Assembly Standing Committee on Insurance

Good morning, everybody. The Assembly Insurance Committee is now beginning. Vice Chair, I think is Members of the Committee, welcome. Today we're going to consider five bills. Please note, file item number three, AB637, was pulled at the request of the author. One Bill is proposed consent. This Bill is file item six, AB1531.

We're going to begin today as a Subcommitee as we await other Members to come. And we have a special order of business, Assembly Bill 888. And so I'm going to hand the gavel over to my Vice Chair, Mr. Wallis.

Assemblymember Calderon, you may begin your presentation of file item one, Assembly Bill 888. Whenever you're ready.

Got to get used to this room, different room. Okay. Vice Chair and Members with me today. I have two special guests to speak in support of AB888, the California Safe Homes Act. California Insurance Commissioner Ricardo Lada, the sponsor of AB888, and Alabama Insurance Commissioner Mark Fowler. Welcome, Insurance Commissioner. Thank you so much for making the trek out to California.

Thank you.

Without delay, I'll let the insurance commissioners begin their testimony.

Thank you, Mr. Vice Chair. I want to express my gratitude to Chairwoman Calderon for authoring this important measure. Investing in mitigation is essential for addressing our insurance crisis. We are not powerless in this fight. We must empower consumers with the resources needed to undertake vital work.

We have traveled throughout our state, listened to thousands of Californians, collaborated with local communities and our firefighters, and consulted with insurance leaders from various states and countries. One thing is clear. Wildfire mitigation works and we must scale it like we've never had before to have a chance at success.

The goal of AB 888, the California Safe Homes act, is to support home hardening by establishing a new grant program within my Department. This program aims to help homeowners reinforce their roofs, clear the first five feet around their homes, to create a non combustible zone, and to ultimately build more resilient communities.

It is well documented that reducing losses makes insurance more accessible and affordable. This program will concentrate on the most critical actions to achieve that exact goal. My Department already offers incentives for insurance companies to provide discounts for home hardening under my safer from wildfires regulations.

However, I believe we need a dedicated program to maximize risk mitigation benefits for Californians by addressing a key barrier, the upfront cost of essential mitigation actions. Today we are honored to have a special guest.

I want to thank my colleague, Alabama Insurance Commissioner Mark Fowler, for traveling to Sacramento to advocate for this important mitigation measure and to share the success of the Strengthen Alabama Homes program.

Alabama is a leader in risk mitigation and and home hardening and their work over the past 10 years serves as a vital example for California to follow. We also have seen promising results in other states that have implemented similar programs, including the Louisiana Fortified Homes program.

These programs provide compelling evidence of how state backed grant programs can assist individual homeowners while shifting the entire consumer market towards safer, more resilient construction.

According to a March 2025 audit, the Louis of the Louisiana program, grant recipients experienced an average of 22% decrease in their annual insurance premiums and a measurable reduction in uninsured losses that is major. Can you imagine if we were to ever get to a 22% decrease in your insurance premiums for hardened homes in California?

California is not alone in following Alabama's lead. Currently, 11 other state departments of insurance have established mitigation grant programs with 15 more states exploring similar initiatives. The positive outcomes in Louisiana further reinforce the potential benefits of such programs.

The new program authorized in AB 888 is crucial for our state, specifically targeting some of the costliest yet impactful wildfire mitigation efforts. What sets this Bill apart is the solid evidence from other states like Alabama demonstrating that similar programs can lead to actual, real, lasting and widespread change.

Members, I would like to now invite my dear friend Insurance Commissioner Mark Fowler from the great State of Alabama to share his testimony and experience on how their mitigation program has effectively protected homes, stabilized their market and provided more options for consumers. Something that we can only dream about in California today. Commissioner Fowler, thank you. Thank you sir.

Well, good morning Vice Chair Wallace and Members of the Committee. Thank you so much for this opportunity to be here to speak in strong support of my dear friend, California Insurance Commissioner Ricardo Lauda. You are so fortunate to have him in the office that he's in.

We work together with the NAIC, which is the National Association of Insurance Commissioners. He's extremely well thought of and well respected and you're very fortunate that he's in the position that he's in and to be here in support of Assembly Bill 888, the California Safe Homes Act.

Now I want to thank you in this as I learned late yesterday that you've sort of taken the limits off speech in time of speech. I'll be respectful and try to be quick but remember I am from the State of Alabama. It's pretty hard for us to even say hello in two minutes. So we'll.

I'll try to try to keep it as short as I can. Let me say congratulations to the California Assembly, this Committee, and the Bill sponsor, Chair Calderon, for recognizing the benefits of home fortification and considering this important legislation. And to Commissioner Lara for bringing it to you. This is a really big step.

This is your opportunity to act in broad support in a bipartisan way to do something really good for the people of California by doing something a little different. Natural disasters, be they windstorms, earthquakes, floods or wildfires, will come no matter what we do.

This means that we must find ways to help our consumers build stronger and before the event so they can have less damage after the event. Now that really sounds pretty simple, right? We've been wondering in Alabama, why haven't we been doing this for decades and decades?

Because maybe that's because it's so simple is why we didn't really go out and try it. AB888 will help you pave that way. So I've been working closely with Commissioner Lara through the National Association of Insurance Commissioners. I mentioned those a minute ago. That's the coordinating accrediting body for all state insurance jurisdictions.

We're drawing on experience for all states with natural disasters and the impact they have on our insurance markets. Through our meetings across the country and internationally, we have learned from each other. We've seen firsthand how insurance markets are connected. When Californians have a strong and sustainable insurance market, we in Alabama benefit from that.

And this is why I'm so happy to be here today to advocate for all insurance consumers, not just Alabama or California, for all states in between. Actually, to make sure that we are protecting insurance consumers, the nation's insurance regulators last year developed the first ever national climate resilience strategy. This strategy clearly says that to.

That clearly says that to better protect communities, we have to start long before the disaster happens. Something that we learn in the State of Alabama.

Now, you've heard in Alabama we have a similar program that would be created similar program to the one that would be created by AB888, the Strengthen Alabama Homes program, which was approved by our Legislature in 2013.

Our program focuses on the risk associated with windstorms, but the fundamentals of risk mitigation and the benefits to insurability are the same no matter where you are, no matter what the pain peril may be.

When we help people reduce their risk, their homes become more insurable and their communities will be more secure against the worst that nature has in store. In Alabama, it was the 12 punch from Hurricanes Ivan and Katrina in 2004 and 2005 and the incredible devastation and market chaos that followed that provided our real wake up call.

We realized that we simply had to do something different. We saw all the same things happening over again. Truckloads of contractors bringing in the same old roofs, slapping the same old roof, same old buildings together, commercial and residential. And we knew that that was not going to happen. Same thing was just going to happen.

The next storm would come through, wipe them all out just the same. So we realized we had to do something different.

Former insurance Commissioner, my predecessor, Jim Ridling, who at the time was a retired insurance Executive, was sent to the Alabama coast by then Governor Bob Riley to see if he could sort of calm the market down and work with all the various stakeholders and use his experience as an insurance Executive.

He had actually spent most of his career in San Francisco as the head of all US Operations for Fireman's Fund. And he bought a little subsidiary of American Express called Southern Guaranty and moved to Montgomery, Alabama, where he still is today. He met and married his wife in San Francisco.

And so he has told me all about his time in San Francisco and he took that experience there and then saw the devastation from the storms and he went down and he looked at everybody, says, what a timeout, y'all. Y'all. That's a Southern term, by the way. Okay, everybody with me on that one?

Okay, good. That's what we say. Time out, y'all. Now he grew up in Arkansas, so he knew what it meant. All right, time out, y'all. You're not going to do anything about insurance and insurance rates until you change the economics of what happens after the storm hits.

Yep.

And that right there, those few words are what started it all for us in Alabama. What followed, among many other things, was a data driven state based home fortification grant program for Alabama homeowners. Strengthen Alabama Homes program was broadly supported by agents in industry, academia, nonprofits, consumer groups, governors, legislatures, local governments and many others.

We bundled the program with mandated wind mitigation discounts and strong building codes in our coastal counties. So don't misunderstand me, it didn't happen overnight. It was a long term commitment by state leaders and, and a great deal of grit and determination by an awful lot of people all pulling the wagon together to see this through.

We knew, we didn't really realize we were about to create a national model, but we knew we were about to do something different and we knew that if we didn't, the same old stuff was going to happen again.

The next Hurricane since our first grant in 2016, our Department has issued more than $86 million in grants and fortified more than 8,700 homes. Now, a key part of our program is the Insurance Institute for Business and Home Safety Fortified standards.

The standard gives us a clear benchmark for homeowners to achieve and then our grant program can provide financial assistance as an incentive. Without achieving substantial growth in the number of fortified homes, our most at risk counties would face further challenges with insurance accessibility and affordability.

So as our program has grown, we have been able to strengthen our market and help out our customers, our consumers in Alabama. They're the ones who benefited. Lives and livelihoods have been saved and our market has largely stabilized. Some of our successes are as follows. Our state is now home to more than 5,500 IBHS certified fortified homes.

It's the most of any nation, I mean, excuse me, any state. So, as we had hoped it would all along, the private sector has caught on and far outpaced the grant program.

From that success, Alabama Governor Kay Ivey last year established through Executive order the Alabama Resilience Council, which I co chair with my colleague from the Alabama ema. The purpose of the council is to bring the principles of resilience to other parts of state government. So this is far more than a single state grant program.

It has become for us a catalyst for creating a culture of resilience. The fortified homes have been proven to perform much better in storms than homes that have not been fortified.

Next week in Alabama, we will release a top quality peer reviewed study that proves fortification works, commissioned by the Department of Insurance and conducted by the Alabama Center for Risk and Insurance Research, which is at the University of Alabama.

Now, I'm an Auburn guy, so that's hard for me to say, but it's at the University of Alabama we commissioned the study. The University, the research center conducted the study and we used claims data south of I10 in the aftermath of Hurricane Sally, a Cat 2 storm that hit the Alabama coast in September of 2020.

Sally was the first hurricane to go over the tops of a critical mass of the fortified roofs. From this study, we have learned that the IBHS certified fortified roofs not only performed as advertised, but they also far exceeded our expectations in terms of claim frequency, claim severity and loss ratio.

In fact, we also found that most of the claims on the fortified roofs were not about wind blowing the shingles off, it was trees falling on the homes. So the fortified roofs held. Let me also emphasize that this is a multi year program.

It's a multi year effort that is one of the reasons why this program has been so effective. So my encouragement is for you to be prepared for this to be a long term effort. We have not had the change. We have not had the change to see benefits for fortification over some years.

It's taken some years for us to see those benefits. Our program has demonstrated that when you align public funding with clear science based risk reduction standards, you can influence the broader market.

As you have heard from Commissioner Larda, we other states, including Oklahoma, Louisiana, Kentucky, Connecticut and North Carolina are among the states that have used our program as a template where it has been implemented. Those states are also learning that it can reduce the risk to homes and businesses and provide the needed stability to insurance access and affordability.

AB888 gives California the opportunity to do the same thing. Assembly Members, I believe that this is a moment that demonstrates the importance and success of our state based system of insurance regulation.

Individual states can implement programs that are tailored to their specific insurance market needs and risks and then we can learn and share and apply those successes among other states and jurisdictions to maximize the benefits to all insurance consumers.

Always remember that this is really about effectively addressing insurance access and affordability and market stability, giving the people of our respective states, from Alabama to California and everywhere in between, the opportunity to build stronger, recover quicker and live safer. Thank you for providing me the opportunity to speak today.

I particularly appreciate my friend Ricardo Lar for inviting me to come out to California. My apologies for taking a little long again. I warned you. I'm from Alabama, but I appreciate the opportunity to work with California on our shared goals of risk mitigation. I strongly encourage you to Support Assembly Bill 888.

And again I thank Chair Calderon for her leadership in sponsoring this Bill. Thank you so much for your time and attention.

Thank you. Commissioner, it looks like we can now establish a quorum. Madam Secretary, please call the roll.

[Roll Call]

We have a quorum. And with that, do we have any other witnesses in the room that would like to add on in support of AB888? And just as a reminder, please state your name, organization and position on the Bill.

Good morning. Good morning, Madam Chair. Members, Mr. Vice Chair Seren Taylor, on behalf of the Personal Insurance Federation of California, pleased to be in support of AB888 thank you.

Mark Sektnan with the American Property Casualty Insurance Association. We're strongly in support of the Bill. We do know we have scientifically based standards. They're already been employed in Paradise. We hope they'll be used in LA. But I would be remiss to say that this is but one step for fortified homes are very important. But we need to remember that community mitigation is also very important. Thank you.

Hello everyone. Casey Taylor, on behalf of the Rebuild Paradise Foundation, we're in strong support. I actually have the very first IBHS Wildfire Prepared Home certification and because of that we're seeing really good insurance rates come back to Paradise.

Good morning. John Norwood, on behalf of the Independent Insurance Agents and Brokers of California, pleased to be in support of this Bill. Thank you.

Terry Mchale from Aaron Read and Associates. Representing USA Insurance and CAL FIRE Local 2881 in favor of the Bill.

Good morning. Zach Suflu with the League of California Cities in support.

Thank you. Second all right, we have a motion and a second. Are there any witnesses in opposition? Seeing none. Let's bring it back to the Committee. Do we have any questions, comments, Mr. Harabedian?

Thank you Mr. Vice Chair. Thank you Madam Chair, for this Bill. Thank you to the Insurance Commissioner for the Bill as well and Insurance Commissioner Fowler. I could listen to you testify all day, see why people get along in Alabama if the accent goes a long way.

But I will say that this is exactly what we need, this type of solution. We need more carrots, not sticks to get people to do the right thing. And I think this is very much going to help my district.

I want to thank the Insurance Commissioner for his continued support for all the victims of the wildfire in LA and would love to be a co author. So happy to support. Thank you

Thank you very much, Mr. Vice Chair. And to the author, thank you very much for bringing 888 to I'm glad it's not 666 to us today. And also want to welcome the Commissioner from Alabama. Appreciate the Southern accent. My family is from the South, Texas and Alabama.

So appreciate your leadership being here and your sacrifice by sharing your life live experience with California so that we can get it right as well. And to our Insurance Commissioner, Ricardo Lotto, thank you very much for your focus on this particular matter. Certainly this is something that we take very seriously in California.

The devastation we have seen has hit hard. I have a cousin who lives who lived past tense in Altadena. Grammy, all of her Grammys, all 10 of them gone, her baby grand piano gone. She just left with a shirt on her back. And these are stories that we hear continuously on and on.

And so this is forward thinking, thinking out of box. Bless you. And I look forward to supporting this Bill and I would ask to be a co author of this Bill as well. Thank you.

I just wanted to thank the author and thank you guys for working on this. Thank you for coming all the way out here. I represent the north from the Oregon border to Alpine and Amador County, 11 counties, very rural, very plagued by fire. This will be huge for our county. I did have one question.

If you had considered like a, a section that is just allotted for rural residents or if there is some, some way to do that because I know we have a hard time qualifying for things a lot.

Assemlbywoman. Yes. This is going to be again, data driven, fact based and it's going to prioritize the entire state. Those are considered wildfire distressed areas which definitely are considered in your entire district.

Okay. Thank you so much. And I would love to be a co author as well.

Any other comments, questions? I would just like to say I appreciate you both being here. Commissioners, thank you for your testimony. I think this is a very smart approach. And Assembly Calderon would love to be added as a co author as well with that. Would you like to close?

Yes, yes. And before I close, I just wanted to, I'd be remiss if I didn't mention that Assemblyman Harabedian represents Altadena, where the Eaton fire occurred. And I think that was his first month on the job. So, wow, what a way to come into this, this world.

So we in Alabama watched on the news in horror, when you were going through all you went through, we know that you have wildfires in other parts of the state. We have them in Alabama. But this was something. So just know that we in Alabama, our hearts, minds and prayers are with you all and all of that.

And I'll tell you one thing about our program that when you really know you're doing something good is when you go talk to some of the folks who have had in our state, it's fortified roofs for windstorms. We have done a number of special projects in different parts of the state where we'll focus on an area.

We had a special program where we renovated or fortified 100 homes in five neighborhoods around the new protective stadium in Birmingham, Alabama, depressed areas. And that's what the program is for, is for those areas. But we were able to build a program around just those areas. And we met some of the recipients of those homes.

And one lady said to us, it doesn't rain in my house anymore. And when I heard that, I had chills. In fact, I have chills just saying it now and what she had experienced all those years and now it doesn't rain in her house anymore. We knew we were doing something good when we heard that.

Thank you. So in closing, I want to thank you both for being here again. I greatly appreciate it. I appreciate the support and the great idea. This measure. It's going to lay the foundation that we need to help make California more resilient. I'm really, really grateful for this opportunity.

And to all the Members that asked to co author, I would love to have you as co authors and I respectfully ask for an aye vote.

Thank you. We have a motion by Haarbedian, second by Gipson. The motion is do pass. The Bill is fiscal and will be headed to Assembly Appropriations Committee. Madam Secretary, please call the roll.

[Roll Call]

All right, that bill's out. We'll hold the roll open for absent Members. Thank you, Madam Chair. I'll hand the gavel back over to you.

All right. Yes. Really? I don't know if I'm allowed to add on. Absolutely. Yes, you can. Yes. Yes. Thank you. I'd love to have you. Thank you. You're welcome. It was such a great. Our next item is AB290 by Assemblywoman Bauer Kahan. Whenever you're ready, Assemblywoman.

Thank you. I wanna thank especially Madam Chair for her partnership on this Bill and I will say just her partnership in my own insurance journey in my district. I know I'm not the only one here who is in a district that has been hard hit by the insurance crisis.

But, you know, the chair and the Committee has been incredible in helping me and my constituents navigate what has been a really challenging period in the insurance market. And so I want to thank you for that and also, of course, your work and support on this Bill in particular.

As many of you know, I, like many of my constituents, received a letter about a year ago that I would be non renewed by State Farm. And I went on the journey of trying to find coverage. I called, I think every, not every admitted insurer, but I went down the list. Nobody was writing insurance in my area.

And so I landed on the Fair Plan. It was not a choice that I wanted to make. My insurance went up 300%. I went up from under $3,000 a year to $9,000 a year. So there's no question that I personally would make any choice but this if I had an option.

As we talk about the affordability crisis, you guys are sitting at one of the central points, I think, of the affordability crisis in California for homeowners. So the work we're doing here is really important. So I ended up on the Fair Plan.

When I set up my Fair Plan account, my broker told me, well, you need to know that unlike any other insurance carrier, you can't go on autopay despite the fact that you and your husband have very full time jobs and three kids. And autopay is the way that we make sure all of our bills get paid.

We would have to set up our account to pay and every month go on and click our fare plan. She told me that two of her other clients had missed the clicking, had been dropped from the fare plan.

And then their fare plan, which as I mentioned for me personally was 300% more than my prior insurance, went up another 300% because they had been kicked off the fare plan for failure to click the link.

And so this was shocking to me that we would have a system of last resort for people who had no other choice. That was so frankly dysfunctional. I had a conversation with the Fair Plan. They told me that this is on their to do list.

But constantly other things are rising to the top of the to do list and this keep moving to the bottom. And so I decided to move this piece of legislation to ensure that autopay had to be at the top of their list.

One of the reasons they said they have yet to do it is because they didn't want to make it easy for folks to stay on the Fair because they are the insurer of last resort. Maybe 10 years ago that made sense, but it doesn't make sense anymore.

I am not on the Fair Plan because I want to be. I'm on the Fair Plan because I have to be. And so making it harder for me to stay insured feels like the wrong choice for Californians who are already struggling.

And the fact that my cost would go up because I didn't click the link in the midst of my busy life was even more shocking to me. And so with that we're presenting AB290 and with me to testify is Robert Harrell, Executive Director of Consumer Fed of California.

Good morning Madam Chair Members. I'm Robert Herrell, Executive Director of the Consumer Federation of California in support of the Bill. I understand that testimony limits have been re raised today. So I have a brief 25 minute presentation for the Committee with a slideshow. Now I'll be very brief. The author did a great job. This is common sense.

The Fair Plan as the analysis points out, has upwards of half a million folks on it. And even if the insurance Commissioner's game plan is wildly successful to so called depopulate the number of people who are on the Fair Plan and rematriculate them over into the insurance companies who you all just heard from a few minutes ago on your Bill.

Madam Chair, you're still going to be talking about, I would think easily a couple 300,400,000 people on the Fair Plan. This is common sense. You've heard me speak before about the the game plan that the Department had, including an audit and management report about reforms the Fair Plan should conduct. It came out in June of 2022. Very common sense. And we urge an aye vote.

Thank you. Do we have additional support in the room? Seeing none. Do we have any lead opposition? Please come.

All right. Good morning Madam Chair and Members. My name is Obed Franco and I'm here on behalf of the California Fair Plan. The Fair Plan would like to begin by thanking Assembly Member Bauer Kahan, Chair Calderon and their staff are working with them and incorporating amendments to get to this point.

While the Fair Plan appreciates those amendments, they must respectfully maintain their oppose unless amended position on AB290. The Bill requires a Fair Plan to implement automatic payments by April 12026. While they are actively working toward this goal, they remain concerned the timeline is too aggressive given their current operational demands.

These include processing and paying claims from the recent catastrophic wildfires in Southern California, implementing implementing the Safer From Wildfires discount program and expanding commercial policy limits for homeowners associations, builders and farmers. These are significant undertakings that demand resources. The Fair Plan is also concerned about applying a grace period to non renewals.

Unlike installment payments, which already include a grace period and multiple notifications to both the policyholder and broker before and after a missed payment, non renewals occur at the end of a term when no premium remains. Extending coverage into a new term without payment effectively results in free insurance and exposes a Fair Plan to uncompensated risk for renewals.

The Fair Plan policyholders and brokers already received two advance notices to ensure they have ample opportunity to maintain continuous coverage. Aligned with the CDI Sustainable Insurance Strategy, the Fair Plan is working to return customers to the voluntary market. Their policy count has more than doubled since 2021 and their risk exposure now approaches $600 billion.

This underscores the need to preserve operational tools that ensure financial stability. The Fair Plan sincerely thanks the author for accepting several key amendments to date. However, they continue to respectfully request two additional changes, removing the grace period provision for non renewals and extending the implementation timeline for automatic payments beyond or on or before July 1.

The Fair Plan remains open to continuing this conversation and working collaboratively with to find a path forward.

Thank you and Madam Chair, if I may. I think I forgot to accept Committee amendments. So I'm sorry. Thank you. Thank you so much.

Is there any additional opposition in the room? Seeing none. I'll bring it back to the Committee for comments or questions. Assemblewoman Farris

I just want to thank the author from my county. I remember talking with you about this and really happy to see that you executed on it. You always embody really keeping your ear to the ground of the community of what what is going on in our county and in the state and I really appreciate that.

So thank you for moving. I'm very supportive of it. As far as the perceived technology difficulty, you know automation happens rapidly and I think you're able to deploy. The industry should be able to pivot very quickly given where we are in Silicon Valley hub here of the Bay Area.

So I would hope that you know that is not a hindrance and that embody really keeping Californians insured.

Thank you Assembly Member.

Harabedian

Thank you Madam Chair. Thank you to the author. I would, I will just attest to the fact that I received numerous phone calls about this issue over the past few months and I thought it was, I thought it had to be a joke that if you're on the Fair Plan you there was no option to do the automatic payment.

I mean I do think that government needs to be in the 21st century on a lot of different ways. Like everyone is caught up on this I guess other than the Fair Plan. So it's, it's unfortunately we need a Bill.

I do think on the grace period point, I think private industry is well ahead of the Fair Plan even on this. I mean I do think that a lot of our partners at various insurance companies give more grace than the Fair Plan. And so I just think that, you know, these are common sense things.

I would love to be a co author and again it's too bad we need a Bill for this and so I appreciate you doing it. It's really something that consumers need and hopefully it passes very quickly and gets people some relief. So thank you.

Thank you. I'd love to have you as a co author.

I just wanted to also thank you for this Bill. When I read this I was very excited because this just happened to my 80 year old father in law last week and he went without insurance for three months and didn't know because it wasn't renewed. And I think it is ridiculous that we have to have a Bill. This should have been fixed a long time ago.

And I'm very frustrated that there isn't an urgency because we work for the people and this is for them and they're figuring it out and we should be figuring out for them and helping them through this process. It's just, it blows my mind that we are that this wouldn't just be fixed from the Fair Plan. So happy to support Bill. Would love to be a co author as well.

Thank you Assemblymember. Mr. Gipson

Speaking of which, does this Bill have an urgency clause?

It does not.

It does not. Okay

I'll take a non hostile amendment on that.

Only reason why, Because I think, you know, Californians are hurting and we need to work expeditiously in this space. Anyone that has bills, whether it's taxes, deferment or whatever should have urgency clauses because we people who are hurting, can't wait for the appropriate help. We need help right away.

And so I would also like to be considered as a co author of this Bill. And thank you very much for your leadership in this space. Sorry this had to happen to you, but these are where the good bills come out.

These kinds of moments in our own personal lives so we can be authentic as we are by advocating for not only ourselves, but also the people who are also being hurt by these policies. Thank you very much.

It's true.

Thank you. Assemblywoman, Addis.

I'd like to thank the author as well and ask to be added as a co author. And I took some data from the Fair Plan's website. I represent three counties, Monterey, Santa Cruz and San Luis Obispo.

And in four years, we've had 300% growth of people on the Fair Plan in Monterey County, 530% growth for Santa Cruz County, and 560% growth in San Luis Obispo County. And I'm astounded that, that we would talk about not covering gaps in coverage simply because of a payment mistake.

And I'm also astounded that we have to do legislation to get an automatic payment process going. I have a separate Bill in a different Committee just to get people to stop using fax machines. And I'm always just taken aback at how hard it is to get normal things done for the people of California.

I think it's why they get frustrated with government, and I think it's our duty. I concur with the comments that there should be an urgency clause because I don't think people can wait. And I think people lay awake at night thinking about these things. And so I would like to make change that's easy, change as soon as possible.

Thank you. I want to thank you for bringing this Bill forward. And, you know, I feel like we've all been a part of this journey. As painful as it's been for you, I think when you were going down that list, you may have actually took a break to call me because you were very frustrated.

And so I'm not surprised to see you back here in front of this Committee with a really good Bill idea. And I think that this Bill is going to, along with the comments from everybody on the dais, it's going to really incentivize and help the Fair Plan do better. Californians deserve better.

And so with that, would you like to close?

Yes. I just want to thank you all for your comments. And I will say that when I, the first person I spoke to about this was actually the Member of Altadena to know what he had heard, because I know he'd been experiencing similar things and I hadn't thought about the folks who had failed to pay and then lacked coverage and been the subject of a catastrophic wildfire.

And, you know, that was something that he brought to light for me. And so this is real and this is important. And I know we shouldn't need a law. I couldn't agree more. But here we are. So with that, I respectfully ask for your aye vote.

Thank you, Secretary call the roll.

[Roll Call]

Okay, that bill's out and we'll leave the roll open. Thank you.

Thank you.

Good morning. Assemblyman Gonzalez. Whenever you're ready, you can present on AB 1339.

Thank you. Madam Chair and Members, I'm pleased to present AB 1339 which seeks to address the ongoing insurance crisis facing affordable housing providers in California. I want to thank the Committee, the staff, for their thoughtful work on the Bill. I will be accepting the Committee amendments.

California is grappling with significant challenges in its insurance market and the affordable housing sector has been disproportionately impacted. Between 2020 and 2022, the cost of insurance for affordable housing providers increased by 56% on average, and some providers experience rate hikes as high as 500% between 2022 and 2024. This has caused severe financial strain on affordable housing organizations.

Unlike market rate housing, affordable housing providers cannot offset these rising costs through rent increases or profit margins because they are mission driven and regulated by rent controls.

As a result, many affordable housing providers are forced to implement drastic measures such as using operational reserves meant for one time emergencies, deferring properly maintenance and necessary improvements, cutting services and reducing staff reducing insurance coverage which increases their vulnerability to potential risk.

These challenges threaten the fiscal viability of affordable housing development and put vulnerable residents at risk of displacement. AP 1339 aims to create a data driven solution to assesses and addresses these challenges. The Bill requires the California Department of Insurance to conduct a study of insurance coverage available to affordable housing entities.

CDI will identify barriers of keeping these affordable housing entities appropriately insured and collect and analyze data on policy availability, premium trends and claims history to get an accurate picture of the existing problem. The study will also look at underwriting factors such as resident populations and sources of income to better understand how insurers are affecting affordable housing providers.

The Department of Insurance will collaborate with a wide range of stakeholders, including insurers, risk sharing pools and affordable housing entities, to ensure that a comprehensive and thorough assessment is conducted based on the study finding, CDI will submit a report by December 31, 2026 with policy and budget recommendations to approve the availability and affordability of insurance for affordable housing providers.

Join me this morning Primary Witnesses and Support Natalie I'm going to mess up your name Spivak on behalf of Housing California and Araceli Palafox on behalf of Enterprise Community Partners. Take it away.

Good morning Madam Chair and Members. My name is Araceli Palafox, and I'm here on behalf of Enterprise Community Partners, a co-sponsor of AB 1339. Enterprise Community Partners is a national affordable housing nonprofit working towards increasing the supply of affordable housing, advancing racial equity, and building resilience and upward mobility.

As our partners began to lose access to insurance or experience cost increase, we began convening an insurance working group of over 100 Members from organizations across the state to brainstorm solutions to address the rising cost of insurance at a state level.

As part of this work, we have spent the last two years analyzing our own LIHTC properties story, banking the experiences of affordable housing providers and surveying developers across the state to understand the negative impact that increasing insurance costs was having on affordable housing projects and how the increases are putting these properties at risk.

From 2022 to 2024 organizations reported insurance expense increasing increases ranging from 50% to 500%. These rising insurance rates are not just a function of climate risk. We are seeing huge premium increases in Wildfire Urban Interface as well as infill areas like Downtown Lake.

In 2021, a nonprofit which opened up a new permanent supportive housing development in LA County to serve over 100 households experiencing homelessness. This property was an infill and near public transportation and despite zero insurance claims to date, they saw a 450 increase in insurance premiums from last year to this year.

And so what we've learned through this work is that the issues that are facing affordable housing providers are similar to but distinct from those facing the broader housing market and warrant a unique policy solution. But in order to craft the right policy solutions to address the insurance crisis and protect state funded affordable housing.

We need greater transparency and systematic data collection to understand the drivers and factors behind the issue and so AB 1339 is critical for helping us accomplish that. I want to thank Assemblymember Gonzalez's office and and your Committee for working with us on this effort and respectfully request an aye vote.

Good morning Chair and Assembly Members. My name is Natalie Spivak and I'm a Senior Policy Advocate at Housing California, a statewide nonprofit organization dedicated to producing affordable housing and ending the homelessness crisis. We're also a proud sponsor of this Bill.

When I talk to affordable housing developers, they describe rising insurance costs as an existential threat to the viability of their organizations, their properties and their low income residents. Affordable housing developers are legally required to restrict rents at affordable levels, making it impossible to pass on the costs of rising premiums to their tenants like market rate developers.

And as many affordable housing developers are still recovering from rental arrears during the pandemic, it's much harder for them to absorb these rising insurance costs. As you've heard, they've already been required to dip into their operating reserves, postpone improvements or upgrades to properties, decrease services or Layoff Staff, and reduce insurance coverage which exposes them to further risk.

While we need more than just data to solve this problem, better understanding by how much and why premiums are increasing is critical to helping us craft longer term solutions that are tailored to the needs of affordable housing. We can answer questions like are some types of places seeing larger premium increases than others?

Are properties that serve certain types of residents differentially impacted? And what other factors are driving the changes in the availability and price of coverage? These are the types of questions this Bill will help us answer and by producing a study with data driven policy recommendations, we'll be in a stronger place to design longer term solutions.

To close, I want to emphasize that spending a couple $1000 on a study is a worthwhile investment given that we have billions of dollars in affordable housing properties. The state is that is ensuring the continued financial sustainability of those properties by crafting solutions that address rising insurance costs should be a state priority.

I want to thank Assemblymember Gonzalez for authoring this important piece of legislation and respectfully ask for your aye vote.

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

Clifton Wilson, on behalf of the City and County of San Francisco, in support. Thank you.

Justin Yada, California Housing Partnership and support. Thanks.

Do we have any lead opposition to this Bill? Seeing none. Any public opposition? Seeing none. I'll bring it back to the Committee Questions or comments? Thank you. Assemblyman, would you like to close?

AB 1339 is not just about protecting buildings. It's about protecting the people who live in them. In South Los Angeles, a trusted nonprofit housing provider serving over 300 low income families saw its insurance premium surge by nearly 400% in just two years.

To cover the cost, they had to delay critical roof repairs and cut youth program, including after school tutoring and mentorship services that many families relied on. These families did everything right, working hard, paying rent and trusting that their housing was secure. But without affordable insurance, that security is unraveling.

We wouldn't accept schools without teachers or fire stations without water. We cannot accept affordable housing without the basic protection of insurance. If we don't act, more providers will face impossible choices and more residents will be pushed to the brink. Not because of poor planning or bad management, but because the insurance market has become unpredictable and unsustainable.

We can't build a resilient housing system if our providers can't weather the storm. This is our moment. Let's act now. Because more residents lose not just support, but the homes that they depend on. Thank you. And I respectfully ask your aye vote on AB 1339.

[Roll Call]

Okay, that bill's out. We're gonna now take up the consent calendar.

Thank you, Secretary. Please call the roll.

[Roll Call]

Okay, that bill's out. We'll leave the. Oh. Ready for this Assemblymember Wallis? Whenever you're ready, you can present AB646.

Good morning, Chair and Committee Members. I have before you today AB646. This is a really good Bill that I have some great witnesses on. So with me today I have Kelly Jensen from the Motor Vehicle Protection Products Association and Kenton Stanhope from the California New Car Dealers Association.

Thank you, Madam Chair and Members. Kelly Jensen representing the Motor Vehicle Protection Products Association. We've worked very closely with your staff. To craft some great disclosure language. This is an important product to protect. People from catalytic converter theft. We asked for an aye vote.

Yeah. Thank you, Ken Stanhope with the California New Car Dealers Association. I would like to thank the author and his staff for all the hard work they put in up to this point point. And to the Committee staff, especially for the the work on the amendments, specifically the disclosure, which made an already great Bill even better.

I'll keep my statement and just echo the comments of of Mr. Jensen. Just say that this Bill furthers the intent of SB55. It will increase the amount of etchings that are put on catalytic converters in California while still maintaining the options for consumer at the point of sale.

With that, I'm happy to answer any questions of the Committee from the perspective of the dealers and CNCDA respectfully requests your aye vote.

Thank you. Is there additional support in the room?

Morning, Madam Chair, Members of the Committee. John Moffatt on behalf of the Alliance for Automotive Innovation. And support.

Cody Boyles on behalf of CARM Action Support.

Thank you. Do we have any lead opposition to this Bill? Seeing none. I'll bring it back to the Committee. Questions? Comments? No. Okay. Would you like to close?

Yeah. I just want to thank the Committee for their hard work in collaborating to refine this Bill so California consumers not only have access to effective theft deterrence, but also financial peace of mind and respectfully request an aye vote.

[Roll Call]

That Bill is out. Okay. We're going to let Members add on. And then for those Members that haven't made it to Committee yet, we're going to leave the roll open for five minutes.

We're going to let Members add on. Secretary, please call the roll.

[Roll Call]

Okay, this concludes the Assembly Insurance Committee hearing.