Senate Standing Committee on Insurance

The Senate Insurance Committee will come to order. I think we're only missing one member, so I ask the missing members to please join us in room 112. Today, we only have one bill in the agenda, SB 371 by Senator Cabaldon. First, we need to establish a quorum. Madam Secretary, please call the roll.

[Roll Call]

We have established a quorum and so now we will move over to the good Senator from Sacramento. He will be presenting SB 371. Mr. Cabaldon, when you're ready, you may proceed. Thank you.

Thank you, Madam Chair and members. I'm going to focus principally in the—on the—amendments to SB 371. When this Bill passed the Senate, it was clear the direction we were heading.

At that time, the original version of the legislation expressed the direction that we intended to tackle the challenges posed by the uninsured and underinsured motorist coverage that the Legislature enacted into law as part of the very original ride sharer legislation more than a decade ago.

And as you know, that requirement was put into place without any studies or research, was largely put there because Uber at the time was offering that. And the p—both the PUC and the Legislature simply took that and put it into the statute.

And it has created substantial cost problems for riders, it appears, as part of our fares each and every day. And it's one of the reasons why California, many parts of California, have the highest fares in the country relative to distance and driver availability.

And so, the point of the Bill is, is to make rideshare more affordable, substantially more affordable for Californians who rely on it every day for every possible kind of mobility: trip to work, to church, to visit grandma, to school, everywhere. It has become an essential service in our society.

But the costs have been rising, and this has been a very significant contributing factor. The other aspect of this issue is that drivers are also not getting the composition that they deserve these in order to balance in the market. Prices are going up, and driver compensation hasn't been keeping pace.

And when drivers don't want to drive, that raises fares even more. So, that was the problem statement. We and—both we and the opposition indicated that, in the Assembly, we would be working on changing those limits and substantially reducing them from $1 million to a lower level and that is exactly what the Assembly amendments do.

The Assembly amendments change the $1 million coverage down to $600 per individual, or $300,000 per vehicle, which is 60,000 and what, $300,000, respectively, more than every other comparable form of transportation, whether it's a taxi, or a limo, or an Uber Black.

So, it is still, it is still a unique feature of the insurance that would require—be required for—Uber and their drivers and Lyft and their drivers, while also right-sizing the insurance requirement to the market. California is one of the few states that has this requirement at all.

In addition, the Assembly picked up on many of the issues that were raised in the committees here, which were how do we—how can we be more certain that riders and drivers will actually benefit and that will not be captured by the rideshare corporates? And the Assembly amendments deal with that in two ways.

First is it strengthens the language that was developed in the Senate Energy Committee, with respect to reporting to be able to have clear, a clear picture on fares and total cost that riders bear before this Bill and after this Bill, so that we're able to hold both the companies and ourselves accountable.

I would point out that at least for one of the companies, this charges directly in the fares that we all pay. And so, with that, that direct transparent charge will go from its number now to zero or to a much lower number in that respect.

And then second, to assure the drivers are also benefiting from this because we need drivers. Drivers deserve better and also, we need them in order for the marketplace to function properly.

The Bill also is now linked to the Bill that the Senate passed earlier this week or yesterday, AB 1340, which permits rideshare drivers to organize and bargain collectively on a sectoral basis. So, both of those were done in order to accomplish the same commitments that we were asked to make during the Senate's consideration of the legislation.

That's the complete set of amendments. And much of the opposition, including the California Federation of Labor Unions, has come off as a result. And with that, would be happy—would ask for an aye vote, and happy to answer any questions you might have. Thanks, Madam Chair.

Thank you, Senator Cabaldon. We will now move over to support witnesses, witnesses to support, John Finley of Uber and Malcolm McFarland of Lyft. Please join us in the front for testimony. You can join him in the back. Thank you.

Thank you, Madam Chair and Members. John Finley with Uber, speaking in enthusiastic support of Senate Bill 371. We're also supportive of the amendments that were taken in the Assembly. We want to thank Senator Cabaldon for his leadership in bringing this issue forward.

This is a huge win for affordability in California and we're glad to have gotten to this point. So, thank you, and with that, we respectfully urge your aye vote.

Thank you. You may proceed.

Thank you, John, and thank you, Senator Cabaldon, for your leadership on this issue. Good evening. Thank you, Chair Rubio, Vice Chair Niello, esteemed Committee Members for your consideration. Again, my name is Malcolm McFarland II and I'm representing Lyft, speaking in favor of this Bill, Senate Bill 371.

This Bill, as, as noted, is essential to keeping rideshare services affordable and accessible for millions. Senate Bill 371 will right size uninsured and underinsured motorist costs or coverage rather, and creates, as Senator Cabaldon mentioned, new TNC annual reporting requirements centered on rider fare transparency. This Bill represents a historic compromise for Californians, strengthening affordability and protecting gig workers.

So, thank you for your time and respectfully request your support.

Thank you very much. We will now allow members of, of the audience, to come and state your position in support. You're welcome to come to the microphone. State your name and your position. Okay. I see no interest. I will now invite opposition witnesses to join me and speak in opposition. Seeing none.

I will now invite those in the audience wishing to speak in opposition to join us in the microphone and state your name and your opposition. Okay, thank you. Seeing none. We will now move the conversation over to Members. Any Members wishing to speak? Oh, I will turn it over to Senator Caballero.

Well, I want to thank everybody that came to the table to work on this. These are not easy issues to come to agreement on, and I do appreciate the hard work of the author as well, and with that, I'll move the Bill when it's appropriate. Thank you.

Anybody else wishing to speak? Seeing none. Well, first of all, I want to thank Senator Cabaldon. I do agree this is something that was way overdue, and I think that it's, it's big. I know that this has been ongoing, and tensions have been around for, for quite a long time, and I'm so thankful that both stakeholders that have interest in this issue have come together.

I just want to highlight a couple of things. First of all, affordability does win here because there's a lot of issues that were brought to the table, ultimately added to the Bill.

Number one, we know that there will be reporting requirements, which is important because we wanted to ensure that we monitor. We want to make sure that when we pass a Bill that we have information at our fingers to that would allow us to redirect if necessary. But thank you.

We do need to ensure that when we get those billing statements that we know, and I understand that there'll be annual reporting, that's one. But secondly, that it'll be transparent for riders, so they know what they're being charged.

I also am very thankful that we're adjusting the insurance rate so that we could also take care of our employees, making sure that employees are able to organize and fight for better wages and also ensure that, you know, that they are able to, again, fight for whatever makes them whole, in terms of insurance, health insurance, taking care of their families. So, today, I just want to say thank you to everyone that came to the table.

But Mr. Cabaldon, I know this is something that's not an easy bill to take on. And to all the stakeholders that are sitting before me, thank you for sitting down. As already mentioned, this Bill is tied to another bill in the Assembly by Assemblymember Buffy Wicks.

So, we do know that this will not move forward unless the other partner bill becomes effective January 1st. And, and with that, I will turn it over to you for you to close. Thank you.

At the suggestion of Senator Wahab, I would merely request an aye vote. Thank you very much, Madam Chair.

She is pretty scary, isn't she? Well, you know, it's been a long day, so we do need a little comedy relief. So, I'm going to turn it over to—with Senator Caballero making the motion, Madam Secretary, please call the roll.

[Roll Call]

That's 7 to 0. The Bill is out. Thank you, gentlemen, for your testimony. And thank you, Senator Cabaldon, and.

Before we adjourn.

I would like to turn it over to my Vice Chair, Mr. Niello, for some words.

This is a rather momentous hearing, even though it's sort of a special hearing, sort of called on the fly. But Tim Conahan, to my right here, has been with the California Legislature for as long as I can remember.

Decades.

And I was here a long time ago.

He was here a long time when I was here a long time ago. And this is his last public hearing, I believe. Is that correct?

Probably.

Probably. Well. This week, this week, we really don't entirely know, but Tim informed me earlier this year that he was going to be retiring this year.

And I asked him, was it something I said? I come back and he takes off, and I told him that he can't. I forbid him from retiring and he has completely ignored me.

And he's even telling me tonight about his plans of things, wonderful, joyous things he's going to do in his retirement like climb El Capitan—Half Dome, excuse me, climb Half Dome. But he said not up the face. Not up the face.

But I am truly sorry to see him go and I'm sure that everybody will join me in that and I'm sure everybody will will also join me in wishing him the very best in the next chapter in his life. Thank you, Madam Chair.

Yes.

Madam Chair, if I can just tag on that real quick. As Minority Leader, Tim is one of the people that I count on, not just for Insurance Committee but for several issue areas here in the Capitol. For those that don't know, not only does he full time staff Insurance, but he also full time staffs Health Committee.

So, he carries double duty this year. He has covered various different committees in his 21 years of—what's that? 31 years. Somebody will be fired for that typo. 31 years of service to the State Capitol and to the—specifically the taxpayers and voters of California.

Because I know Tim's passion while he's working on policy for the Senate, he keeps in mind that he's actually working for the voters and the taxpayers that elected us to be here, and he works for them.

And I appreciate that outlook and aspect of his analysis and every once in a while, even the funny comments that he slips into his analysis that we have to put attention to. So, again, just backing up what the Vice Chair said. Thank you, Tim, for all your hard work. We appreciate you. We are going to miss you.

You're going to leave a vacancy here that will be very difficult to fill. So, thank you very much.

Thank you. Well, and with that I also want to close, but I want to also thank you, Tim. I think it's been seven years since we've been on this Committee together and I know, as electeds, we just show up a lot of the times and it's staff behind the scenes that really makes a difference.

You know, you make us all look smarter and we really want to appreciate. Public service is a difficult task and you do it so well. And thank you for your service and we just want to say congratulations on your retirement and we hope to see you again. So, with that, this meeting is adjourned. Thank you.