent Members. Thank you so much, Assembly Member. And if anybody is listening, those Members that are absent, we are getting ready to close. Please make your way here. Thank you so much.

So I believe we're missing Senator Caballero. Okay, thank you. The Senate insurance Committee will take a brief recess and we'll come back the insurance Committee will now come to order from recess. And we have two bills up. We're going to call the roll first on Bill AB 2743. Madam Secretary, please call the Roll AB 2743 by Pacheco. .

[Roll Call]

The Bill has 7-0. The Bill passes now. Can you repeat the motion? And the vote on Assemblymember Rodriguez's Bill.

[Roll Call]

That Bill is out 7-0. Thank you so very much. We want to thank all the Members that showed up and those that came to visit at this point. The Committee hearing is adjourned. Thank you.