Senate Standing Committee on Insurance

The Insurance Senate Insurance Committee will come to order. Good afternoon everyone. Senators, Members of the audience and those watching remotely as we convene today for our first hearing. We do so against a backdrop of yet another devastating wildfire season. One that will leave scars in El Tedena, Pasadena and all the surrounding communities.

I personally have the opportunity to tour it's next to my cities and the impact to our communities. The emotional and economic toll is really heart wrenching and incomprehensible.

So I wanted to take a time to just say to all those that were impacted, as we know, a lot of loss of life, property and, and they're still trying to, to recover. We want to say that we're thinking about you and our hearts go out to you.

As we know, these wildfires are no longer an isolating event. They're part of a growing crisis fueled by a combination of climate change, prolonged drought conditions, aging infrastructure, and evolving land use patterns that create a perfect storm, turning what used to be a seasonal challenge into a year round disaster.

And we need to do better and we need to be better prepared in the face of this. Insurance remains a critical lifeline for homeowners, businesses and communities seeking to rebuild. Yet we're seeing rising premiums, less insurance options, withdrawal from high risk areas and an increasing strain on the insurance market, leaving Californians even more vulnerable.

Clearly, we cannot do business as usual and that is why we're here today. As a Committee, we have a responsibility to ensure that our insurance system remains robust, fair and accessible.

So today we will hear from stakeholders and experts to help us understand the market and better inform our decisions as we craft policies that balance risk with affordability and accountability with sustainability, while at the same time exploring solutions that promote resilience, encourage mitigations and provide incentives to homeowners whenever possible.

We need to ensure that the insurance market remains resilient and that the insurance, the insurance also remains a tool for recovery. And it's not something that families have to worry every single month where they're going to get insurance. And at this point, I would like to invite our Vice Chair who just joined us. If he'd like to make any opening remarks, you may do so.

Thank you very much, Madam Chair. I think you stated the issues fairly well. The fundamental problem that we're faced with is a regulatory framework that was created about 40 years ago. I think we can all agree that was quite a different time, quite a different market, quite a different environment, and it's not working real well for us.

So I'm looking forward to the testimony to provide us some guidance as to where we go from here. And we absolutely have to go from here to ensure, as the chair said, ensure that we have insurance. Thank you.

Thank you for that. And what he's referring to is Prop 103 that voters passed in 1988. So you are correct, I was a different time and words like climate change were not very often used. So we're going to hear from our our panels today.

But before we move forward to our hearing, I will notify the presenters as they come up how much time they'll have to present and I will also give you a few minutes warning so that you know when to wrap up.

First, we will be hearing from all the panels and presenters on the agenda prior to taking any public comment. Once we heard all presenters, we will allow the public to come up and say a few words and direct the comments to the topics on today's agenda. Only right now, I would like to invite our first panel up.

That would be. We will start with the Department of Insurance and the goal is to share their assessment of the fires and update us on their sustainable insurance strategy. We will start with Michael Martinez. Let's welcome the Chief Deputy Commissioner for Ricardo Lara and Dr. Michael Peterson, Deputy Commissioner for Climate and Sustainability.

Thank you both for being here. You will both have 15 minutes between you and I will let you know when you're halfway to ensure that both get equal time to speak. And when you're ready, you may begin. Thank you. You may begin when you're ready. Thank you.

Thank you. Chair Rubio. Good afternoon Members. Michael Martinez here on behalf of Insurance Commissioner Ricardo Ladup serve as Chief Deputy Commissioner at the California Department of Insurance. Joined here by my colleague, we say Professor Mike Peterson. Dr. Mike Peterson, he's our Deputy Commissioner for Climate and Sustainability.

Commissioner Lata was not able to be here otherwise he would he had previously scheduled engagements. But that said, we would love to have him be here and testify before you at a subsequent hearing.

I want to thank the Committee for inviting us to be able to describe what actions the California Department of Insurance has done to assist those affected by the recent devastating wildfires in Southern California as well as what is the status of Commissioner Lara's sustainable insurance strategy in light of these devastating fires.

As you know and as what the chair had stated that our communities across California are facing one of the most pressing crises of our time. Climate driven disasters that threaten lives, homes and communities. As state leaders, we are on the front lines here. When disaster strikes, Californians look to us for answers.

And I want to tell you here, we are your partner in creating solutions that work. Our job at the Department of Insurance is and always has been to protect consumers, hold insurance companies accountable, and make sure California's insurance market is stable, sustainable, and working for the people who need it most.

Californians across our Golden State, which is considered to be the world's fourth largest insurance market, the Los Angeles wildfires were absolutely devastating. Entire neighborhoods were reduced to ashes. Families were forced to flee with at times, very little, little time, little of their. Of their just material possessions.

And now, as we enter recovery, our focus is to ensure every wildfire survivor gets the benefits they are entitled to and gets them quickly.

Commissioner Latta has taken a series of actions enforcing strong consumer protection laws that have been on the books for many years, as well as some new laws that we have worked on with many of you here today to pass in the past several years.

We are proactively working and responding to evolving threats which today include climate change, rising global reinsurance and inflation costs, and a tightening national property insurance market, among other increasing cost factors. Since 2019, there have been more than 100 disasters, several of them catastrophic here in our state.

And the hard working and dedicated Department staff have put boots on the ground after each of those disasters, responding quickly, appropriately, and with tremendous empathy to help and protect consumers during these challenging years.

In fact, since 2019, please know that Department staff have participated in more than 130 disaster recovery centers and local assistance centers across the state following all major disasters and have recovered more than $150 million for wildfire policyholders through handling their consumer claims and holding market conduct exams on insurance companies. So immediately during the wildfires.

And Mike Peterson here will go through our PowerPoint. I don't know if it's. I presume that it's being. You're able to see it or not.

Are you able to put the PowerPoint? We have copies. You may proceed. Let's see if we can get that fixed.

Great. All right, so immediately we're on slide two for. For those that are following in hard copy. Immediately during the wildfires, our focus was to protect consumers and help get them out of harm's way safely and securely while working to bring immediate stability to the insurance market.

Some of Commissioner Latta's major immediate actions to protecting consumers include ordering insurance companies, including the California Fair Plan, to provide advance payments on claims so wildfire survivors could cover immediate expenses like rental housing during that immediate need.

This included at least four months of additional living expenses and at least 30% of personal property losses up front, again, cash in hand without requiring a detailed itemized list.

And that was important because it really was being able to get consumers the money that they need per their coverage limits, per their policies, that they have paid on time, that they have paid in full to their insurance company so that the insurance company was able to be there in times of this disaster.

And the Commissioner went beyond that and actually requested, as was done in 2018 and 19, for insurance companies to actually go beyond existing law, beyond those those minimum coverage limits paid cash uphand up front.

And we just announced or publicly unveiled last Thursday that a majority of homeowners insurance companies heeded Commissioner Latta's call there it is to exceed current legal obligations to provide at least 6.75percent of contents coverage without a detailed inventory, including some insurers who agreed to provide 100% of those coverage limits.

As a related note, Commissioner Lotta is proud to sponsor SB495 this year authored by Senator Ben Allen that would require insurers to pay 100% of their contents coverage without needing a detailed inventory list.

Another action was issuing one year residential property insurance moratoriums preventing insurance companies from canceling or non renewing insurance homeowners insurance policies in the SoCal wildfire affected areas affected by the Palisades, Eaton Hughes, Hearst, Lydia, Sunset and Woodley fires that totaled about 104 zip codes and representing 924,000 policies.

And again, those policies under existing law today are protected from cancellation and non renewal for their homeowners. It's a law that the Commissioner was proud to author when he was a fellow Senator back in 2018 and as a Member of the State Senate and know that that law has been incredibly effective since 2019.

In fact, Commissioner Lata has issued 361 year moratoriums as a result of wildfires under a Gubernatorial proclamation as a result of more than 110wildfires since 2019, thus protecting more than 4 million Californians across the state from this insurance nonrenewal and cancellation.

In addition, Commissioner Lott is proud to sponsor Senate Bill 547 this year, jointly authored by Chair Rubio and Senator Sasha Rene Perez, known as the Business Insurance Protection act that would actually extend that residential moratorium law to actually commercial policyholders for for that one year as well.

Another action was creating an insurance fraud strike team and it is unfortunate that there are unscrupulous actors out there that will take advantage of individuals affected by wildfires.

We've seen it and we unfortunately continue to see scammers out there and so we are warning the public about unlicensed public adjusters, fraudulent contractors and recovery scams, among other enforcement and investigation activities.

We have, we are very proud that since 2019, the Department has under existing grant funding program, we've allocated over $550 million in funding to District Attorney offices statewide in order to combat and investigate insurance fraud again across the State of California.

And then in addition, we directed all health insurers to submit insurance emergency plans detailing how they will ensure consumers can continue to access much needed medical care and life saving prescriptions during this time and in wake of the wildfires.

Michael, don't mean to interrupt, but you have five minutes. Thank you.

Of course, thank you.

Thank you.

We have hosted a weekend insurance support workshops. We've had several last month and this month in order to help insurers with their benefits understand their policies and actually help them get checks in hand. And we've had several insurance companies that has been in partnership with them. Actually there we've had warm handoffs.

We've assisted over 7,000 wildfire survivors directly in those insurance support workshops. We've ordered insurers, including the Fair Plan, to properly investigate all consumer smoke damage claims. And that's important because we know that we continue to hear and hear consumer complaints in regard to consumer smoke damage claims.

And we want to make sure that insurance companies know that they cannot summarily deny smoke damage claims without a thorough investigation.

We've ordered insurers, including the Fair Plan, to continue providing additional living expense coverages for wildfire survivors until their homes are deemed habitable as a result of fire, debris, ash and other hazardous substances, subject of course, to, to applicable statutory timeframes and other any policy limits that may exist.

And that's something that's also very important as the, as the County of Los Angeles undergoes their wildfire debris removal program that actually can be free and no out of pocket costs to policyholders if they opt into that program.

And we also launched a first ever public consumer claims tracker that just this past Monday we showed publicly on our website that $12.1 billion in claims has been paid out. And so the regulator we are watching, we are involved with active claims and insurance companies are paying again to the tune of $12.1 billion in claims.

And the more to come for wildfire survivors numbering more than 37,000 claims to date for these so called wildfires. As I transition to my colleague, I want to say that we are not just responding to disasters, we're also laying the foundation for a stronger, more sustainable insurance market, one that provides real solutions for California's communities and consumers.

And we have already been seeing that progress. We have seen more companies like Farmers Insurance, AAA, SoCal, AAA, NorCal, under CSAA, and Mercury Insurance, among others, continue to write new homeowners business. And those are California companies that have never left our state. And continue to write here new business, new homeowners business.

We expect more companies to come back and write more in our market. As Commissioner, Latta's sustainable insurance strategy is fully implemented. For a look at the overall strategy and progress of the Department enacting the Commissioner's sustainable insurance strategy, I will now turn it over to my colleague, Deputy Commissioner Mike Pewter, to to continue on.

Thank you, Michael. You have very limited time, so let's see if we can wrap it up in three minutes. Thank you.

Thank you, Michael.

I'll provide a brief update on the sustainable insurance strategy. Thank you very much, Chair Rubio and Committee for letting us speak today. In December, Commissioner Lara finalized the largest insurance market reform in 30 years, and the Department is now moving forward at unprecedented speed to implement that strategy and monitor the response of the insurance market.

I want to share for the Committee today that the implementation of our sustainable insurance strategy is not being jeopardized by the Los Angeles fires. In fact, the fires further embolden us to continue to move quickly to fully implement our strategy because a competitive fair insurance market is where people have real choices, not just last resort options.

I'm going to give you a very brief overarching review here. Up on the screen, you'll see a snapshot of the multiple components that make up this sustainable insurance strategy. The first component is to improve the Department's rate application approval process by holding all parties accountable.

Last August, Commissioner Lara issued a bulletin to implement comprehensive rate review reforms so that filings can move through the Department's process faster. Secondly, the strategy introduces new risk management tools, namely catastrophe models and reinsurance into rate making. Both regulations are paired with insurer commitments to write more policies in wildfire distressed areas.

Third, catastrophe models are risk assessment tools that can account for risk mitigation measures taken by communities or regionally as a result of federal, state and local investments. Reinsurance is a financial tool that is part of how insurance companies manage their risk portfolios associated with the policies they write to homeowners and businesses.

Modernizing our regulations around the use of these two tools will enable insurance companies to expand coverage and write more policies in communities across the state facing greater risk and ensuring stability and resilience in our insurance market.

The third critical piece is that as fair plan reform, the two points I want to make are that our reforms include expanded coverage limits that enable commercial insurance consumers, such as summer camps, homeowners associations, and farm structures to secure necessary insurance coverage when they can't secure it in the regular market.

Second point is that our reforms produce greater financial stability for the Fair Plan to timely pay consumer claims and continue operating during catastrophic events, while creating solvency protections to help the Fair Plan manage risk more effectively, which is essential for a healthy insurance market.

Another strategy component has been intervener reform to ensure a more transparent Department webpage on intervener participation in rate filings and intervener compensation. The Department also plans to hold a public rulemaking this summer to add more transparency and oversight to the processes.

And finally, the foundation of the strategy is the creation of the first in the nation insurer commitments to write more policies in wildfire distressed areas. The commitments by insurance companies to write more policies will help the state achieve greater insurability over time and availability of insurance to consumers.

As I sit here today, I want to make four points on our progress. One, I can report that by December 312024 which was the Commissioner's target date, our catastrophe modeling regulation, complete rate filing regulation and California only net cost of reinsurance regulation were all completed. We finalized our fair plan modernization actions.

We finalized policies last year to implement for this year our rate application process to be more efficient. And we defined and identified the state's wildfire distressed areas with updates just last week.

I'm going to need you to wrap it up in a few seconds. Thank you.

So I'll just the final update I would give is just that on risk mitigation, on catastrophe models and on the distressed areas. We're making excellent progress. This is a moment when all of us have a responsibility to work together and to use the data and community outreach to implement this strategy. And we ask that you continue to support the sustainable insurance strategy as we work to fully implement it for consumers. Thank you.

Thank you. Now I will turn it over to Members of this Committee if you have any comments, questions, concern, concerns. Yes. Senator Aisha Wahab

Thank you. So I do have some questions and I'll be honest, I'm brand new to this Committee. So, you know, maybe this is redundant for you. All I'm hearing, obviously a lot of what you guys have done, but it almost also seems very reactive rather than proactive. So and I may be completely wrong, but if there was 36 wildfire moratoriums on cancellation that has taken place since, I don't remember what time period you stated, that's number one.

And then also the mere fact that we're talking about, you know, what has happened since the LA wildfires, which is the big elephant in the room of what we're largely concerned with at this point, what are some of the more proactive measures? So for example, a lot of the bills were more just because lessons learned.

The Commission has, you know, this, this particular position has been around since 1990. And it's not just wildfires. It's, you know, I live in a fault zone, so the Hayward fault, I live in a flood zone. We're talking about high density housing in transit oriented areas.

So those are literally ripe for wildfire issues or any type of fire that just tends to happen in those areas and other disasters. Have we accounted or is there any conversation about some of the other proactive approaches to areas that are not necessarily LA and have been affected by wildfires. But my region that is slightly more dense but also haven't, knock on Wood, had a problem.

Thanks so much for the question. I think in terms of proactiveness, our key point that we've been focused on is risk mitigation. If we're able to mitigate risks before fires happen, that improves public safety. It also saves the costs of rebuilding.

The Commissioner has, since the fall of 2022, had in place regulations that require insurance companies to reward home hardening of structures and get insurance discounts when those are done. And so what that does is that sort of gets ahead of fire risk before it occurs, and it gives homeowners and businesses an incentive to do so.

Also, as we integrate catastrophe modeling and reinsurance into our regulations, those tools do incorporate risk mitigation. And so, again, for those communities that have not yet been affected but do have fire risk, it is a way for us to line up or sort of align all the risk mitigation that can occur into the insurance front framework that we have at this point.

The one stat I'd give you is that since 2022, when our safer from wildfires regulations were finalized, 60 companies have had rate filings that were approved for using those discounts. And so those are being implemented through the marketplace.

So I had a conversation with a number of insurance providers, and one of their concerns is the fact that the rate plans, it takes on average, more than a year to approve. So even if it is approved, obviously with inflation and a number of other concerns, you know, that's that that request is already outdated, number one.

Number two, again, you know, when we're talking about these. These benefits of hardening. Right. I have never had a constituent come to me and say my insurance got reduced. Right.

Plus, insurance providers are also canceling a number of different folks, you know, property insurance for a wide variety of reasons without them having the ability for the opportunity to cure the issue. Whether there is moss on their roofs, whether there's more storage and, you know, let's say, junk in their backyard and a number of other things.

And again, it doesn't address, okay, we're talking about wildfires, but what about the other catastrophes that could potentially happen in the Bay Area? We always get tsunami warnings. We get overflooding of, you know, when it rains a little bit harder. So what are the responses there, too? Because it's not just about the wildfires.

Yeah, absolutely. You know what we've tried to do is to look at, like you said, the multiple risks that could occur. And so we, when it comes to flooding, extreme heat waves and fire, the community mitigation actions that can help those situations were built into our climate insurance report that came out in 2021.

And so we are kind of working through how do you get better notice to communities about the risks? What are the community level mitigations that can help reduce those risks? And then how do you grow insurance? Because for fire, we do have many homeowners who have fire insurance. Flood insurance uptake in the state is very Low.

And so growing that accessibility of flood insurance is one of our goals to help close that protection gap.

And how long, just real quickly, we're going to have to try and keep our question and answer succinct. We have to. Okay, I have roughly two questions. One, how long does it take to create that formula? If you guys have been working on it since 2021 or so?

Mitigation is a multi year process. And so it is something where the investments that were made in wetlands and flood protection in the last couple years will have benefits to insurance availability, affordability moving forward. But it is a multi year incremental process to get there as far as closing the insurance gaps.

We've worked with our community outreach efforts to be able to get more information about flood insurance to communities and that hopefully will promote good education and risk understanding.

Okay, and then final question. And I let's see what happens. But you know, you stated that you guys work very significantly to ensure that the most vulnerable community Members are supported. I went to the wildfires in LA and I will highlight that one of the big conversations that are missing in the entire conversation is renters.

So they may have lost their job as well as their unit. They're paying probably the least amount on their insurance for their unit and life is at a standstill for them. So how are we prioritizing the most vulnerable community Members that do not have.

And I've talked to survivors that said that they hired an arbitrator to talk to insurance companies. Renters, vulnerable communities, immigrant communities do not have the resources to hire somebody to be the middleman. What are we doing to support them?

We need to keep it very succinct. We have to move on to the next panel. Thank you.

So I'll start with just the wildfire moratoriums do affect renters as well. So that is a way to protect both homeowners and renters. And then in addition, we have had.

Thank you. With the outreach that we have done, I would say that absolutely it's something that's very important for Commissioner Lara.

In addition to having renters insurance be a part of the moratorium, we also have said that we are there for individuals to call the Department if they have an issue with their insurance claim or their insurance policy and have them have us be able to our hard working staff be able to work with them to get their benefits and their coverage, to be able to work through again the issue that they have with their insurance company.

I'd say all in all what's also benefited is the Sustainable Insurance strategy also is part of increasing the availability of insurance for not just homeowners, but for commercial and renters as well.

I need to be able to move on to the Next Committee. But before we go, I know that you went really fast in terms of giving out the dates when you plan to complete. First of all, if you can share when you started the Sustainable Insurance strategy and then give us the. The timeline and the end date. I think you were sharing when I wrapped up the time. Can you go over the dates please? Thank you.

Yeah. If I look to my colleague to provide the dates, I would also just say that this has been, this has been a years long process. I would say in response to the Senator's question, the Sustainable Insurance Strategy is actually an incredibly proactive and getting ahead of seeing what the problem is in regard to insurance availability and the lack thereof. We have had. The Commissioner has been to all 58 counties across the.

Michael, we need to wrap it up.

I'm sorry, 30 seconds. And so the timelines, the Commissioner as part of getting the feedback statewide is we have said December 31, 2024 was the date that he would get everything done from the Sustainable Insurance Strategy. So we are proud to say that we did and that was a huge, huge Herculean task.

So can I interject with that? And is that now yielding results as we saw the Last fire just occur in LA or is that now being implemented in a way that you are satisfied with the Sustainable Insurance Strategy?

I would say that as with. I guess you say there's two steps. As one, it took about, I'd say more than a year because the Commissioner announced in publicly September 2023 the Sustainable.

Michael, I'm sorry, I want to let you talk but we need to move on to our next. But I just wanted to think. Do you think it's working the way it was intended?

Yes, I would say it is. It's going to take some time. We implement it but yes, absolutely. It's well underway.

So we look forward to hearing more from the insurance Commissioner and yourself. Sorry for the rush here, but we need to move on to our second panel. Thank you for your time. I now like to invite our second panel, which will outline the consumer perspective. I have our first presenter who will be testifying over zoom. Her name is Barbara Birenbaum, a resident of Palisades who lost her home in the fire, and she will share her experience, and I want to thank her for joining us today.

Well, thank you for having me. I hope you can hear me all right.

Yes, we can. You're going to have very, you know, condensed time. You have about five minutes. We just want to share what your experience has been like. And let us start by saying that we're so sorry for. For the tragedy and the loss of your property. And you may begin when you're ready.

Yes. Okay. Thank you. Yes. Well, we were in the Palisades. We had a house there for 34 years, and it was completely burned down in the. In the fire. We actually, up until about a month or so ago, we had a pret. Experience with our insurer.

I had gone online, I think, two or three days after the fire and started my application, and I stopped it, because at that point we had no idea whether we were partially burned out or completely burned out. It was still unknown to us.

So I stopped it and they actually called me the next day and said, zero, no, please, go ahead. Complete. Let's complete it on the phone and get it going. And so. And then they followed up pretty quickly. We had three adjusters right away.

We had our ale and we had our dwelling adjuster, and then we had a little bit later, the content adjuster. And they were paying our. You know, they. We stayed with friends for a couple of weeks, but then we.

We got an Airbnb and they were paying, you know, I would submit the receipts, and they were paying promptly. And we met with our DW spelling adjuster, and he was very efficient, and he went out there, you know, after, after he was allowed to go in and. And we. We were given. You know, we were.

And he told us what he was going to do, and he gave us. And let me just say that all of the adjusters, which was very comforting in a way, which told us that they were going to do their best to get us to our policy limits. We. They told us that two or three times.

So he actually did do that. He. He went out and he. On the dwelling, the other structures and the landscaping, they Gave us our policy limits. But then in February they switched. He was done. So he was pretty much out of the picture after that. And then the other two adjusters were switched on us. You know.

You know, they were always very nice and I told people they've been very nice but we really haven't got gotten to the real money yet. But they were nice about the dwelling and, and then I don't know what happened, we switched adjusters and, and it didn't feel like a very good transition, especially with the content.

The woman who had done the contents the last time we talked to her, she had, we had done a walkthrough and you know, in a virtual walkthrough where we kind of told her everything that was in there and, and kind of highlighted some of our more unusual items. And she said, well, she thought it looked pretty good.

I might have to schedule a few things, but it looked pretty good for the limit. So then nothing happened after that. And they said there was some issue. I don't know if it was an issue or just that they were reviewing because it was held in a living trust. And I don't know if they hadn't.

They had some procedure about that. But just the other day I said it seems like an awfully long time for this and all of a sudden they got back to us. But this with content estimate and it was way lower than I thought we were going to get. And then this morning she clarified that it was sort of just a, just a way to get us some money right away because it was just kind of a draft.

So I'm hoping that she'll give us some guidelines because it's a little hard to know what this draft contains or what and I don't want to duplicate things or so anyway, so it was just kind of like for a month we really didn't have any, anything. But I'm hoping that, that this contents will go forward and then we're.

Going To be wrapping up and I have a couple of questions for you. So if, thank you for sharing your experience, but I have a couple of questions in the process. Where have you been staying? If I just wanna make sure that we kind of get a sense of what a victim at this time is going through.

Where are you staying and how are you handling that?

Zero, sure. Right now, like I said, we stayed two weeks with friends, which was nice. And now we're in an Airbnb in Brentwood, California. At Brentwood, Los Angeles that is. It's kind of set up for long term visitors so we're going to probably be here at least through May 30th.

Is that out of pocket or is that part of the insurance coverage?

So they're covering the rent for that.

So as it stands, you feel that the first initial contact with you is positive, and now you're feeling. You're a little stuck in the waiting game in terms of your contacts. Is that what I'm hearing from you?

Yes, exactly. It was very good at the beginning. It looked like it was just going to go speedy, and then it kind of stopped when we changed adjusters.

And I understand your entire block burned down. Correct. And can you share if your neighbors are feeling the same frustration? Where are they? If you don't mind sharing for them? How are they feeling?

Well, I haven't talked to my immediate neighbors. We did have a couple of houses that did. I have talked to one of my neighbors whose home was survived. And I must say that. And we have people in our building here that had some condos up in the Highlands that survived. But they are having.

In terms of the insurance, I think they're having a much harder time. They lost less, perhaps, but they are having a harder time with issues of health and, you know, mitigation and mediation and all of that stuff. Well, we want to thank you.

Right now, we're running out of time. I just really wanted to hear someone that was in that situation. I did tour your area, and it's pretty devastating to see so many empty lots. And so thank you for taking the time to share with us.

We're also going to ask Amy Bach, Executive Director of United Policyholders, who also advocates for consumers, to join us on Zoom. Is she on?

I am.

Hi, how are you?

I'm good. Thank you for convening the hearing. I don't. I just switched to a different screen in case you weren't able to see my slides. Are you able to.

Can we fix that, please?

If you can't, I can just.

Yeah, I'm not sure what's going on, but yeah. I think it's going to come up soon.

Okay. While she's going. Because I know while she's getting the tech set up, I know that you're under a time crunch, so thank you so much for having me. My name is Amy Bach. I am one of the founders and I'm the Executive Director of a nonprofit that you're familiar with.

But some of your newer colleagues may not be. We're 501C3. We're based here in California, 34 year track record of problem solving, informing and advocating for insurance consumers. Through our three programs, we're working to help people stay insured, recover from disasters and loss events, and help solve the property insurance crisis.

So a number of your other witnesses are, I consider them partners in these efforts through our Roadmap to Recovery program. We are down there in LA. We've been. Start my video. Okay. Okay. All right. You want me to just share? Let's see. We have been down there. I'll just share. That's fine.

We can see.

Great. Terrific. Okay, so we've been down. We had tables at both of the disaster recovery centers.

So I'm going to try to very briefly speak to two of the issues that you're looking at is, you know, how are things going down there and how is this, how are these fires going to affect all the work that's been done to try to solve this crisis and what are we looking at in the future?

So succinctly we're down there in LA, we've been keeping our finger very closely on the pulse of the issues. Very interesting to hear what Barbara was saying and she really kind of nailed that in this particuLar fire. And in many in recent years, it's been sort of easier.

Not that it's ever easy to lose your home and everything in it and be displaced by a disaster like this, but it's. People who have partial losses often wish they had lost their home because it gets. It's so.

It's so contentious right now with what insurance companies responsibilities are and the fact that we really need them to be paying for testing and appropriate scoping of the smoke damage. And that is a really big issue. And there's some legal cases now that, that are being where things are being fought out.

And there's been a lot of consumer complaints about how the Fair Plan is handling smoke claims, et cetera. But let me just try to get through my, my slides in case you have questions. So. So we have been doing our, our roadmap minutes.

I just want to make sure that you get to two minutes. We have to get the Committee moving and so please try making tonight.

Okay, thank you, chair. So tonight I'm gonna be teaching a class about what do you do when you're underinsured? That's a big one.

So then through our preparedness work, we have been working very closely with firefighting agencies, scientists, the Doi, to try to bring about as much risk reduction as we can as a strategy with the sustainable insurance strategy for restoring the market.

And I will say this after talking to a number of insurance companies that have been part of this working group I have on. Okay, well you can we get you guys to really reward and incentivize people who are reducing.

I have talked to some insurers who had made some commitments to write more policies before the fires and they have reiterated they intend to stick with those commitments. And I honestly think but for the sustainable insurance strategy, we would be looking at a very different picture.

So while some of the insurers may be hesitating on opening back up for a few more months, I do have some optimism. I've heard two agencies this week tell me that insurers have lifted quotas on their sales. So we've got some green, some blue sky, a little bit there. So. Okay, so advocacy. These are the challenges.

You heard some of this from Barbara. You don't need me to go over. These are the challenges. We always have out of state adjusters and your body has done a lot to try to address these issues and some of some. A lot of it is working pretty well. These are the problems.

You have these materials in front of you. I don't need to go through each one of them. The prior legisLative fixes that are helping in La, the required advances of temporary rent and contents benefits up to 250 are definitely helping get cash in people's hands.

The non renewal moratoriums are incredibly helpful for helping people who are in the area not panic. And also the survivors as they're dealing with all of their stuff not to have to worry that they're going to also be dropped.

The right to that the Legislature has given people to use their insurance money to buy instead of rebuild has a lot of benefits and we're really seeing that work. Well.

The requirement, I'm sorry to interject, we're going to need about another 30 seconds to wrap up.

Thank you. These are the other pieces that are in place. These are our upcoming events. The challenges that. I'm sorry, I know you said 30 seconds but I've got like a technical thing here. I'm sorry for your constituents. You should know we have a risk reduction center online where people can go to find out about grants.

These are the challenges policy owners are encountering in the marketplace. And the fixes mitigation is not being rewarded. We have the CDI regs now. We need a little bit more there. The non renewals again you extended 75 days. The moratoriums are really important. The 85% more writing and distressed areas goal, those are good. We need more fixes. The closing the loophole in the moratorium.

I'm sorry, I'm going to have to interject or else we're going to be here for a long time. Stick around. We might have some questions. First of all, thank you. I know you and I have had a lot of conversations, but I'm glad to hear a lot of positive experiences as a consumer advocate.

I'm, I'm glad to see that you're working hard and that you're getting results. So thank you. We're going to now move over to our next presenter. That's Carmen Balber from the Executive Director of Consumer Watchdog. Thank you. She's here with us today. And when you're ready, you may proceed. Sam, you have five minutes.

Let's see if we can keep it under five. Thank you.

Thank you, Chair Rubio and Members. I'm glad to be here today. The number one thing we hear from homeowners who lost their home in the LA fires is what can I do to make sure I get insurance when I rebuild?

So we would urge you first and foremost to get tough with the insurance industry and require them to sell coverage to California to build back better or bring their existing homes up to six state safer from wildfire guidelines. That is how we're going to get people back into the private insurance market.

And as we wait for my slides to get up, I'll just jump in because I know we're crunched. I want to start with Prop 103 because every insurance company in the state has said it has the resources to pay its LA Fire claims.

And that might have surprised a few people who were hearing from the insurance industry that they were going broke. The reality is that insurers are doing far better financially in California than they have led us all to believe. Prop 103, as you mentioned, was written by Consumer Watchdog's founder.

It has a very simple premise that transparency will make rates fairer and insurance companies more honest. So it requires a few simple things. Insurance companies to open their books, justify rate increases when they are asking for them and get approval from the insurance Commissioner before those rate increases go into effect.

That transparency requires insurance companies to keep rates fair and in return, the insurance Commissioner has to approve rates that companies can justify. And the public has a right to participate in that process. And that public approval process, according to the Consumer Federation of America, has saved Drivers in California $154 billion since the law was enacted.

Consumer Watchdog, in participating in rate reviews at the Department of Insurance, has over the last 22 years saved drivers and homeowners $6.5 billion in what would have otherwise been excessive rate increases. So those are big returns for consumers. But the insurance industry of course, has blamed those regulations for their actions in abandoning whole parts of the state.

As I said, insurance companies have been more profitable in California than they have been nationwide. And I'm not sure exactly the slide number, but you do have the slides in your packet. One of those shows that the insurance companies, the home insurance companies, particularly in California, have made a greater return on net worth.

That's not only their premiums in claims out, but also critically their investment income over the last two decades. Three points higher than the national average. And that gap got even greater if you look at insurance companies returns over recent years in California. But the insurance industry has been holding California over a barrel.

I want to point out as well that under the existing regulations. I think this is your next slide. Nine of the top 10 insurance companies in California have asked for and received double digit rate increases. Many of them have received several rate increases. And this is under the existing regulations.

But the industry is still claiming that rolling back consumer protection rules was the only way to get Californians insured again. Unfortunately, the Commissioner's plan enacted all of those consumer protection rollbacks that the insurance industry asked for. They include black box models, catastrophe models to raise premiums.

We don't have a problem with models, but we have a problem with the fact that their calculations on wildfire risk are completely secret. The Commissioner also implemented new rules that will allow insurance companies to charge consumers for the unregulated cost of reinsurance.

And while the Department of Insurance did not do a cost analysis on that regulation, we can look to other states to see the impact of that. It is an average 30 to 50% rate increase in other states that allow pass throughs of reinsurance costs. And thank you.

And there's a slide in there that just points to State Farm as an example of how bad this is for consumers. State Farm buys reinsurance from its parent company. It's a very cozy transaction. And in the last decade the company has not. That reinsurance purchase has not benefited California policyholders.

In fact, it benefited the parent company to the tune of $3 billion sent out of state. That's the kind of market we're living in where insurance companies are taking advantage of California and in State Farm's case, sending money out of state.

My written testimony also goes into more detail about why the loopholes in the regulation the insurance Commissioner put forward to require insurance companies to sell more. Thank You I will do that will not protect Californians.

So I guess I will just end on a few solutions, which is number one, I really appreciate some of the proposals that Members of this Committee have put forward. Other Members of the Legislature, we support several of them, but we really would stress a few. A public wildfire catastrophe model so we all have access to that information.

A mandate that insurance companies cover people who mitigate their homes. That, of course, is going to need more funding for that mitigation. And we need. Chair, I appreciate your Bill. That would create community wildfire hardening standards as well. And I'll end it there.

Okay, well, thank you so much. I know we're running already behind, as always is the case. I'm going to just turn it over to our. Our colleagues, but we will keep it to questions and not so much statements. If you can make that thing. Thank you.

Well, first and foremost, I want to say that this hearing is incredibly needed and we should actually expand on this to give you a little bit more time. You say that the catastrophe formula is not transparent. And even though that's through our insurance Commissioner, have you requested documentation? Has there been any PRAs to kind of see what that formula entails?

So under Prop 103, everything that goes into an insurance rate is supposed to be public. And. And the reason insurance companies have not used catastrophe models to predict future risk in the past is because the private modeling companies will not allow their secret sauce to be made public.

And so we have for the last year and a half, as the Commissioner was implementing his sustainable insurance strategy, pushed for the Commissioner to require those models to be made public. His regulations did not require that. He did create process for pseudo review of models. However, it is completely in a black box. That information will never be made public. The participants have to sign NDAs.

In fact, with the amount of data mining that is out there, both by insurance companies that are targeting, you know, regions and charging more for this region versus that region, as well as just algorithms being utilized, do we believe that there is some artificial intelligence and some, you know, data mining evidence that is being utilized by both insurance companies and potentially this modeling that the insurance Commissioner is doing?

Well, one of the companies is actually called Zesty AI. So there's definitely AI involved. You know, on one level, data about your home is important for your insurance rate. We do want insurance companies to have up to date information about the status of your home.

The problem right now is, in fact, when they get that information, say you correct them that there is not mold on your roof from the video that they took overhead two months ago, they don't act on that information. So there's a real problem with getting that information correct. And then.

Yes, because we don't know what's going on in the black box. We don't know if companies are using the information they have accurately or if the information is correct.

And they cancel insurance without the opportunity for the property owner to have a moment to cure the issue. Correct?

Absolutely. I think that's a great place where reform is needed. We have a Bill on that.

Thank you.

Yeah. Real quickly, any other Members wishing to speak? And I know that we already had Michael Martinez speak. Is there anything that you want to share in regards to some of the comments that were made? You don't have to. I just wanted to give you that opportunity.

Thank you. Mike Peterson from the Department of Insurance. So the PRID process, the model review process that was referenced, is one that was set up through our regulations. We have had four modeling companies petition to be part of a prid, and we have participants from the public who can petition to participate within that model review process. Thank you.

Thank you. So we want to thank all the participants. Thank you for coming today and those that were joining us via Zoom. We will move now to panel three, and I'd like to invite them to come to the table.

So our third panel is comprised of representatives from the insurance industry who will give us an update on what actions they are taking in response to the fires and subsequent claims. Our first presenter will be David Lawrence, chief staff to the California Fair Plan President, Victoria Roach. Mr. Lawrence, welcome.

And just real quickly, I do want to make a quick comment, and I do agree with our Senator Aisha Wahab, that we need a little bit more time with each panel. So this is just to sort of give a little sense to the new Members of this panel of, you know, the overall State of the insurance.

But we'll come back and figure out how to give each presenter more time in the. In the near future. So I'm going to start with our first presenter, David Lorenc. When you're ready, you may begin.

Thank you. Chair Rubio. Committee Members, it's my great pleasure to be here today to support you on behalf of the California Fair Plan. I am the Chief of Staff to the President. I've been with the Fair Plan for all of nine months, and I'm very proud to be here with you today.

For context, maybe for some folks in the room, a little bit of background. The Fair Plan was created by staff statute in 1968 with the mission to operate as a so called insurer of last resort. So the Fair Plan guarantees access to all Californians for for basic property placement, regardless of risk. That includes wildfire risk.

We are not part of a government entity. We are not funded, contrary to popular belief sometimes by any government entity. We are privately held and privately funded. As you may be aware, over the past several years the Fair Plan has experienced historic growth. So we talk about 400% policy growth over the last five years.

And in fact, not only are we growing, we're growing at an accelerated rate. So January of 2025, 2 months ago was our largest policy growth month ever in our history. We continue to support all those who come to us.

You could say that as opposed to being by design the insurer of last resort, we have become the insurer of first resort, or in fact only resort for more and more Californians through time.

And that continues our emphasis and focus on supporting, working with the Commission on sustainable insurance and on depopulation in terms of supporting those who have suffered loss from the devastating LA wildfires very quickly. So that first week we dropped everything, right as you might imagine.

Boots on the ground, increasing staff count significantly, keeping the phone lines open significantly and building a tiger team to be able to afford in person claimant support. Like for example at the insurance workshops at the disaster recovery centers. So that's talking about coverage, working with claimants in terms of empathy, being supportive, adjusting claims and paying on site. And we continue to do that today. In fact, there's one this weekend at John Muir High School in Pasadena.

So next we have. Thank you for that. We're going to have a chance to go back and forth and ask a couple of questions. Next I have see Denny right in front of me. So when you're ready, you may begin. Is that okay? We'll just go in order. Thank you.

Good afternoon, Chair Rubio, Vice Chair Niello and Members of the Committee, thank you for the opportunity to test today. My name is Denny Ritter and I am here on behalf of the American Property Casualty Insurance Association, or apcia. We are the primary national trade Association for home, auto and commercial insurers with over 1200 Member companies.

On behalf of our Member companies, I do want to begin by expressing our deep gratitude to everyone who has been working tirelessly for the past two months from battling the devastating Southern California wildfires and leading the path to recovery. I want to reaffirm insurers commitment to helping Californians recover and rebuild.

Since the wildfires began, insurers have been on the front lines proactively reaching out to impacted customers, setting up help centers and deploying catastrophe teams to provide immediate assistance. This includes helping residents file their claims and secure emergency housing, food, clothing and financial assistance in their time of need.

We've been making claims payments to help families and businesses begin the recovery process as quickly as possible. As of March 5, as you've heard, insurers have paid out more than 12 billion across more than 37,000 policyholder claims for the Eaton and Palisades fires.

In order to expeditiously get those claims payouts out the door, some insurers used aerial imagery in the days immediately following the fires when on the ground access was restricted to confirm that the homes and businesses were total losses so that the claims process could move forward.

Insurers worked with their policyholders to advance additional living expenses or ALE funds quickly, using either electronic Fund deposit methods if possible, or by writing a check on the spot in their mobile catastrophe vans or RVs in parking lots across the area, insurers worked with housing vendors to place their policyholders in short term rent housing before transitioning to longer term housing, which includes direct billing to reduce the financial burden on their insureds.

And as soon as access to these areas has been restored, insurers are deploying field adjusters to the area. And this is just the beginning. Tens of billions more in claims will be paid in the months and years ahead as Californians work to rebuild their homes, businesses and lives.

Additionally, insurers have also contributed to support the Fair Plan in covering wildfire losses despite never collecting premiums from their policyholders. The road to recovery will be long, but insurers remain fully committed to working alongside residents, businesses and elected officials every step of the way. As of February 27th, the EPA has completed their phase one toxic debris removal.

Now FEMA will work with individual homeowners and business owners to get their permission to continue the debris removal process. Additionally, the city and county are working to rebuild and repair infrastructure including electricity and water, which will be crucial to beginning the rebuild process. We can't rebuild a home using generators, of course.

While this work is going on, insurers are working with our policyholders to begin rebuild plans, identify contractors, identify the permitting process so that when construction can begin we're ready and we can support and Fund that process. Ultimately, true recovery will require going beyond rebuilding. It also depends on urgent reforms to stabilize and strengthen California's insurance market.

As we all know, even before these fires and I'm almost done, California's insurance market was severely out of balance. The Bottom line is our current insurance regulatory system is too old, too slow to respond and not built for today's climate realities. And that's why we support these fundamental reforms, including the Commissioner Sustainable Insurance Strategy.

We must reduce regulatory delays to review rate requests to ensure insurers can keep up with the actual costs of covering risks. We must allow catastrophe models to more accurately capture future future risks. And we must allow insurers to incorporate reinsurance and rates as a backstop for these major decisions. Disasters.

APCA and its Members stand ready to work alongside this Committee, Commissioner Lara, Governor Newsom and legislative leaders to do the hard work, the hard but necessary work to restore a stable insurance market. Thank you for your time.

Thank you much. Now I will turn it over to Seren Taylor. Sorry about that. Vice President of the Personal Insurance Federation of California. And when you're ready, you may begin. Thank you.

Great. Thank you. Thank you. Good afternoon, Madam Chair Members .Seren Taylor on behalf of the Personal Insurance Federation of California and also the National Association of Mutual Insurance Companies, we appreciate the opportunity to share our perspective today regarding California's insurance market.

And first, you know, as we've been discussing for several years and I think the chair and Vice Chair noted, California's insurance market has been experiencing a capacity crisis because of outdated rules that do not reflect the dynamic challenges we're facing.

We've experienced significant population growth in fire prone areas combined with historic inflation that has dramatically increased the cost of reconstruction and catastrophic wildfires that are exacerbated by changing climate patterns with warmer temperatures and longer fire seasons. In this new environment, it's important to recognize the limitations of regulations established nearly 30 years ago under Prop 103

rules that were put in place before we had cell phones or the Internet and climate change was not an issue. Commissioner Lara's Sustainable Insurance Strategy, or sis, provides a series of updates to make the rules more responsive to today's challenges.

Allowing the use of modern catastrophe models to better account for the growing risk caused by climate change and risk mitigation measures taken by communities will help ensure rates are properly aligned to risk. Modernizing regulations around reinsurance will enable insurers to write more policies in communities across the state providing stability and resilience in our insurance market.

Every state except California allows for the use of catastrophe models and the cost of reinsurance in rates and they do so without requiring insurers to expand in high risk areas as required under the sis. This is a unique aspect of California's regulations to benefit consumers.

It has taken several years of hard work by the Department and all stakeholders to develop the sis. And we have appreciated the ability to work collaboratively, even if we don't always agree on every detail.

In fact, before the LA wildfires, some carriers had already agreed to grow their business in California because they had confidence in response to the recent wildfires. Insurers remain committed to implementing the SIS and serving California.

However, it is important to understand that turning around a market the size of California that doesn't happen overnight and restoring the market's health is going to take some time. And there are still technical aspects of the regulations that need to be put in place before carriers can make CIS rate filings.

So it's important to have realistic expectations as we move forward together. Regarding the historic and tragic LA Wildfire, which was the largest insured wildfire loss in the history of the planet, the industry response has been exceptional. Over 37,000 claims have been filed. At least 28,000 policyholders have already received more than $12 billion in payments.

As we've heard, insurers are committed to serving their customers by quickly putting money in their pockets for living expenses, starting the rebuilding process. However, we also know that with catastrophe of this magnitude, there will be some errors in claims handling and mistakes will be made.

The press will focus on stories about people who are dissatisfied, but that's a very small minority. And the overall feedback has been extremely positive. And you know, to be fair, people don't call their Legislator or the news media to say they are happy with their insurance payout. Right? You just hear the complaints.

So it provides a biased perspective. But according to CDI, and this was in the LA Times the other day, out of these 37,000 claims, the Department has received only 200 complaints, most involving adjuster delays early in the process, many of which have been resolved.

So I'll just say for the mathematically inclined, that's about one half of 1% or over 99% that do not involve a complaint to the Department. And that seems like a pretty good track record thus far. Though obviously we'd like to be perfect 100% of the time. So in closing, we appreciate your time and interest in these issues.

It's a very complex and challenging problem. We do think we're finally on the right track. And I'll pass the baton to my colleagues for additional thoughts.

Thank you. Next, I will introduce. First, I'll start with you, Sherry. I'm going to introduce our Next presenter, Sherry McHugh, representing the Pacific Association of Domestic Insurance Companies. And with her is Anisha Basi, President of the Pacific Association of domestic insurance companies. Then you may begin when you're ready.

Thank you. Good afternoon. As primarily California companies, the PADIC Members, as Shari alluded to they are our neighbors, our friends, our family. And so the Southern California fires deeply impact our companies and how we responded to these fires. We had over 730 claims between our Member companies.

Nearly 200 total losses which resulted overall in an extreme exposure of over $200 million. I'm proud to say that our Members have been diligent about being fully staffed including the claims team, the field adjusters and making sure that we process these claims as swiftly as possible.

And in resulting of that we have paid out almost completely our total losses that were expo that we had exposure for and has helped our insureds with everything from the wind claims down to the soot Nash claims to make sure that we are taking care of our policyholders because again we have a neighborhood feel to our companies.

PADIC Members are very optimistic about the sustainable insurance strategy. We feel it is a step in the right direction and we fully support the work that is being done by the Department in that regard.

We are optimistic about the new positions that are being opened and filled with the Rate Bureau which will help to to process applications swiftly.

It's critically important that our insurers have actuarially sound rates and that they get products that would benefit California's promptly to the market if it indeed, if this is indeed the case, the insurers will write business in California.

Insurance agents will be able to keep open their doors, the real estate market will bounce back a little bit and it really is sort of just that simple in making sure our economy keeps moving. We do have many ideas.

You know, I won't repeat what my colleagues have gone ahead and went over already but we do welcome questions especially in regards to Prop 103 and anything that you would like to hear from us on as we feel there is a lot of reform ahead of us that would just improve consumers approach to or outlook on insurance and helping to correct some of the false narratives that we see in the media. Thank you.

Thank you. So now I will bring it back to our Committee Members for very short. Short, concise we got it questions and. Hopefully we can also get the answers. You know. Yeah, we have one more. So go ahead.

So I know that I've. I've already stated with the insurance Commissioner in regards to the rate increases and as, as I was educated on some potential rate decreases and the length of time that it takes you Know, over a year or so.

You also have a significant number of advocates that have stated that there's a lot of reform still needed, transparency involved that's needed and much more. Have you all sat down with the advocates for the consumers from the Consumer Watchdog and. And many of the others to identify where. Do you guys have middle ground?

Because I'm gonna be very frank, the insurance companies are not seen as a champion for property owners. Let's just be very honest about it. Right. And so right now it is very clear. The writing on the wall is we need to do more in the insurance space.

We need to protect property owners as well as renters for having at least some type of benefit when they come out of a situation like this. Have you guys had the conversations? Do you guys plan on having conversations? Is there some middle ground where you can say, Here are the 10 things we agree upon that we're willing to commit to?

Happy to start. Thank you for the question, Senator. I'm just going to be very Frank with you. It depends on the consumer group. I will say that we regularly engage in discussions with United Policyholders on a range of issues, including on smoke damage.

There are lots of ongoing conversations with them about where can we find middle ground and, you know, help us identify where we're missing the mark, you know, to your point.

But I will say that sometimes, yes, we've had a challenging time having a serious conversation with some of the other entities involved, largely because we can't agree on basic, like, the facts of the situation. We, you know, I'm going to borrow your piece of paper, Sarah.

Great. I mean, the fact of the matter is, you know, statements like, oh, it's actually incredibly profitable for insurers in California, and this is a long game of chicken we're playing.

The data from the National Association of Insurance Commissioners and from the Department of Insurance clearly shows the dire financial situation that the insurance industry is been in in California. So it makes it really challenging to have a serious conversation about solutions when you. When you're having a hard time agreeing on the, like, facts of reality.

Yeah. And I will highlight that all the documentation that was given was given to me and my staff today right before this meeting. So I don't believe it's fair to me also, as just a person who's interested in good policy for Californians. Right. So I just want to flag that for full transparency.

But at the same time, when we're talking about a lack of transparency in the modeling for you know, I'm going to say disasters. In the future, we would like to know exactly what is the truth. Right. And we have not heard that very clearly as to what is the modeling.

How long is it going to take you guys do this for a living in regards to data mining? Years and years and years of this. Let's just be very honest about that. So what do you guys think about this?

Yeah, thanks. Senator Seren Taylor with PIF. Again, honestly, I frankly don't understand the criticism at this point with regard to the models. I mean, I think the Department in its regulations has bent over backwards to include the consumer groups in, in that process of making a determination of what is in a model.

Is the data in a model appropriate? Is it including the factors that are necessary to come to a reasonable judgment? They are actually intervening in three of the four processes. They are in it and already have said how much they want to get paid to be in it. Right. It's open to the public to be in there. Sure. You have to sign.

They have to sign a non disclosure agreement because you're getting people's intellectual property that they have spent decades building and they don't want to expose that to their competitors, the modelers, which I don't even represent, but they have long said they're happy to share any information with the Department, with academics, with people that want to understand how they work.

They just don't want their competitors to have it. The consumer groups are invited into that process. They can, there's a model advisor that can decide, you know, you can subpoena information, you can, what's the legal term, you know, depose people everything they want to know. You just can't blast it out to the public.

And then once the Department determines what information is necessary for the rate filing, then that information will also be in the rate filing as well. They keep pointing to the transparency of the rate filing. Well, the rate filing only matters on what is the output of that model that's going into the rate.

You don't need the code of a model to say what's in the rate. You can debate the rate and transparently in the rate filing process and they can dive into the code in the prid process if that's what they want to do.

So, so to Denny's point, these are the types of, I think misleading and sort of catchphrases around black box, which by the way, these models have been around for decades.

I need you to wrap up your.

so it's used in every state. Earthquake authority has been using them for decades in California. It's not the mystery they're pretending that it is.

Okay. And then for the Fair Plan, I do just want to highlight the Fair Plan and I'm just going to be very honest. I have not heard from anybody that says that they are happy with what's going on with the insurance world across the board.

Even in our area, people are now have to be reliant on the Fair Plan because all other insurance providers are not providing them insurance. Right. And the Fair Plan is, was originally supposed to be a temporary stop gap to figure out what else can this person do. So that is obviously evolving. Can you shed a little bit of light of what's going on with the Fair Plan, especially for those that cannot find any other insurance?

Sure. And thank you for the question. So our focus is on depopulation. We have made advances in that regard to be able to allow those in the admitted market. I say admitted, what I mean is the voluntary market.

So the brands that we all talk about, to be able to have access to our policies to get those addresses and to understand what those risks are and to have absolute visibility into the policies that they may be able to write and take from the Fair Plan. We are pro depopulation explicitly.

If you would like to cut me off, go ahead. You have one more question. I just think right now I'm, you know, very concerned about the renter slash property owners that really have no other option, have no ability to hire an arbitrator or a lawyer to go through your filings and discovery and pushback.

And just be honest, insurance is being canceled left and right for very vague reasons. Not even a moment to cure why their insurance is being canceled. And insurance companies do need to do more. Especially considering that this is our new normal, right?

Whether it's a flood, whether it's an earthquake, whether it's wildfire or anything else, we are seeing this happen more frequently. And we are also seeing a lot of pushback. So everyone here and I, multiple panels have talked about how they're doing their best. They're doing, you know, almost a perfect job. No criticism of their own shortcomings.

And I just want to highlight that for many people who have lost their insurance, for many people who are victims of the fires, their life is at a standstill and they have no other option. They are effectively homeless. Right. And slightly more affluent individuals can lease something, rent something, so forth. We need to wrap up.

But the payouts aren't enough for what we are seeing. And I don't see A true plan in front of us as to this is the model that we're going to move forward from the subject matter experts.

I'm going to give you 30 seconds if you want a response. Okay. So we're just going to move on to the next panel. But before you do, I think nobody else has questions, but I will make a comment. You know, I've been doing this for six years alongside with you and you.

I've been very aggressive in your offices asking questions and, you know, demanding answers. And most of the time I have to say that I hear stories from our consumers and I go raging in and saying, I demand answers. And then I sit down and then you walk me through the process.

And, and sometimes there are misconceptions and I have to, you know, be real about that. The other day, I heard from a consumer that they were having a hard time getting payment on their items from their home. And when I went into your office and I said, you know, I demand answers.

I think it was one of you. It was when you're going through the process of becoming whole and getting your insurance. And what I've learned is that it's impossible to give you the, the money up front for your contents of your home when you don't have a home built. And can you share a little bit about that?

Because I know I hear it often, they're not getting the money right away for, for their furniture and all their clothing items and materials. But at the end of the day, like I said, as I learned, is it takes a while before you start building the structure, before you can actually recover the contents. You want to comment on that?

Yeah, I'm happy to start.

And if anyone else wants to pitch in just real quickly.

Oh, yeah. What I would say is that, I mean, under state law, insurers are paying 30% of your contents coverage upfront without an inventory. But I know I've heard from some insurers who are, who are, you know, exceeding that.

And I think a lot of what it hinges upon, though, in terms of, like, the full payout, oftentimes you don't have a home to furnish yet. Right. And so it's a matter of, do you want the money now and then you're sending that stuff into storage? I think a lot of it.

I understand that there can be a frustration, and we heard certainly from the consumer who was affected, Barbara, but sometimes it is a sequencing and a timing issue as well. You know, the rebuild process takes longer than anyone wants it to. I mean, as we're currently watching right now. We can't start rebuilding until a number of things have happened. And so sometimes it's a secret sequencing issue.

Thank you. And other comments that I want to make is that, you know, I've been working, like I said, with not only the insurance Commissioner, but, you know, two years ago we got together with, you know, even the Governor, the insurance industry and all the stakeholders.

And I make comments back then and I'll continue to make comments now. That's the first time I had seen every single stakeholder come to the table and try and figure out a solution. And we spent almost a year trying to figure out how we come to the table where no one agrees.

But everyone agreed on one thing and, and that was that we need to do better for consumers. And you know, we talked about depopulating the Fair Plan. And in fact I had a Bill on that because a lot of the times people come up to me and say, what is the state insurance doing?

And that gives me a sense how much education we have to put out there because they actually think the Fair Plan is the state insurance and it's not. But I also want you to touch one more time, where does the money come from when you have to pay out the. The homeowners?

Sure. So first it's cash on hand. We are a not for profit, so we do not do things like surplus reinvestment income. That doesn't happen with Fair Plan. Right. So cash on Hand. We're a cash in, cash out organization. Reinsurance. We purchase reinsurance every year, just like Members in the voluntary market, the state farms, the geicos.

And then there's the assessment protocol which we did execute on this year. That's in statute. So. So that's existed since 1968. A lot of people don't know about that. That's common to all 30 plus fare plans across the United States. Everyone has an assessment protocol.

It's an effective mechanism to be able to finance covering expenses, but in this case, really paying claims. So we assess the Member industry. We actually send all of the voluntary market Members who write insurance in California property insurance. The math is a little bit complicated, but we do send them a Bill.

Okay, well, thank you. I just wanted to touch on that and I want to thank all of you and we'll continue the conversation. I mean, at the end of the day, you know, all of us up here are looking for one thing and that's to make sure that consumers are taken care of.

And when they run into those glitches, you know, as we heard one of the presenters talk about it was great at the beginning. And you know, of course we also have to take into consideration the massive, the enormity of the crisis.

I know that when I came in six years ago, I used to talk about the Paradise Fire as the worst, most costly wildfires in California history. And here we are six years later with the worst, costliest, devastating wildfire in California history. And I don't think it's going to slow down.

So I think it's important that we continue to be very vigilant about those cases from consumers that are coming to us, making sure that we help them when there's issues, but also at the same time to continue to sit down and find solutions that are going to be long lasting because this is our new normal and it's not going anywhere.

So I just want to thank you for, for coming and sharing your thoughts. We'll continue with the next panel. Our next panel will deliver expert perspective on the outlook of California's insurance market and potential paths forward. Our first presenter is Nancy Watkins. She is a principal and consulting actuary at Milliman. Is she here? Yes, she is. Ms. Watkins, welcomes. Thank you so much for joining us today.

Thank you Madam Chair for having me.

Thank you. And we also have, and he'll go a little later. Dr. Michael Wara, Ph.D. j.D. Senior Director for Policy Sustainability Accelerator, Stanford University and Director of Climate and Energy Policy Program and Senior Research Scholar, Woods Institute for the Environment. Now you know why we have you here, right? A lot of depth of knowledge there. So we're going to start with, with you, Nancy and when you're ready, you may begin. Thank you for being here.

Thank you so much for having me. And thank you April for getting our slides up while we're talking. The last thing you said at the close of the panel really struck both me and Michael that we are in a new normal. I agree that we are.

I guess I'd like to offer the possibility of a new, better normal. And that's what I'd like to talk about today. I've been a California resident for 25 years. I work with most of the major insurers, also communities like paradise and Rancho Mission, Viejo, Realtors groups, FEMA Builders, Western Fire Chiefs Association.

And I'm an expert on how insurance markets fall apart and how to put them back together again. So that's where I'm going to throw some thoughts up there for you. Backwards and then forwards. I guess I'd like to start with the question if we could wave our magic wand as a Committee and fix the insurance crisis.

But we're still having the Palisades fire and the paradise fire happening to us over and over again. Did we do our job for our constituents? And is it even realistic to think that insurance is going to be available and affordable if we don't have any reduction in the urban conflagration risk?

So I'd like to pose a solution that would help us both reduce risk and fix the insurance problem in the most constructive way. I'd like to point you all to the CAL FIRE Risk Modeling Advisory Workgroup report.

This was formed pursuant to AB 642 to advise CAL FIRE, the state fire marshal, and the Commissioner on community mitigation and risk modeling. Their focus was on how to prepare communities to receive fire. And I worked on that Committee alongside representatives from the CDI builders groups. I mean, a lot of different kinds of constituents.

You guys have been emphasizing alignment and transparency, and that's exactly what we got to in our Committee. So we put together this thing called the big picture. Like, what does alignment look like? How do we align together to solve this problem? And insurance is a piece of it, but it's not sufficient to. To solve the insurance problem.

We're looking at measuring the risk by aligning on what are the mitigations that matter at the parcel level and at the community level, and then capturing standard. Having standards for that data and capturing the data to measure the risk as it stands now and measure current conditions, the facts.

And at that point, we can communicate the risk signals through insurance pricing and underwriting. We. We focused a lot on that today, but also through public standards like fire protection, building codes, land use, maintenance. There's a lot of work to be done to come together on that communication.

There's also the need to come together and find out what are the barriers to mitigation and try to address those barriers and get past them to have the mitigations implemented that really will drive down the risk and prepare communities to receive fire. Because as chair Rubio said, the fires will continue to happen.

The question is, how vulnerable will we be as a state when they do happen? And then once those mitigations have been done, capturing that information, feeding it back into the models, and then having continuous improvement on the measurement of this.

So one proposal that came out of the CAL FIRE study that I've been working on for three years, along with chief Dave Winokur and Frank Freevald, you guys have heard from them before, and it's called the WUE Data Commons, the Work has been going through a couple of phases already funded by IBHS and the Moore Foundation.

We've been working with the Cal Chiefs for the past year and we've involved consumer groups, community leaders, insurance regulators, fire chiefs, not only from California, but from other western states like Arizona and Colorado that are a little bit behind us in terms of the problems, but facing the same issues. Also modelers, also insurance companies.

So what you're asking for, we have been doing trying to align the stakeholders that don't always agree to try to find a common denominator of what we can all do to help.

So we're talking about getting data that already exists from parcel and community level mitigation actions and creating a market for more of that data to exist to start feeding the measurement of what's been done and what needs to be done at the community level and really bend down the risk curve.

We'll have to work to anonymize the data and make it available in the right level of privacy protection. But if we have that, it will be available to all the stakeholders in the community in a way that increases the value of the data and helps people make better decisions.

Our three primary use cases are first, communities Zone Zero ordinance, if it gets implemented fully and the CAL FIRE map changes. They're going to be significant, they're going to help a lot. But the state and local communities will need a way to enforce and monitor compliance.

IBHS is the insurance industry's response to the question what all do you need us to do in order to start providing insurance? They are rolling out their wildfire prepared neighborhood designation in 2025. They will need inspections to evaluate individual communities for compliance.

And then there's tons of demand for the actions that are being taken to be recognized by modelers and insurers. This black box problem is really not about algorithms, I don't think. I think a lot of it has to do with data and so I think this is going to help make it possible. And if you want a public model, I think you're going to want it to be able to see this too. So where is that data going to come from?

We need to wrap up your comments, Dean.

Absolutely. So just a note that if we are able to build this, we're going to partner the data commons with mitigation makeovers which are just what you think they are, and insurability fairs to bring new communities to the attention of insurance industry that wants to find distressed areas to write in and fulfill the sustainable insurance strategy.

Bringing it home. We are losing we're getting non renewed, not canceled, and we are clearing our cocktail mint garden. You can see how pretty it was. It was growing up right next to the house. There's my husband and my son. We replaced that mint garden with stone stairs that do not burn.

We're going to be doing things that we never had to do before because we know we have to. We're getting it reinforced. So I would like to see that kind of action spreading farther and making a bigger difference for all of our communities. Thank you.

Thank you. Now I'll turn it over to Dr. Wara. Thank you for being here and looking forward to your input.

Let me just grab it, Just grab it. Just one second. I'm gonna stop share and hopefully start share. zero, it's not open, sorry. Do you want me to look while you're. Sure, yeah. Thanks, Nancy. It should be on the desktop. I'm Michael Wara from Stanford University. Today I'm speaking in my personal capacity, not the views of Stanford University or the Woods Institute for the Environment.

Chair Rubio, Members of the Committee, thank you very much for having me to speak with you today. What happened in Los Angeles was, as many have said today, a terrible tragedy. I think it was also a predictable tragedy.

In fact, when I was assisting the Senate Pro Tem in the design of the wildfire Fund, AB 1054, Pacific Palisades, along with some other jurisdictions, really jumped out of the modeling that we were doing as places of really concentrated risk. It was a terrible day on January 7th.

I think we need to find ways to not have that happen. And if we can do that, we will have available and affordable insurance. That's how far I got. Okay. oh, all right. That's not good.

Well, I'm just so you know, we do have the presentation with us, so we have the slides here.

Oh, that's cuz it's on the D drop. Try that one. This PC desktop. No, don't worry about it. We're just. I'm just going to go. Okay. So what's a healthy insurance market? You asked me to talk about the insurance market today. And I think healthy insurance market consists of three main characteristics. One is accurate pricing of risk.

That means that the premiums collected are enough to pay the claims when they come due. And that is incredibly important. That's how we have solvent insurance companies that are around to put the money into disasters when they occur. Accurate pricing of risk also allows for insurance availability.

It allows insurers to have a business model where they can write policies where we want them. And that creates availability, which has been a real problem in California. At the same time, we want to have an affordable insurance market.

We want to have policies that homeowners can afford and we want to have pricing of policies doesn't change so quickly that it upsets assumptions that homeowners have made Principally in their 30 year mortgages relative to their incomes.

And I would argue that the only way to get there, and this really tracks with what Nancy just said, is reducing levels of risk. What we are observing in California is rapidly escalating risk due to wildfire. And that in turn is driving real challenges with affordability.

I just point you to a chart that one of my postdocs, Nam Nguyen has, has prepared that uses CDI data that we obtained via a PRA in combination with modeling to extend the trends forward to the end of 2024 in insurance pricing.

And what you can see is that insurance prices have changed dramatically, particularly for the highest quintile of risk in California. And that's a trend that is unlikely to change unless we address risk. What can we do? Well, the state is acting on the next slide. Let me just make sure I'm on the right page here. oh wow. Did it work? Yeah. oh great. Fantastic.

How exciting. Okay, let me see if I can advance the slide.

Maybe with the arrow.

Can someone help?

There we go. One more. So here's pricing and you can see the trends. They're, they're I think pretty scary from an affordability perspective. Not shown here are fair plan policies which would be off scale on this chart.

But trend, the pricing is changing rapidly as insurance, as has been said, is becoming more available because of the sustainable insurance strategy and the, the broader efforts that CDI has made to solve for availability. But we, you know, we need to do more. Next slide, please. So this is just a picture.

I wanted to show a picture of Altadena on fire on January 7th to make one point really clearly we're talking about wildfire, but this was not a wildfire. You can see the hills behind Altadena. They are not on fire. What is on fire are structures.

This is that urban conflagration, like the great Chicago fire in the 19th century. And we don't blame the cow for kicking the lantern over. Right? We say, how do we prevent cities from burning down? That is what we need to be doing in neighborhoods in California.

The CDI sustainable insurance strategy will in time create accurate pricing and therefore restore availability. I think that problem we are making a lot of progress on. However, reducing risk is a problem really that this Committee can't solve, but it is definitely within your responsibilities as Members of the Senate.

Zone Zero which is going to be finalized by the end of the year, will do a lot, but implementation of Zone Zero is a tremendous challenge that should not be minimized. The first hearing at Board of Forestry suggested those implementation challenges are going to require a lot of work.

The current strategy we have for enforcing defensible space is not up to snuff for getting this done. Chapter 70 building codes, which we have in California are great. They reduce structure, ignition.

Getting both of these things done on a rapid basis is how we're going to preserve affordability of housing and not make this another part of how housing affordability is a challenge in county California. Next slide, please. Nancy, thank you so much. So, yes, I'm almost done. So, zone zero. I want to emphasize this point.

The zone zero regulation will not apply to existing homes until 2029. That is a very long time. We could easily see another loss event like this occurring prior to that time. There is not implementation funding to get that work done. Chapter 7a, the building codes do not apply broadly enough.

Every house burning on that map was not subject to chapter 7A because it wasn't mapped into the high hazard zone where that code applies. We need to be thinking more broadly, more frankly, more in a sense, more conservatively about our level of understanding of fire risk and imposing that code on more homes.

We also, and this is really important, don't really have a scalable home retrofit strategy. It's this point. CAL FIRE has been making significant efforts in this space, but they have not found a way to get the mitigations that matter in place affordably across the large fleet of already existing homes. In California, we build 150,000 homes a year.

We have 12 million that are existing. We need to go after that existing home, those existing homes and existing gardens in order to keep everyone safe. Our own families in high risk areas, Nancy's family, my family, I also live in a high wildfire risk area and also our neighbors by taking actions to protect our own homes.

Those actions have spillover effects onto neighbors and vice versa. Thank you very much.

Thank you. Is there any Members of the Committee that want to ask questions? Senator Caballero, you may proceed.

I haven't said much because I want to get to the public testimony and I'm supposed to be in another Committee so that I'm feeling anxious. But my frustration is I had an opportunity to visit. I have family in high risk zones. My district does not have high Risk zones.

And the fair plan is going to end up costing people in my district, rural agricultural district, where a lot of people that don't make a lot of money. So there's this tension between how do we spread the cost out and then how do we mitigate damages and then how do we retrofit things that should be.

Because there's no question that getting in and doing some of the defensible space, but also the screens and the vents and those kinds of things are really important. But how about communities that continue to build in the WUE area?

And this Committee doesn't have control over that, but I did visit over the holidays a community where they're planning to put 500 homes, where they had a massive fire a number of years ago and the neighbors protested and the City Council said yes, anyway, because they. I don't know.

I don't know what the thought was, but the challenge is that we just can't continue to build in. In regions, in areas that are. Have. Are at risk of wildfire danger, where there's canyons. Where there's canyons, there's wildlife and wild brush in the region as well. So that's my concern, and I don't know that it's been addressed.

Provide a perspective. Absolutely. So it's worth reflecting on the fact that Altadena and Pasadena were old communities. These are places that the street layouts were put down in the 1920s and 30s. Many of the homes were pre World War II, some were, you know, post World War II. But there's a lot of old housing stock there. Right?

New community design, new home construction is generally much, much safer, much more able to manage a wildfire passing through a community. And so it's a. It's a complicated question because in some ways, building new around existing communities can create greater safety because the new build around the older, less safe build can create like a buffer that will protect the existing older homes.

At the same time, there are places that are incredibly dangerous, particularly from an evacuation perspective, where we need to be concerned and need to ask that the new build, at a minimum, build streets and plans for evacuation that are up to fit to purpose and recognize that fires are a part of the California landscape and climate change is going to make them worse.

There's also the ability to, like, I love the idea of new construction as a moat to help existing communities like mine that are going to be very resistant to moving the rose bushes and the manzanitas.

So if we could build more affordable housing condos, places where people can rent in nice communities and bring up the value of everybody in the community by making us safer and dropping our insurance premiums. I mean, we can do that at the same time that we're trying to push this Zone 0 thing and the retrofits.

So it has to be done with care and proper zoning. There can be agricultural land, ranch land, some of the things that don't burn, that aren't just a fuel break, that have value to the community. So you're right. It has to be thought of very carefully and we can't keep doing the same thing in those communities. Thank you.

Agreed. Agreed. Thank you.

Senator Aisha Wahab

Thank you. So I do just want to highlight the fact that even we had evacuation notices go out and they were 12 hours late. Right. When we're talking about true what the responsibility of the community and the government is supposed to be, part two is the fact that, you know, we are building more dents across the state.

We are promoting 80 use, no parking, tinier streets, bike lanes, much more. I will be very honest, if I was in a fire zone and they're traveling acres per minute, Right. And that's what we saw in the fires, I probably wouldn't follow a lot of the driving laws. Right.

I'm trying to get out of there and save myself. Right. When we talk about kind of the water pumps, the failures across the board, what is your response to that? From water pumps to the direction to the notice, to even the design of the housing, you guys have any response in regards to that?

Yes. And because I'm an actuary, it's going to involve data which is exciting and not at all, but it matters. I mean, having, having an understanding of how fast a fire gets into a town is exactly what you're talking about. A slow moving, enormous, high intensity fire is not really a threat. It's usually just burning Wood, grass.

But a fast moving fire that overwhelms the fire suppression resources and makes all of the emergency responders focus on evacuation and not on fire suppression. That is where we have these terrible urban conflagrations.

And so to be able to understand what are your fire suppression capabilities all around the state, we don't have any data on what every fire battalion has in terms of equipment, training, mutual aid agreements. When we have multiple fires like we did in LA in order to prioritize the planning.

And we are working on that with the Western Fire Chiefs Association and that information is being input right now as we speak by individual fire battalions that can be put together with information about the number of Structures in an area and how many people have to evacuate to make better plans and to have better modeling of how fast fires will go into a community.

If you have more mitigation to slow the fire down before it gets into the community. The structure separation, distance is being handled by IBHS in their wildfire protection prepared neighborhood designation, which I said they're rolling out in March, well, probably later this month.

And it will have really great information on how houses at a certain distance won't catch each other on fire. And then closer together, I think it's within like 20ft, they start catching each other on fire no matter what you do. So all of that information is needed for us as a society to make better plans.

But right now, there is no actual data that is in statute to say that homes need to be developed this far apart, structures need to have these things. Correct.

I don't think that California statute has that, but that's what we're getting at is aligning everyone with zoning ordinances, building codes. It's all interdependent. There's a whole system, just like making yourself healthy, There's a whole system of things that have to be taken care of.

And those that do not have vehicles, that live in transit oriented development,.

They Need a safe place to go.

Okay, and then how do they get out?

They need a safe place to go. There's ways to design places that are safe and much less likely to burn or to be penetrated by fire. Like, I'm not a fire scientist, but I have been hanging around with fire chiefs for the past few years, and I think they would be better at this.

And IBHS people like that, that the insurance industry depends on. Michael knows these folks, too.

I just provide a perspective. Senator Wahab, that I wanted to say two things in response to what you said. The first thing is that the Southern California fire services are some of the best equipped, best trained fire services in the world, if not the best.

And I think it's instructive to realize that they were unable to engage in suppression when it. In terms of when the structure loss occurred, all they were doing was trying to save lives. And they did an incredible job doing that. We lost 17 people, but that's frankly, a surprisingly Low number given what happened.

So I count that fire response as very successful. We should not have the expectation that the fire Department is going to show up with trucks and hoses and water and put out these fires. That is not how these fires work.

Once five to 10 houses are ignited under these conditions, the fire suppression effort is over and it's about getting people out. So that's the reality. It is a very difficult reality to accept. That's why we need to build communities that will not ignite in this way. The other thing I would say .

We have about 30 more seconds.

I'm really, really quick. The other thing I would say is that part of the problem is that the IBHS wildfire prepared X home, neighborhood, whatever is going to work really well when we're building new, but it is not going to work in Altadena. It is not going to Pacific Palisades.

The side yards are 10ft wide, 5ft fence, 5ft. Those houses are close together. And the only way to really change it would be very disruptive to the community and the rebuild effort. And so we need to be thinking about other strategies to make those homes as resistant to ignition as possible.

Thank you. We got to get going. I know that we have another Committee to attend. I just want to make a couple comments on that and I'll be as quick as I can. You know, my mother worked in Palisades for 25 years, so I know the area well.

And it is, it's a lot of hills, a lot of brush. And I walked the Altadena. And the interesting part, I was with the fire chief and he pointed out to the homes that were standing and those were the new construction. So he shared that it was because they were adhering to the new standards.

And oddly enough, we passed bills to allow ADUs and ADUs, some of them were still standing once again because they were using new standards that we came up with. But I think for me, the key is something that you said, Ms. Watkins, I think you said, what are the barriers to mitigation?

And I think this is, it boils down to, I believe, the state investigation and trying to help those that can't afford it. Currently, I have a community home hardening Bill that's going to try and streamline things. But the barriers continue to be that some folks cannot afford to retrofit their home or home hardened. It's.

We're never going to get there. So I think it's going to take investment on the state's part. And you also in your presentation stated that we need to improve fire science and research. I mean, understanding the pattern of fire and where it goes. And that is key, key to survival of anyone, including those that don't have cars.

And so I really want to say that I wish we had more time with, with your presentation because I really do live in data and I love to see what you have. But we're going to have to move now move over to our the public.

And so with that, I'm just going to say thank you so much and we'll figure out how to circle back because I want to get deeper into the conversation of what you guys have presented here. I love solutions and you had a lot of great data. So thank you.

And so now we will move on to thank you everyone for your patience. We're going to move on to those wishing to to speak, but I do want to make sure that we keep it under 30 seconds and let's make sure that it's. The comments are based on the agenda and we may proceed. Go.

Thank you, Chair Rubio and Committee Members. My name is Will Abrams. I am one of the fire victims from 2015 to 2018 that are forced to Prop up PG&E's insurance through the California Wildfire Fund. Yet not made whole through that same 2019 AB 1054 legislation.

There are victims who are suffering who are not able to pay their bills. We cannot disconnect and artificially Prop up the insurance for the utilities while not taking care of our residents. The utilities need to be on the hook for our increasing insurance rates. I've submitted comments to the California Public Utilities Commission that traces the reinsurance rates.

And you will notice every utility caused wildfire there is a jump in the reinsurance rates. We've got to fix that issue if we're going to have insurance in the State of California. I really appreciate Senator Wahab's investor owned utility accountability rate, but I'm sorry.

All right.

We can't have accountability without.

I do appreciate comments, but we have to move on. Thank you. Next.

Madam Chair Members, Dan Dunmoyer, California Building Industry Association. We represent the Home Builders of California. A couple quick things. We support the sis. We still have an insurance crisis. We do not have access to insurance for condos, legally defined affordable housing or apartments. The Fair Plan still doesn't offer that yet. They're working on it.

But that's our most vulnerable citizens who don't have access to insurance. Quickly, we need to pass AB226 which will help strengthen the Fair Plan. We fully support using code 7A construction for all construction. The moat that Ms. Watkins talked about is how we solve the problem going forward.

Finally, let's use cap and trade dollars to help retrofit old homes. Thank you, Senator.

Thank you so much. Anybody else wishing to speak in the public? Okay. Seeing none. I just want to thank everyone for for coming here today. The reality is that we.

It may seem a little rushed to a lot of you, but the reality is that we do have a new membership on this Committee and insurance is really complex and a lot of moving pieces. And so I really just wanted to give everyone a sense of, you know, the topics and.

And eventually I will take a poll and survey to ensure that next Committee hearing is longer in terms of the subject matter to make sure that we go deeper into the conversation once again. We all recognize that insurance is such an important piece of our existence. Everyone has insurance. It is vital.

And I know, because I've been doing this six years, I know what it's taken me to really understand all the moving pieces. And I will have to say that everyone needs to be at the table. We need the insurers to stay in California.

We need, you know, the perspective from victims, and we need everyone from our, you know, our scholars giving us information. But again, it was a little rush, and we hope that our colleagues will share what other subject matters they want to cover and make sure that we go a little deeper.

So my apologies if it's felt rushed, but we have two committees hearing going on and we're going to lose our Members very quickly. So thank you so much. And once again, to all the victims struggling with insurance issues and all the victims that have lost, we send out our condolences if they lost a family Member.

Thank you so much. And the meeting is adj. Thank you.