Senate Standing Committee on Insurance

Good afternoon, everyone. Can we please ask all Members who are listening to please come to room 2100 so we can establish a quorum. We have a very short agenda today. We have several bills on consent and two authors who are here present ready to present.

In the interest of time, we are going to start as a Subcommitee to allow our guests to begin with their presentation. So again, seeing no quorum, we're going to begin as a Subcommitee. I will invite our very first author to join us. Assemblymember Calderon. Please join us.

Assemblymember Calderon will present AB75, which will be followed by Assemblymember John Hatabithian after. And we have five bills and consent. Welcome, Assemblymember Calderon. Hi. You may proceed. If you have anyone presenting on your behalf at this time, they can join us in the front.

Okay. I do have somebody, but I think she's out in the hall. It's not Wendy. It's not Wendy Mitchell, but I will go ahead and start. Although she could probably wing it. Yeah. But I'll go ahead and get started whenever you're ready. Okay. Thank you. Madam Chair and Members, I'm here today to present AB75.

AB75 provides new consumer protections to homeowners when insurers use aerial imaging to make decisions about coverage. Insurers have been increasingly using images from drones, aircrafts and satellites instead of in person inspections to make underwriting decisions. California homeowners have reported that they were blindsided by non renewals based on these pictures.

In many cases, it turned out that the images were inaccurate or outdated. AB75 requires insurers to use images no older than six months and allows policyholders to receive any aerial images taken of their home.

For aerial images used to non renew, cancel or reduce coverage, AB75 requires that the image is up to date and gives consumers the right to request an in person inspection to verify the accuracy of the image and any remediation performed by the homeowner.

Recent amendments delay implementation to July 1, 2026 to allow the insurers to meet the timeliness requirement in this bill. With me today is Claudia Milder, Assistant Chief Deputy Legislative Director at the California Department of Insurance.

Good afternoon, Madam Chair and Members of the Committee. Ms. Claudia just walked in. Josephine Figueroa with the Department of Insurance Deputy Commissioner and Legislative Director under the leadership of Insurance Commissioner Ricardo Lara.

Before you begin, you will have a total of four minutes.Oh, okay.

Unless you have somebody else sharing, you may take the four minutes. Thank you so much.

Thank you for allowing me to speak today in support of AB75 which would require residential property insurance in California to give notice before they capture and obtain aerial images of their insured property and give the homeowner the right to request and receive copies of any images and challenge coverage decisions based on those images.

A widely reported by the media and documented in consumer complaints to the Department of Insurance. Insurers have increasingly using aerial imagery to inspect homes.

Insurers and their third party vendors are using not just drones but also satellite images, manned and unmanned aircraft and high altitude balloons to collect images of homes and and property, often without the homeowner's knowledge, and then using these instruments to deny coverage or non renew policies.

In opposition letters submitted by industry insured share they inspect homeowners properties using images as old as 18 months, which raises serious questions about whether outdated and inaccurate images are being used to cancel or renew policy.

AB75 seeks to remedy this by requiring if images are used to act on a policy, that the images be no more than 180 days old. The Department of Insurance has provided consumer support in instances where flawed aerial imagery led to wrongful cancellations or renewals.

In several cases, insurers attempted to use outdated satellite photos to assess roof conditions, resulting in policies being dropped due to incorrect data. Consumers are concerned about privacy and the lack of transparency in the home inspection process.

Policyholders should not have to fight to know when their property is being surrounded to understand clearly what information is being assumed in those images and know how that information is used to affect their policy. This measure strikes a necessary balance.

Insurers can leverage fast, cost effective aerial data to assess risk while policyholders gained increased transparency with access to the images and the chance to remedy the problems. AB75 ensures that consumers are protected and not unfairly penalized based on inaccurate, outdated or misinterpreted images. On behalf of Insurance Commissioner Lata, I ask for your aye vote.

Thank you. Thank you for that testimony. And I'm sorry, Before we move forward, I believe we have a quorum. If you may allow me, please. Secretary.

[Roll Call]

We do have a quorum. Once again, thank you for that testimony. Now I would like to invite anyone in this room to come up to the microphone and state your support. Your name, the organization and your position only please. Thank you.

Good afternoon Chair and Committee Members. Zach Seflu, the League of California Cities in support. Thank you.

Thank you. Good afternoon. Anna Buck, on behalf of the California Association of Realtors in support. Thank you.

Anybody else wishing to state your position? If not, we will now move over to a main witness in opposition. You may join us here in the front. Thank you.

Thank you. Becca Kramer Mater, with Kaiser Advocacy on behalf of Privacy Rights Clearinghouse and Respectful oppose unless amended position While we appreciate the intent of the bill, the bill still fundamentally fails to protect Californians privacy.

Instead, it legitimizes and normalizes a deeply invasive surveillance practice that most homeowners remain completely unaware of and that has the potential to harm Californians beyond just insurance Impacts A drone at only 100 foot elevation can be practically invisible to those of us on the ground as well as us not able to hear it.

Yet it can capture crystal clear images of the intimate details of our private spaces, our children playing in our backyards, security vulnerabilities, neighboring properties, even what is going on inside of our house through the windows. These are features of daily life that go far beyond what's needed for insurance purposes.

Without data minimization requirements, these images pose risks to consumers. Beyond the insurance impacts, insurance companies have troubling data security track records. Privacy Rights Clearinghouse has a database of US reported data breaches and it documents over 545 different insurance organizations involved in data breaches. Yet AB 75 lacks basic data minimization protections.

Without downstream restrictions, insurance companies can freely sell these images to data brokers who who in turn sell to a wide range of buyers from immigration enforcement agencies undermining California's sanctuary protections to stalkers and harassers targeting vulnerable individuals to criminals planning break ins. Yet AB75 lacks safeguards against downstream sharing as well. The bill has three critical flaws.

First, the bill does not have sufficient notification requirements so that folks will know exactly when their house is going to be surveilled by a drone and could, for example, make sure that their children are not playing in the backyard at that time. Second, it only allows consumer response after harm has occurred.

Why not provide an opt out ahead of time?

And third, and most egregiously, it lacks basic data security and minimization requirements, including maximum retention periods or deletion requirements for the images purpose limitations restricting how images can be used beyond insurance mandatory blurring of people, neighbors, properties or sensitive elements, and restrictions on downstream sales and sharing of this information.

We urge you to hold AB75 to further amend it to include strong data minimization requirements, genuine consumer choice, and meaningful limitations on how these intrusive images can be collected, retained and shared. Thank you.

Thank you for your testimony. Now I would like to invite Anyone in the room to please come up and state your opposition, your name, your organization and your position only. Thank you.

Good afternoon, Madam Chair, members. Robert Horrell, Executive Director of the Consumer Federation of California. We have an opposed unless amend position. Also, in addition to the comments you heard, we think consumers ought to get an automatic copy of any image to deal with the high error rate. Thank you.

Thank you.

Madam Chair. Members, John Norwood, on behalf of Near Maps, I'm somewhat chagrined that we're still. Being showed as opposed and want to apologize to the staff and chair and author of the bill for not making sure our letter went in, but we have removed our opposition with the recent amendments. Appreciate those. Thank you.

Thank you. Anybody else wishing to state their opposition? Seeing none, I'd like to invite our Committee Members. Any comments, questions or concerns, now is the time. Senator Niello, you may.

Thank you, Madam Chair. Just ask the author what you have to say about the requested amendments.

Well, you know, throughout this whole process, I've been working with opposition on this Bill and I'll continue to do so. So, I mean, yeah, that's all I can commit to doing that.

Senator Becker, you have a question?

Yeah, well, thanks. Thanks for your work on it. I just guess more specifically some of the concerns raised sound concerning about selling. Is it can the insurance companies sell the images and can they be used for other than insurance purposes?

I'm going to defer to my witness.

You're welcome.

Please state your name just for the record, please.

Mildner, Assistant Chief Deputy Legislative Director at the Department of Insurance.

You want to address the question?

Yes. So right now, these images are not typically captured by the insurance company. They are captured by a third party that captures via satellite and drone and then they're purchased. So it's, it's a little bit more of an expansive world in that they're already sold typically to the insurance company.

You're saying that this bill doesn't affect that one way or the other?

No.

Is that, can we through the Chair.

May I respond to that? It doesn't directly, but it very much does affect that by legitimizing the market for these images and for these third party data brokers to go out and take these images and sell them to the insurers.

The fact that they are being sold already does not mean that we shouldn't at least put in protections to make sure that the insurance companies, if they are, for example, taking these images themselves, are not then selling them on, but we should be putting in place protections to make sure that regardless of who is taking these images.

People's private lives are subject to the appropriate privacy protections under California statute in honor of the California constitutional right to privacy.

Yeah, so I hear that. So there's a concern about. Even this third party then sort of legitimizes the market. And having done a lot of current data brokers, raises concern for me that I hadn't fully anticipated with this bill. So I'm just trying to clarify. But.

But can the insurance companies themselves also take images or is it only third parties?

They can also take images, but it's typically done through third parties.

But if the insurance companies take images, can they sell those images or not?

That I do not have an answer for. I'm happy to get you one afterwards, so I'll look into it.

Okay. It's kind of like important. Feels like. Can we get an answer, like more quickly? I don't know. I'm just trying to. It's kind of pertinent to the bill.

I will. I can step out and I can make a phone call and see if I can get an answer.

Is there anything that you want to add?

No, I mean, we will try and get you an answer as soon as possible.

Yeah, I mean, it feels kind of fundamental just to this, like if. Because we also had other. We had a Senate Bill also on this kind of question on privacy, and I don't know where that one is in the process, but I just have a lot of concerns about.

We should make sure the images are not used inappropriately, are not sold, that people. There's also a question about blurring. Is there blurring of people or. There was a concern raised. Does that happen?

I will also get an answer to that question for you. I'm not sure that this is a discussion that fully came up during the conversations on this bill.

Okay.

Anybody else wishing to ask questions?

Just a. Sure. Senator, A follow up to that point. And I understand the concern that Senator Becker is raising, but I can't. If insurance companies are taking pictures, I can't imagine that they would be selling them.

What we're really talking about, and I didn't fully realize in reviewing this, is we're not necessarily talking about insurance companies taking pictures. We're concerned about anybody taking pictures. Google Maps could be considered part of what we could potentially be concerned about, particularly with regard to the privacy issues, if that's your real concern.

Google Maps could provide similar invasions, if you will, and other surveys of a geographic or otherwise nature could be a much bigger deal than potentially than what we're Talking about.

But with regard to insurance companies, if there were a provision that would prevent insurance companies from selling the pictures, I don't know if insurance companies would have a problem with that. I don't know why they'd want to. But perhaps that could be a consideration. To. Address that concern.

Yeah, I mean, I don't know why insurance companies would want to sell these pictures. But to your point, I mean, we know that there are companies like Google and others that have the, you know, capability to fly planes over and take pictures of our homes.

If you go on Google and you Google your address, you can see different iterations of your home depending on how frequently they update those photos. So this bill is an attempt to actually help homeowners, and that's why I introduced this bill. But we will definitely go back and work on this.

And yours is in the insurance application. The privacy organization's concern is a broader one.

Yes.

Not just the insurance application. You're concerned of an invasion of privacy by anybody surveilling a property from above without any notice.

To be clear, the amendments that we have proposed are specific to this context around the insurance use of this information. So, yes, we have, with broader concerns generally.

But specifically looking at the insurance application here, and I wish our printer unfortunately wasn't working otherwise we actually flew a drone up and took images from the ground of the drone 100ft up to show what you can and really cannot see and then what the drone image captured to show just how invasive this practice can be.

That is a little different, I'd say, than Google Maps, where they're specifically targeting areas of the property that are not always available on Google Maps, such as your backyard, where your kids might be in the swimming pool, or depending on the angle that they happen to be at when they're taking the picture, it could see through the windows of the house.

But I will say that the mock up of language we provided addresses both the issue of insurance not being able to sell the images or retain them for longer than necessary, recognizing that there are many data breaches that are involving insurance companies.

And so that's also a concern as well as our mock up contains language around blurring the images to make sure that people are blurred and that other properties that are on the inside of the house are blurred as well.

Thank you. Any other questions? Senator Becker, you have one more question?

Yeah, I guess I was just going to say that it says that they. These images are available upon request. So this does provide notification to the homeowner. Right. And then their images are available upon request. Is that right?

Yes.

Okay. I mean, I just would love to, you know, because we had a chance to discuss this part of it. But I appreciate, you know, certain your intent and with this bill would love to maybe just. And does a lot of good things. So I do want to support it.

But I do want to love to just chance to talk, maybe talk through some of the privacy, especially some of the questions we have unanswered going forward.

Okay. Any other questions? Sure. I want to thank the author. What? I wanted to just share with everyone that this Bill started somewhat expansive and the author has been doing a great job of working with stakeholders and trying to get to a place where everyone can be comfortable.

You know, a lot of the issues that are expressed here are valid concerns, but I have to share with you. These are issues that I think just generally all of us have. Let me just take the insurance out of the equation. You know, I'm a survivor of domestic violence.

I have a restraining order and I've been complaining about the possibility of everything that you expressed. Right. Stalking and trying to follow someone. But that belongs in another discussion as it pertains to what we're doing with, you know, drones and imaging and Google Docs.

I mean, this is just something that I think we have to look at in a different policy area. But in this particular case, I do really appreciate all the work and I've seen a lot of people be extremely opposed to going neutral. And so that only speaks to the work that you're doing.

And I did hear you say that you will continue to have those conversations. I heard you say that you will bring that information to ensure that everyone is well informed as to what's happening with that data.

And I also heard data breaches and privacy, again, not disagreeing with you, but this is something that drones are already doing separate from the conversation of insurance. I see them all the time, I complain about them all the time around my home for the reasons that I stated.

But again, I think that the author has done tremendous work in terms of trying to bring everyone to the table and listening to all the stakeholders. And so with that, I'd like to give you an opportunity to close.

Well, thank you, Madam Chair, and I appreciate your comments. It has been a lot of work working with all the stakeholders. And from where we started, we have taken a lot of amendments and done a lot of work to get to a place that we feel is balanced.

And I mean, you know, the whole goal of this bill is to help consumers, our constituents, who are being non renewed based on aerial images. And so I will definitely talk to the insurers and about whether or not they.

I don't think that they would want to be selling these images, but I will talk to them about that. And I got to tell you that all the stakeholders have been negotiating in good faith thus far and I'll continue to work on the bill.

And I just want to take note of what Senator Becker just shared, the possibility of blurring images if there's children involved or just people in General. But I know that you'll continue to work on it and like that. Madam Secretary, please call the roll. I move by Senator Caballero.

Motion is due pass to Judiciary Committee. [Roll Call]

50 at this time, but we'll leave it on call for the absent Members. Thank you very much and thank you for your testimony. I'd like to invite Assemblymember John Harabedian to present AB 597. Please join us. And I want to invite the witnesses, lead witnesses and in supporting opposition to join us in the front.

Thank you, Madam Chair. First of all, thank you by always pronouncing my name more Armenian authentically than I do, which is really a testament to you and your connection to the Armenian community. And I just want to thank you and the Members of the Committee for hosting me today.

And obviously to the chair and Committee staff who really dug in on this bill and I think made it a better bill and all your engagement and conversations, I just want to thank you, Chair Rubio, for everything that you've done.

I am accepting the Committee amendments and again, just want to thank you and I want to thank the public adjusters who have really engaged on this bill. And I'll tell you, when we started this bill and to where we are now, months later, I have learned more about public adjusters than I thought I ever would.

And let me first just by start by saying they provide a good and a service that consumers oftentimes need. And I want to commend them for that work. I think that there are a few instances and a few bad actors in this industry which this bill is trying to address.

Obviously, as you got most of you, you know, Senators that I represent, the Eaton fire area of Altadena and thousands of my constituents have lost their homes and are now going through an insurance process of trying to recover really life saving money. And oftentimes it's hard to go through that process.

And oftentimes it is a struggle for various reasons. And oftentimes the policyholder needs to hire a public adjuster to help with the claims process. A public adjuster is a licensed professional that helps policyholders file and collect on their claims in certain instances. And again, they play an essential role.

Public adjusters can play an essential role in advocating for policyholders and ensuring fair settlements. So let's have that as a baseline and all agree to that. However, there are gaps in the current law, and there's gaps in the law that have allowed certain consumers to be misled when retaining public adjuster services.

For example, and most specifically, policyholders, oftentimes, especially during a disaster, are in a frantic, emotional stage. And a lot of times they are signing and agreeing to a contract that is not clear as to what they are paying and for what services a contingency fee from a public adjuster is applying to.

Most specifically, many public adjusters apply a fee and charge money on money that was received prior to to the public adjuster being hired.

So in an instance where someone loses their home, a total loss, an insurance company pays out on coverage, a $600,000, but the total limit is a million, there could be an argument that that additional $400,000 needs to be litigated more. A public adjuster has to come in and fight for that additional $400,000.

Many consumers, when they hire a public adjuster, do not know fully, because the contracts are not clear, that in part they are hiring a public adjuster to fight for that 400,000, obviously, but they have to pay money that's already in their bank account for that service on the 600,000, the old money.

And that leads to a lot of confusion and it leads to a lot of heartburn with consumers feeling like they are being left in a worse position than they were prior to hiring the public adjuster.

And that is really the genesis of this bill, which is the old money versus the new money, being able to actually charge a fair rate, but on money that the public adjuster actually worked to obtain. So this Bill would clarify that.

It would also make sure that some adjusters have aggressively marketed and solicited clients during the midst of the wildfire, literally as the wildfire and flood or disaster is happening, you have solicitors and runners knocking on doors, talking to people who are trying to figure out just the next day how they're going to survive.

That is obviously not a very good situation. And there are rules against that. You cannot solicit during certain hours, during A disaster. And that is usually from after 8pm to, excuse me, after 6 PM and until 8 AM the next day. And the problem is, there is no remedy if a public adjuster actually was soliciting during that time.

Right now, there really is no remedy for that. This bill would allow the consumer who was solicited and maybe forced into a contract too quickly to actually cancel the contract and get out of it if they felt rushed, and they did it in sort of a heat of passion. So let's be clear with what this bill does.

And by the way, where this bill was a few months ago and where it is now, thanks to the chair and Committee staff, it's a very different bill. It only applies to catastrophic disasters.

It would strengthen contract transparency by requiring adjusters to clearly state the claims and coverages they are handling, ensuring that policyholders know exactly what they are paying for. And that is a big part of this bill.

As I said, it would prevent public adjusters from charging fees on monies paid out before the public adjuster was involved or did any work for their services on the disaster emergency claim.

And again, it gives policyholders the right to cancel their contract if a public adjuster contacted the survivor during a prohibited period or while emergency conditions are still present. Again, we can't allow a few bad actors in this industry to harm our consumers.

This is a consumer protection bill, and this is something that all of us in our districts, hopefully we don't have to deal with. But if you do have to deal with it in your district, we want to make sure our constituents are protected as much as possible.

Here to help with testimony are my witnesses, Josephine Figueroa and Tony Signorelli from the California Department of Insurance. Thank you again, Madam Chair, and I'll hand it over to my witnesses.

Just a quick reminder. You have total 4 minutes, 2 minutes to each, and I'll remind you when the midpoint comes. Thank you.

Good afternoon, Madam Chair and Members of the Committee. Josephine Figueroa, Deputy Commissioner and Legislative Director for the Department of Insurance under the leadership of Insurance Commissioner Ricardo Lara.

As a proud sponsor of AB 597 insurance, Commissioner Lada would like to thank Assembly Member Harabedian for his leadership in authoring this important measure that will protect Californians from unfair fee practices following a disaster. We all are aware of the recent wildfires which have brought immense emotional and financial strain to Californians. During these challenging times.

We must work together to prevent the revictimization and targeting of disaster survivors when they are not in, when they are in the most vulnerable state, we know responsible public adjusters provide an essential service in negotiating on behalf of consumers, aiding them in securing additional funds under an insurance polygon. However, varying fee structures can be confusing to consumers.

Often AB 597 ensures funds go to where they are needed most to the consumer by prohibiting the consideration of payments received by the consumer prior to entering into a contract with a public adjuster after an emergency or catastrophic disaster.

It also provides individuals the right to rescind or void a contract that was solicited during a prohibited period which is not currently in existing law. AB 59 AB 597 would not limit the ability of a public adjuster to charge any amount they believe is fair.

It only requires public adjusters to be transparent on their fees as it relates to as it relates to disaster areas. The difference in fee structures between different public adjusters is precisely what AB 597 attempts to address.

As a consumer solicited under both emotionally and financial distress may not be in the best position to understand the opaque fee structures contained in public adjuster contracts. AB 597 11 is the playing field for consumers by adding transparency to fees charged by public adjusters following a disaster or State of emergency.

We have continued to engage with public adjuster representatives and have heard their concerns. We have taken amendments to address these concerns. On behalf of Insurance Commissioner Ricardo Lara, I ask for your aye vote.

Thank you. Just here for technical questions. Okay, well, thank you very much for that testimony. I would like to invite members of the audience to come up. Please try to limit your comments to your name, organization and your position. Thank you.

Mark Second American Property Casual Insurance Association in support of the bill.

Thank you. Sherry Mchugh representing the Pacific Association of Domestic Insurance Companies in support of the bill.

Thank you Madam Chair Members. On behalf of LA County in support. Thank you

Madam Chair, Members Sarah and Taylor on behalf of the Personal Insurance Federation in support. Thank you.

Good afternoon. Anna Buck on behalf of the California Association of Realtors in support. Thank you.

Madam Chair Members. Joe Lang representing the Pacific Coast Association of Public Adjusters wanted to say that through all the hard work of you, your staff, the author, his Chief of Staff and the Department many meetings nighttime early morning we were able to arrive at a neutral position with the latest amendment.

of the bill and want to thank everybody for all the work that was done.

Thank you. Now I would like to invite anyone wishing to speak as lead opposition to this bill to come up. You're welcome to join us in here. Thank you. As a reminder, you'll have four minutes.

And I'll give you a warning. We're almost there. Thank you.

Madam Chair and Committee. My name is Greg Clifford. I'm the President, CEO of SunPoint Public Adjusters. We are a larger public adjusting firm in the state and we're fundamentally. I absolutely agree with the Assemblyman as far as getting regulations in place that help the consumers and help regulate our industry.

Unfortunately, at this point in time we were fundamentally opposed to the structure that he's put together. Because we're on one side, it helps to cap what insurance public adjusters do and create a venue for that.

On the other side, it has an unintentional adverse effect of allowing the insurance companies an opportunity to present a certain amount of money up front without any basis for that.

And it prohibits that insured from being able to hire somebody because there's just not enough money left there to bring in the experts to fight the insurance companies company. And so it allows the insurance company to technically take the position of $1.0 million claim.

As you had mentioned, the $600,000 payment, I'm going to pay him 6 or 650. It becomes an actuary account. I'm going to give you 675. I'm going to give you 700. At that point the public adjuster says I can't bring in the experts.

I can't afford to operate and represent this client for three years or two years to represent him in that process. And so I have to pass on that loss. I have to go and represent this other person. That person doesn't get the benefit of representation.

And the insurance company is now saying I've only had to pay him 700 out of the million because this person, unfortunately, it's the person going to see a doctor instead of going to buy a knife or surgery. They don't have the ability to fight the battle. And unfortunately this bill where on one side of it, it's wonderful.

It helps the adverse effect of what it's doing. It creates a vehicle that the insurance industry can use to their advantage. It's why so many insurance companies are happy with it right now. They're, they're supporting it because it gives them an opportunity to not pay with what they're supposed to pay.

If you want, if you want to create an opportunity for the consumer to be made whole, make the insurance companies pay 100% after a disaster. Take me out of the equation altogether. It's wonderful. It's what's, it's what Montana's done.

But this, this bill is set up right now just has an adverse effect to the consumer that people aren't seeing. And for people to say, well, it's not too bad, insurance companies won't be bad. You give an insurance company an opportunity to make a profit, it doesn't make them bad people, but they're for profit companies.

And I've been doing this for 30 years. They're going to take every opportunity they can to be more profitable for their shareholders. And if they can give them $0.07 instead of a dollar and that now forces that person to not be able to afford an expert, they're going to use it. And that's why we're opposed to it.

It has nothing to do with what it does to public adjusters. It's this fundamental inequality for the consumer.

Thank you. Thank you for that testimony. I would like to invite anyone in the audience wishing to come up and state your opposition. You may do so now. Okay. See no opposition coming up to register the opposition. I'll turn it over to our members. Anyone? Oh, okay. We have someone. Please state your name in.

Wendy Mitchell, on behalf of Greenspan. I'm sorry. On behalf of SendPoint Public Adjusters.

Thank you. Thank you so much. Anybody else? I'll take my time, make sure I got everyone. Okay. Everyone in? Got it. Okay, so I'll turn it over to our members. Anyone wishing to ask any questions, you may do so at this point. Senator Becker, thank you.

Thank you for your work. And, and I know it's driven out of the work, what the tragedy happened in your district. I guess a bunch of questions. I mean, why not just cap public adjuster fees? Why not do that?

Thank you, Senator Becker, for the question and the remarks. And when we first started this Bill, we looked at fee caps. To be clear, many states have fee caps. We don't.

California allows for various different business models that certain percentages from certain adjusters are going to work for them and certain consumers and certain percentages are going to work for others. And we have that flexibility because of the situation that Mr. Clifford actually discussed.

In a situation where 600 or 650 comes in, but there's only 300 and 350 or 400 left, there might need to be a higher fee on that remaining amount for the adjuster to be incentivized to take that hard case. Those are called reopened files.

A lot of times many of the adjusters who take reopen files as described by Mr. Clifford, they can charge up to 20 or 30% because that, that makes economic sense for them and the consumer knowing full well that that's what the contract is and is happy to enter into that situation. They have their 600,000.

They want to fight for that additional amount if it makes sense, if some sort of investigation by the public adjuster shows that the insurance company isn't acting in good faith. And in that case, we don't want a fee cap because that fee cap would actually hurt the consumer. And we've had.

Mr. Clifford and I have many conversations, had many conversations with Mr. Lang. It is why every adjuster, other than some point, to be clear, is neutral on this bill. Every adjuster in this state, the biggest ones, have actually viewed where this bill is today as a win.

And so I think the caps have unintended consequences for the consumer. And I don't want to do anything to hurt the consumer. And I believe that the caps could, in certain circumstances, the very ones that Mr. Clifford is actually describing, could hurt my constituents.

Your example, just trying to understand because the 600,000 and then the 400,000, right. Or whatever there is. So if so there's an offer of 600,000 or so, the insurance company would come forward and say, hey, you have this limit of this. But you know, this is what we offer you, 600,000 essentially, right? And then that's assigned.

That has to be a signed written contract. You already have a contract. You already have the insurance policy. You have coverage A, B and C, and you get a payment for a total loss.

And now, I mean the trend, and I have to give a lot of credit to the insurance company, we have seen over decades that on total loss circumstances. And this is why the bill only applying to catastrophic losses is so important. Those initial payments have increased exponentially where they may have been 30 40% in years past.

I mean, we're seeing, and again, credit to the insurance companies, we're seeing payment of 70 75%, 85% in first instance. And I think that that is why this is so important. Because to the extent that someone wants to fight for that additional 20 or 30%, that's money in their pocket already. It's literally in their bank account.

They're using it to pay for rent and pay for their kids schools.

For an adjuster to come in and say, I'm not going to just fight for that 20% and I'm not going to fight for that 20% unless you pay me a percentage that's already in your bank that I had nothing to do with, that your contractual agreement with the insurance company allowed you to get without my work.

That's just not fair. And I don't think that's a country and a system that we want to live in. And I think that everyone, again, recognizes that. But for a few, I think for one party, and let's be clear, other states have no reach back states like Florida, states like Virginia, states like New York.

We're not creating new ground here. This is a simple measure that other states have, have used to protect their people. That's great. And I appreciate, I'm just trying to make sure I understand so and look. Let'S hope that you never have to understand it.

Anyone who hires a public adjuster or anyone who has their district go through it, it's because it's a, you know, it's not a good situation. And. Mr. I'm sorry, did you want to, yeah. Tony, did you want to speak to something that I missed?

I'm sorry, not that you missed, but maybe just to clarify, add further clarification to some, maybe some of the concerns and some of the partly to your question is that under current law, a public adjuster is allowed to take up to 100% of new money, while the contract may only say 10 or 15% under this proposed, under this proposed Bill, mathematically a public adjuster can take that same 100%.

There's mathematically no different in how much a public adjuster can charge on current law versus the proposed bill. It's just more transparent because now since it's only new money on disaster claims, it's only contingent on new money that the percentage will be we're going to look for your 400,000.

We're going to try and get that and we're going to charge 1020304050%. It's going to be transparent versus before and the contract, it would say we're only going to charge you 10% of the whole settlement.

So in other words, the whole million that ends up being settled even though the public adjuster had no hand in obtaining that first 600,000. So mathematically there should not be any concern from public adjusters because they can, they can still take the same fee under current law versus this new bill.

Right. Another thing I'm just trying to figure out because it seems like maybe an old system, you know, you would hire public adjuster. Why wouldn't you write, say 10% even though, you know, you know, your point, like, hey, maybe you're not necessarily better off, but you'd probably do it under this, this bill passes. I'm trying to understand.

So if you get the 600,000, then you want to fight for additional 400,000 and you hire public justice. But then you have to go back and justify all the 600,000 as well. Is that the case?

You know, it depends on how you define the word justify. Any public adjuster who, who deals with reopen claims, this is a reopen claim. What you just described would due diligence and would do some sort of audit to determine that this is worth taking.

We obviously don't want public adjusters taking cases where there is no evidentiary basis that more money is owed. So they would do their audit, they would do some sort of work on the front end, and they would sign up that client if they saw some basis to actually go after that 400,000.

So there's a lot of confusion about having to work the full claim or work the full case. You would have to do that anyway. We don't want public adjusters actually contractually trapping people into something where there's no basis to go after that extra money anyway.

And that's something we would hope as attorneys or anyone who represents clients you do work before you sign them up, you know what you're walking into. And I think that here lies the problem. A lot of public adjusters will sign up. I mean, using the word ambulance chaser in this circumstance is apt.

Sign up lots of cases, lots and lots of cases, whether there's merit or not, and you get a percentage on the whole thing. There's dead money, there's easy money to be taken. And then you just kind of figure out, okay, of the 50 I just signed up during a disaster, maybe 10 actually get me some real money.

But for all of them, I know I at least get that 10% on the old money that's already in the bank account. That's not right. And I think a lot of people who sign up public adjusters don't know that that's what they're getting into.

And you could, I can show you the contracts, very ambiguous language contracts, that if me and you were writing them up, it would be something that we wouldn't sign. Absolutely not.

Yeah, that makes a lot of sense to me. Is it possible to have the opposition witness respond? Is that okay through the, through the chair?

Absolutely, absolutely. You may respond.

The. I think the comments by the Assemblyman, unfortunately, are skewed because after a disaster, pardon me, the insurance companies are not documenting the claim. They're not giving in a claim and saying, based on this, we're giving you 600,000. They're saying, we're giving you an advance $600,000.

If you want $600,000, $0.01, show me where you give it, where all the 600,000 went. And that's where. That's where the problem lies with. With that portion of it, which I'm not really even at a problem with. But the reality is when you say they aren't really doing anything for that money, we are.

Because in order to get them one penny above that, you have to document that 600,000 that that person doesn't do. They don't know how to do that. So the insurance companies come in. They have no duty under the current law. They have no duty under the policy to present a claim.

All of that duty lies with the insured, the person that's had that problem, and they can't do it. They don't have. They don't have the ability. They don't have the resources or the education in this world to do it. And so the insurance company can give you 600,000 without anything other than just writing the check.

The Department of Insurance has asked us to give us a quarter of $1.0 million towards contents. Here's your quarter of $1.0 million. It doesn't justify anything. It just says, here's some money. Now you want the rest of your money. I have to show you where that whole 250,000 was before I get a penny above that.

That's where. Unfortunately, there's a mistake in what is being presented here. The claim still has to be documented from $1. And so whether we. Whether we get paid on the outside on overage or whether we get paid from $1 on a much smaller percentage, it doesn't matter.

What does matter is by putting this system in place, it presents that other side of the effect that allows that insurance company to now start manipulating those dollars. And it's why the insurance companies, the insurance industry is so eager to back. Creates. It creates a vehicle for them.

The idea of whether or not we work on an overage or whether or not we work from $1, it's inconsequential. It doesn't matter.

Well, it just. I just. I'm sorry. Thank you for that. I do know we do got to move on, too. I just. I mean, how would you respond? I just. I just want to make sure that we're not.

Because it is great if you get a check for 600,000, that's great, you know, but I want to make sure we're not through this bill unintentionally then discouraging someone to hire a public adjuster for the rest because like, zero wait, now we got to go back and redocument this and this whole process.

Maybe I should just take the money I have or something.

100%. I couldn't agree with you more. That's why we have not capped the fees. And Mr. Signorelli, I think addressed it really well. They can charge whatever they deem as being reasonable and responsible in their business model and the consumer can know very clearly what they're paying for and how much they're paying for.

It would be an economically rational decision. If you believe that there was a basis to get the 300,000, you and I or anyone here would hire an adjuster and happily pay them 20 30 40%. That's more money than we would have in our pocket otherwise. So that model still works. There's plenty of adjusters that do that.

Frankly, there's plenty of adjusters that would be here probably testifying that that is their business model. So that is not a problem. We do not want to make it harder or worse for consumer in any way. This makes it better. This keeps more money in their pocket.

It brings clarity to them, especially during a disaster, when again, times of emotion and lack of clarity in the mind. I think that's something to really hold onto. Mr. Signorelli. I'm sorry.

Yeah, no, no. Great. The only thing I would add, you know, is that insurance companies are going to pay the same amount regardless of this bill or current law. Insurance companies are obligated to document their claim file, prepare an estimate of repair, rebuild to when they pay claims with regard to the inventory.

That's an advance payment by statute. That's a separate issue. But again, the public adjuster can charge the same amount, same dollar amount of fee under current law versus this bill, regardless of, you know, what you're hearing from the opposition.

Is that true what you said? Because, I mean, because we had. Senator Allen has a Bill that was also sponsored, I believe by the insurance a Commissioner that says, hey, we should give 100% or 80%. I forget what it is now. It's 60%. I'm a co-author, proud of it. But anyway, go ahead. Okay.

Now that 60%, we probably knew there'd be some negotiation, but. But that's. So they're kind of. They have to give that, say 60%. Let's just say if that bill passes or something. So then they're not really documenting all that or.

Well, yeah, except for the inventory, which is by statute. They're not documenting it. But. But the public adjuster can charge current law Allows the public adjuster to charge as much as they want, but they can't leave the customer less than what they started with. So if I get $600,000, I can't end up with less than $6,000.

I was just wondering what you said was they have to document everything because it seems like they.

Well, except for statutory advance payments, which is just one or two things that, you know, four months of additional living expenses and 30% currently now for contents, now it's going to be 60 of the contents loss. So those are the only two exceptions.

Most of the issues that are addressed by public adjusters is not the contents, it's the structure, it's the smoke claims. You know, those are the majority of claims that we're talking about here. And again, mathematically, the public adjuster, Instead of charging 10% of a million, they can charge 100% of new money and get the same dollar amount.

I think they're just there's fearful and concerned of. It looks like one public adjusting company of having to solicit business saying I'm going to have to charge you 80% of new money because they're afraid it might scare off a customer rather than trying to justify why they have to do it to the customer rather than this Committee.

And 80% should scare off the customer. Let's be honest, if anyone came in and said I want to charge you 80% for new money, you should say no and go find an adjuster that would charge you 20 or 30.

So anyway, did that answer your question? I know that we have to allow others for questions, but go ahead.

Good for now. Thank you.

Thank you for that. Senator Niello, you had a question?

Well, I was just looking for clarification on the comments that the opposition had said. Relative to the detail of the old money, is that not provided by the insurance company?

Yeah. And in General Insurance Co. Again, the exception is the advance payment by statute on the contents. Right.

Is justified. Subsequent to that, there's an allowance paid up front. Correct. And then reconciled once the insured provides detailed list.

Right. But with regard to, let's say the structure, either a total loss or A. Smoke claim, the insurance company typically undertakes an inspection and they have an adjuster come up with a, with a number before they pay it. And that's they call the undisputed amount that the insurance company is required to pay.

So to suggest while it may happen in certain instances as an exception, most companies aren't just going to write checks blatantly, especially on the structure loss and a smoke Loss, for example, they're going to undertake an inspection and have a calculation done, because they're going to want to justify that number, whether it's the final number or whether it's an initial undisputed amount that they're required to pay.

When you use the term adjuster in your comments, you're talking about the adjuster working for the insurance company with the insured, correct? Yeah.

Okay. Thank you. Anyone else wishing to ask questions? Well, first of all, there's a lot that was said right now, but the one thing that I want to make clear is that this will start it in a really expensive way. And, you know, and I want to acknowledge your.

The area that you represent, we happen to be neighbors. And so I have been seeing the predatory practices. By no means am I implying you, but it's interesting how I get these messages about, you know, filing a lawsuit because I'm in proximity to the fire and how I'm going to get millions of dollars. And.

And so, you know, it's happening very often where these individuals who have tragedies happen to them get taken advantage of.

And so to that, I want to just say to Mr. Clifford, this was a huge bill, and we've been working with your office and with everyone else, and that is why it was important to remove the adjuster fee cap, because we felt that the fair thing would be to allow the adjusters to charge what's fair and what they deem to be appropriate.

And to the author, I mean, we had discussions, and you've come so far in terms of making a Bill that did take a lot of the opposition off. I would say mostly everyone came off, which is a testament to the work that you've been doing and to your willingness to understand both sides.

Because I do see the point you're making in terms of having to go back to $1 to. To analyze the case and see how you move forward. But at the end of the day, I do think that there is the ability to reject the case, if you will.

If it's not, it's not going to be advantageous to your company. But we did remove the adjuster fee cap. There is clarity in terms of the rights of individuals, and I think that there's still probably some more that we could have done.

But I just want to say thank you to the author and to my staff, because this has been one of those bills that has been ongoing for many hours, as someone just pointed out, days and nights. So I think we came to a really good balance here.

Also not allowing other cases outside the catastrophes, which was also important to your office. And so there is a lot of give and take. And again, so I do see both sides.

And that's why we came to a good middle ground in terms of striking that balance, to ensure that adjusters can do their jobs, still be able to charge what they think it's fair, making sure that the consumer has clarity and there's transparency. And again, because I'm your neighbor, I get to see the devastation.

I'm in proximity to what's going on on the ground level and everything that poor victims are going through and consumers are going through. So I want to thank you for just coming at the table and thank you for all the conversations we had as well, Mr. Clifford, and for your testimony. Would you like to close?

Thank you, Madam Chair. Thank you again for all the work, the partnership, and really where the Bill has come. I just want to thank you personally for everything you've done and thank the robust conversation, the questions, and just would respectfully ask for an aye vote.

Thank you. Someone would like to move the bill. Okay. Moved by Senator Caballero. Madam, please call the roll.

[Roll Call]

It will remain on call for those absent Members. Thank you, everyone, for your testimony. I need to leave. Right. Mr. Niello, I'm gonna need to turn it over to you. I have the representing GO and we still need to leave it open for those absent Members. Would you be kind enough?

So I gotta hang around. Do I get paid overtime for that?

Oh, you know what? Hold on. No, we're going to do consent right now. All right? We are going to be taking consent calendar right now. And again, thank you for everyone's patience. We're going to take consent calendar on AB290, AB487, AB815, AB888, and AB1339. Please call the Senators.

[Roll Call]

We're still leaving the the roll open for absent Members. I will excuse myself as I have to go present the Bill in another Committee, but Senator Niello will take over. Thank you, everyone.

We will be in recess for five minutes.

So I'll call the Insurance Commission Committee back into session. And we will roll. Take roll call on consent calendar and three bills first. Two bills. Excuse me. First we'll take a roll call on the consent calendar. Clerk, please call the roll.

[Roll Call]

It's 60. Put that back on call. And now we'll take up AB75.

[Roll Call]

That is also 6-0. Put that back on call. Now we'll take up item four, AB597.

[Roll Call]

That is. See ya. That is a 6-0. We'll put that back on call. And I know Senator Padilla is talking as fast as he can. And we will be in recess for seven and a half minutes. Is reconvened.

And we will now go through the roll on two bills and consent and correcting one that I mentioned before. Item number four, AB597. I think I said it 60. On call. It was 50, and it's on call. But we'll start off with a role on the consent calendar.

[Roll Call]

That is 7-0, that Bill. Those bills are out. And now file item 1.

[Roll Call]

That is 7-0. That Bill is out. Now, item number four, AB597.

[Roll Call]

And that one is now 6-0. And that Bill is out. And this Committee meeting is adjourned. Thank you, sir.