Assembly Standing Committee on Insurance

Let me make sure. Good morning. Welcome to the Assembly Insurance Committee. We don't have a quorum, so we're gonna start as a subcommittee. Today, we will consider nine bills. Four bills are proposed consent.

These bills are file item four, AB 2054. File item five, AB 2061. File item seven, AB 2292. File item nine, AB 2724. We have a special order of business.

One bill falls under the special order. It's AB 1795, authored by assembly member Gibson. I'd like to welcome insurance commissioner Ricardo Lara. Welcome back to the capital today. I know you'll be presenting on this measure.

Mister Gibson, whenever you're ready.

Good morning, Madam Chair and Members. Thank you for allowing me to present Assembly Bill 1795. I wanna thank the Chair and the committee, for working with me on this bill and my team. Wanna start off by accepting the amendments to Assembly Bill 1795. And, again, thank the committee and the staff for working with us to making and strengthening this bill and moving forward.

AB 9, AB 1795 established a uniform statewide standards for inspections, testing, and remediation for residential properties damaged by smoke exposure for from wildfires. California has experienced record breaking wildfires, including devastating the devastating eating Eaton and Palisades fire, which have destroyed thousands of homes and left many contaminated contaminated by smoke and other hazardous substance. Smoke damage is a crisis for thousands of wildfire survivors who have who have who are afraid to go back home because of toxic contaminations.

Right now, this very moment, they they are no consistent or enforceable standards for how damages should be tested or cleaned. As a result, many survivors see their insurance claims delayed, reduced, or denied altogether.

After a wildfire, recoveries should not depend on homeowners' abilities to navigate through the complex insurance disputes while their lives have already been turned upside down. And let me simply say that's an understatement because I've spoken to wildfire victims. Not only have their lives have been ups turned upside down, but their lives have been devastated beyond belief. Insurance companies are required to restore homes to their pre loss conditions, but without a clear clear rules. That process is inconsistent and often unfair.

Today, there are no minimum requirements for how homes are inspected, how smoke contaminations is tested, when homes is considered safe, or who is even qualified to do this kind of work. With the absence of these clear standards, inconsistent insurance patterns, homeowners, tenant space, uncertainties about whether their homes are safe to even reenter their homes.

This bill would create a comprehensive, and I said comprehensive, statewide framework to ensure consistency, a science based handling of smoke damage claims by establishing a science based health driven standards for inspections, testing, and restoration for smoke damaged homes, creating a uniform insurance claim handling practice, and require restoration protocol. I said a restoration protocol. Developing a health based guidelines to determine when a home is safe for a family to return to a place they call home.

Designating the appropriate state and local agency to implement and enforce these standards. Providing an immediate relief by allowing survivors to rely on local public health standards for smoke testing and restoration while statewide standards are being finalized. California would be the first in the state to create a standard base on public health and science serving as a nation's model. We can lead the way in this space and we will.

AB 1795 established a clear standards and rules so that homeowners are protected and survivors can safely move back into their homes and restore and restore homes knowing knowing they can not they they can do this and not put their their health at risk.

And we can do this and lead the way as Californians. I am honored to introduce California's, insurance commissioner, Ricardo Lara, who is the sponsor of this bill.

Thank you. Good morning, Madam Chair and Members. I also wanna thank Assemblymember Gibson for authoring this important consumer protection bill. You all know that California's wildfire reality has changed, not only in size and in speed, but in the type of damage families are facing. In January 2025, the fires thousands of homes that did not burn were still rendered uninhabitable because of toxic indoor smoke contamination.

And here is what survivors told me repeatedly and time time again and what this committee needs to hear very clearly. Many families say that they would rather have lost their homes entirely than endured the smoke damage claims process. Why? Because California has no statewide standards for testing or remediation smoke damage. Absolutely none.

That means no uniform list of what can be tested, no statewide screening levels for safety, no consistent definition of when a home is in is habitable, no training standards for adjusters or vendors, and no common rule book for insurers, survivors, or regulators.

The result has been chaos, conflicting vendor reports, inconsistent claims handling, denials based on proprietary thresholds, and families forced to pay out of pocket just to prove their homes are unsafe. That is completely unacceptable here in California. My department has received more than 2,000 smoke related complaints and recovered over 250,000,000 for policyholders. But without standards, we are operating in a patchwork, quite honestly. Last summer, I convened a smoke claims and remediation task force bringing together consumer advocates, industrial hygienists, restoration experts, public health scientists, and insurers.

The task force identified significant gaps in science, testing protocols, and claims practices. Everyone agreed, California needs uniform science based standards. And let me reiterate, this is a health and safety issue, not an insurance issue, but we are here to try to solve this because, again, there are no current statewide standards. AB 1795 directly addresses these gaps. The bill assigns responsibility to the appropriate state agencies.

It requires Cali PA in coordination with public health and environmental agencies to issue statewide sampling, testing, and screening standards by 06/30/2027. This will be the first statewide science based smoke damage standards in the nation as our author, Assemblymember Gibson, mentioned. AB 71095 creates consistent claims handling. It requires insurers to follow wildfire specific public health guidance for smoke claims that from the event ending insurer by insurer discretion.

It also prohibits insurers from terminating additional living expenses until a home is clear for habitation under the established guidance, and it establishes a thirty day inspection requirement to prevent delays that leave families in limbo.

This will strengthen payment deadline deadlines. It requires insurers to pay actual cash value within thirty days of an inspection with interest after thirty days and to pay undisputed claim amounts within fifteen days of the of the insured signing a remediation contract with interest after fifteen days. These timelines reflect

the urgency of a post fire ability to be able to come back to your home. AB 1795 also ensures qualified professionals are making decisions about the safety of Californian's homes. It requires appropriate agencies to develop training and a certification program for adjusters, public adjusters, industrial hygienists, restoration contractors, and laboratories, something that we should have been doing a long time ago. Today, insurers rely on dozens of private vendors with inconsistent thresholds and proprietary clearance criteria. The bill replaces that single science based statewide standard.

Finally, I want to address concerns raised by some of the industry groups. AB 1795 does not change the direct physical loss or damage standard. It clarifies how smoke damage is assessed, not whether coverage exists. It does not expand coverage to soil, outdoor area, or noncovered property. It does not mandate testing for every claim.

Testing will be required only as determined by CalEPA standards based on proximity to the burn zone or scientific considerations, and it does not increase litigation. In fact, the absence of standards is what drives litigation today. AB 1795 replaces ambiguity with measurable rep reproducible criteria. Chair and Members, AB 1795 is about restoring certainty and safety for families who have already endured the trauma of a wildfire.

When thousands of Californians are still displaced by smoke contaminated homes, they should not be left navigating inconsistent insurer practices or paying out of pocket just to prove their home is unsafe.

The bill replaces confusion with enforceable standards, replaces delay with clear timelines, and replaces inconsistent claim handling with sign based requirements that every insurer must follow. Again, this bill ensures that when the size disaster strikes, Californians can rely on fair a fair process and a safe path home. With me today is deputy commissioner Tony Signorelli, who you all know, for any technical questions. I respectfully ask for your aye vote.

Thank you, commissioner Latta. Are there any other witnesses in support in the room? Okay. Do we have any lead witnesses in opposition? Please come forward.

Good morning, Madam Chair, Members of the Committee, Commissioner, and Assemblymember Gibson. Allison Adey here on behalf of the Personal Insurance Federation in a oppose unless amended position. We've been able to move based on the amendments in the committee. I wanna start by acknowledging how much work has gone into this bill in the last week. These are huge improvements.

The in committee last week, we raised concerns that the bill in print would have meant billions of dollars of additional exposure per carrier. This meant that carriers debating reentry to the market at a time when admitted ensure access has been a high priority. For those that did expand the writing, those costs would have meant substantial increases in premiums across the state to reflect the increased requirements and exposure.

We're incredibly grateful for the efforts of the committee as well as the author and sponsor to address these concerns about market impact and feasibility in the bill. The committee amendments have helped to decrease the unnecessary exposure and tailor the bill to those actually impacted by wildfire smoke.

Smoke claims are a complicated issue. It's one that we've been grappling with with the department for years now. We are in full agreement that there need to be clear standards and expectations for how smoke claims are handled. This will provide greater consumer protection and clear expectations for carriers. The prior approach on the bill drew broad distances that were not scientifically tied to areas actually impacted by the fire and smoke plume.

The committee approach provides a more reasonable impact zone that uses systems the insurers and CDI are already using in these fires by switching to fire perimeter and adjacent ZIP codes. The inclusion of language to further clarify that only downwind ZIP codes per the NOAA maps add additional necessary clarity that only homes within the smoke plume are included.

We do have some continuing concerns about the applied legal standard throughout the bill and have also proposed other measures with the author and sponsor to contain the cost impacts on policyholders. We're committed to continuing those conversations as the bill moves forward. Again, we are appreciative for all of the work over the last week and for the openness of the author and sponsor and the committee staff to hearing our concerns and working collaboratively on solutions.

Thank you.

Chairperson Calderon and Members of the Committee, thank you for this opportunity to speak today. My name is Jane Lawton Hotel, and I am the executive director of Eaton Fire Residence United, a nonprofit speaking for more than 4,000 families whose homes survived the LA fires, but smoke and ash left our homes contaminated even after remediation. Our findings in the Eaton Fire area compiled in collaboration with experts from eight academic institutions shows that ninety six percent of homes tested positive for lead after professional remediation.

Thirty six percent of homes tested positive for asbestos. And when tested, frequently other heavy metals, Arsenic, Chromium, Zinc, and others were detected after remediation.

These are homes insurers are closing claims on right now. That is the problem before you today. We oppose AB 1795 unless amended, and we are committed to working with the author to get the bill to a position that meaningfully supports our recovery. AB 1795 is at its core a bill about what insurers owe policyholders after a catastrophic and destructive wildland urban interface fire. It requires insurers to fund the testing and remediation that makes a contaminated home safe and livable again.

That is squarely within your purview, and we are grateful for this committee taking this on. But the bill has gaps that left unfixed will be exploited in the claims process. The bill currently holds insurers to two standards, health based and trade industry. And when they conflict, insurers will choose the weaker one. We are advocating to ensure that every smoke damage claim receives mandatory, insurer funded, pre and post remediation testing with no visual inspection gatekeeping.

The hundred and twenty day deadline does not offer nearly enough time for residents to file claims as many policyholders couldn't even access their homes for months due to hazardous debris removal, and any deadline should begin from discovery of contamination, not fire containment. Furthermore, without a savings clause, insurers will argue that satisfying the bill's specific provisions discharges all their other broad broader obligations under California law.

And the new definition of impact zone is now more restrictive and limits the coverage to areas adjacent to the fire to just areas adjacent to the fire perimeter. And we know from the evidence we've collected, it goes much further. This committee has the authority to close these gaps.

We are ready to provide specific statutory language for every amendment described. We urge and oppose unless amended position until these fixes are in place. Thank you.

Thank you for your testimony. Do we have any other opposition in the room? If so, please come forward, state your name and affiliation.

Hello, Melissa Ashford. City Palisades Fire Survivor.

Hold on. I don't think the mic's on.

No. Not yet.

Is there another mic?

Is there another mic?

Good morning. Alyssa Ashwood, Palisades fire survivor and coordinator of Palisades Standing Homes. We're so grateful for the work being done on behalf of fire survivors, and we'd ask that that the changes that we're requesting to not make this bill restrict the damage that can be, that can be claimed, that those be amended. Currently, California has the rule of all damage by fire, and this bill starts to chip away without being properly amended at that right.

We never had a fire like this one, and so we've never had contaminants like this one. We don't know what the next fire will have. Each fire has its own footprint, so let's pay attention to that as if it were an explosion of a chemical plant next to a next to a factory. Thank you all for working on this. We greatly appreciate it, and we need you.

Thank you. Please just state your name and affiliation. Thank you.

Kim Stone, Stone Advocacy on behalf of Consumer Watchdog and respectful opposition.

Good morning. Nancy Peverini on behalf of the Consumer Attorneys of California with an opposed unless amended position. Thank you.

Mark Segment with the Merrick Property Casual Insurance Association. I wanna associate myself with the comments of my colleague from the Personal Insurance Federation. Thank you.

Good morning. Sherry McHugh representing the Pacific Association of Domestic Insurance Companies. Opposed unless amended. I'm looking forward to working with the author and the sponsor. Thank you.

Terry McHale with USAA. Opposed unless amended. Thank you.

Thank you. Okay. I'm gonna bring it back to the committee. Do we have any questions? Is Salman Harabedian?

Thank you, Madam Chair. Wanna first thank the author, thank the insurance commissioner, for their continued work and the collaboration with me and my office on this bill and everything that you're doing. Wanna thank the, witnesses, Miss Lottan Patel. Thank you for being here. Appreciate you.

Obviously, this first committee out of House of Origin work in progress. And so I think that there was two issues that I wanted to raise beyond what what we've heard here that I'm hoping we can continue to work on. The first is the downward downwind ash zone, which I know that you both have worked quite a bit and the committee has on trying to define that. I think it is tricky. My view is I just think hard hard set cutoffs are tough.

There's certain ZIP codes that wouldn't be included here that we know there is there has been contamination from the Eaton fire, for example. That wouldn't be included here. And so how do we is there a way where we can have more flexibility where if a homeowner can prove that they have smoke damage or ash damage from either of these fires or fires going forward, that they can actually get relief? Because I think the way that I'm reading it now is the new way we're defining it.

It's pretty defined based on the the ZIP codes.

And if you are outside that ZIP code and and receive contamination, unfortunately, you wouldn't get relief.

So, Assemblymember, I agree with you. I'm also concerned about limiting the scope, and these are committee amendments. So I'm also what I'm worried about is that we somehow if CalEPA comes up with their process that we inadvertently narrow theirs, and I know we're having conversations with the Chair to make sure that that doesn't happen, because they are the experts. Right? Not us.

And so we don't wanna I certainly don't wanna supersede any of the work that Cali PA will do to eventually come up with their process. And so first and foremost and then I and then also, I wanna make sure that we you also know that we're working on amendments to make sure that we clarify that any laws will will supersede that will supersede any trade standards, especially the CalEPA guidance on lead and asbestos laws and contractors laws.

So we're working on those amendments as well because we we totally agree with with the in fire survivors on that. We just couldn't get them in time. As you know, we're we're trying to get this done, and it's the second committee and we're we have we're on a deadline.

But we do recognize that. At the end of the day, what I don't want, and I think what we all agree on, is that let the experts come up with the guidance and let them on who are the ones that are gonna ultimately come up with that and not let this bill restrict any of that any of that in the future. And so that's what we're we're trying to come up with the balance and also try to cut down the cost of the bill.

And so there lies the balance that we're all trying to strike and and really out of respect to the chairwoman and the committee staff, we're trying to work on on that balance, but also not supersede anything that CAL FIRE will end up doing in the future because they are the ones truly the experts in this field.

I appreciate that. And I do appreciate appreciate the Chair and the committee and all the work that's been done and how collaborative it's been. And so that totally right. Going forward, I trust you and the author to continue to work with with all the relevant committees. The second issue is just the presumption.

So, obviously, the presumption has come out of the bill now. Presumptions are tricky. They're not perfect. I totally get both sides of the argument. And I'm trying to figure out if we don't have a presumption, how are we going to ensure that homeowners and these fires, fires going forward, aren't left with a situation where they're going to have to prove each and every chemical or contaminant is tied to the fire and not preexisting.

Obviously, with lead and asbestos, there's gonna be arguments on both sides that, you know, these were from the fires or they were preexisting, and the levels maybe speak to that. But I'm obviously concerned that without a presumption, you're just gonna subject individuals and insurance companies, frankly, to endless fights about what was a wildfire contaminant and what wasn't.

So how can we work to avoid that?

Yeah. Therein lies the I mean, you are talking about one of the biggest contentions during the task force conversations, and so I'll let Tony try to guide you through an answer.

Yeah. Madam Chair, Members, Tony Signorelli, deputy commissioner of consumer services, Mark Kacondak with the Department of Insurance. To to answer the question, the the goal regardless of whether the presumption is there, is no longer there, or is not there in the future, the the goal here and the intent is for Cal EPA to come up with the specific standards that will be required of insurance companies to follow for the parameters in the bill.

And so even though there isn't a presumption currently in the bill, if Cal EPA comes with comes up with specific standards for any home that's in the parameters of the bill, those standards would apply and they'll Cal EPA will dictate certain situations or thresholds that might need to be reached for certain remediation or restoration to take place.

Got it. So, effectively, if contamination levels hypothetically are above a certain level, there would almost be just a not a presumption, but a understanding that that would have to be remediated. Correct. Because it would be attributed to the fire at that point. I'm not I'm not trying to put words in your mouth, but I think that's what you were saying. Is that correct?

Yeah. And it and it goes even further than that in the sense that, CalEPA would allowed be allowed to develop regulations for, let's call them, generic wildfires throughout the state, but also for specific wildfire, if they do, for example, do random testing and decide and and see different chemicals and substances that are there at higher higher levels, those could be incorporated into the process. Got it. Yeah.

Helpful. Helpful, chief.

And trying to let the experts do do what they do and understand this much better than, you know, an insurance regulator.

Yep. Yep. No. Understood. Look.

This is a very important bill. I appreciate everyone that's working on it. I appreciate how complicated a lot of this is. I'm supporting it out of committee today and look forward to continuing to work. Thank you. With everyone here on the bill, and you have my my support and help.

And, obviously, the survivors are are very much committed to helping perfect this bill and just wanna thank the committee and the Chair as well. So thank you, Madam Chair.

Thank you.

Okay. Before we take Assemblywoman Rodriguez's question, we're gonna take a moment to establish a quorum. Secretary, please call the roll.

Calderon. Here. Calderon, here. Wallis. Here.

Wallis, here. Addis? Alvarez? Alvarez, here. Avila Farias?

Berman? Chen? Ellis? Here. Ellis here. Gipson? Here.

Gibson, here. Hadwick? Hadwick, here. Harabedian? Here.

Herbedian, here. Krell? Nguyen? Ortega? Here.

Ortega, here. Petrie-Norris. Rodriguez? Here. Rodriguez, here.

Valencia. We have a quorum.

Thank you. Assemblywoman Rodriguez.

I just wanna say I appreciate the author's engagement with stakeholders. There's work to be done, but I'm glad to see everything moving in the right direction. Thank you.

Okay. Seeing no other questions from members, would you like to close, mister Gipson?

Yes. First of all, I appreciate the comments from the committee and also from those who, pose and those who are supporting this piece of legislation. And I want to go on record and simply say that, one, what has happened in terms of the Eden Palisades, the fire and the victims and the survivors. We wanna get it right through this through this piece of legislation. Those who have suffered damage, those who've suffered loss, those who suffered the loss of loved ones.

As I said in the previous committee, I have family a family member who've lost everything. They didn't have smoke damage. They she's lost completely everything. She decided to rebuild. There's things that she can't get back.

Like I said in the previous committee, she lost awards that she's 20 Grammys. Right? She's a Grammy winner. Her name is Maxine Waters, not to be confused with congresswoman Maxine Waters. She saw with Michael Jackson, Barbara Streisand, and a number of other celebrities.

But she decided that she's going to rebuild and and stay back in Altadena. That's where she lived. That's where her home is at, and she's gonna rebuild and lot other people. And so this is this work here is very intentional, very focused, and certainly is not lost on me to have a survivor here at the desk. The words that you have articulated thus far is not lost for me.

We wanna get it right for the future. We realize that the work that we're in is uncharted waters. California is leading the way in this space. We wanna get it right for the next victims, the next survivors in California because this is not the first wildfire, that we will see in our lifetime. And we wanna make sure that this is a policy.

This is guidelines. This is health based. This is science based. This is driven to making sure that no one else have to go through this complex, situation without guardrails so no one else have to go through unsleepless nights, headaches, contemplating suicide to going through. We want people to move into their home.

This is a safe home that they can move into not having health risk at the end of the day. And so we invite a continuous, you know, other amendments from even industry. And we have demonstrated that by accepting the amendments when I opened up, and we'll continue to do that. But we want this policy to move forward, members. We want this policy to move forward to giving us the opportunity to be able to get it right moving forward.

And with that, Madam Chair, I respectfully ask for an aye vote.

Thank you, mister Gipson.

And thank, commissioner

the mail.

Your work Okay.

Thank you so much, mister Gipson. We have a motion in second. And I just I greatly appreciate the work that's gone into this bill. We have obviously, it's a work in progress and there's still more work to be done. This is only the second committee.

But I appreciate your commitment to work keep continuing to work on this so we can get it right for the people of California. Secretary, please call the roll.

This is item number one, AB 1795 by Assemblymember Gipson. The motion is to pass as amended and re refer to the committee on appropriations. Calderon. Aye. Calderon, aye.

Wallis. Wallis. No. Addis. Alvarez. Alvarez, aye. Avila Farias. Berman. Chen. Ellis.

Aye. Ellis, aye. Gipson. Aye.

Gipson, aye. Hadwick. Hadwick, no. Harabedian. Krell?

Aye. Krell, aye. Nguyen. Ortega? Aye.

Ortega, aye. Petrie-Norris. Rodriguez? Aye. Rodriguez, aye. Valencia.

Okay. We'll hold the roll open. Thank you. Thank you. It's on call.

Okay. Our next. Okay. Now, we're gonna do the consent calendar. Can I get a motion and a second, please?

Okay. Please call the roll secretary.

[Roll Call]

Okay. That bill is on call. Our next bill will be AB 1576 by Assemblywoman Ortega, whenever you're ready.

Thank you, Madam Chair and members, for the opportunity to present AB 1576 today. AB 1576 addresses the Subsequent Injury Benefit Trust Fund, which is a very long name that does not adequately describe this program's importance. The fund was created after World War II to help injured soldiers reenter the workforce, because someone who has a disabling injury is more prone to a subsequent injury, and employers are held responsible for injuries acquired on the job.

Employers after World War II were less likely to hire injured veterans.

The fund was created to spread the risk so patriotic employers didn't carry the burden of workers' comp for any subsequent injuries. It has since been expanded to apply to all disabled workers. Currently, every employer in the state contributes less than 2¢ per $100 in insurance premiums into the fund. The fund then carries the risk and obligations of workers' comp for any subsequent injuries to disabled workers.

AB 1576 makes a series of thoughtful changes, which will reduce litigation costs, reduce medical legal costs, and reduce the number of one hundred percent disability cases.

The cumulative impact will reduce employer assessments by 20 to 25% while maintaining the lessening in financial risk to employers who give previously disabled workers a second chance. The witness I have here with me is former Assembly Member Alberto Torrico representing the California Applicants Attorneys Association.

Good morning.

Good morning, Madam Chair. Thank you, Assemblymember Ortega. Alberto Torrico, on behalf of the California Applicant Attorneys Association, in support of the bill. We fully recognize that there are some significant challenges in the administration of the Subsequent Injury Benefit Trust Fund. As a result of those concerns, we've worked with Assemblymember Ortega for two years now.

Let me just highlight how we got here. Workers' compensation is governed and the decisions are made by the Workers' Compensation Appeals Board. 100% of the members of that board are appointed by the Governor. About 10 years ago, they issued a decision called the Todd decision, which really changed the landscape for how these kinds of cases are handled and really resulted in an explosion of the cases.

We didn't, you know, the applicant attorneys, the injured workers, advocates, we have nothing to do with how that decision came down, and those are the rules of engagement.

Starting in the first year of the Governor's administration, they attempted to make some changes. They were not successful in doing that. Last year, they contemplated putting some changes in the budget. Same. We're taking to use her bill to begin a conversation. As was stated, this bill is the same bill as last year, which got out of this committee, which would result in significant savings.

Part of the challenge for us in dealing with this issue is that there's been not one, not two, but three different estimates from the Governor's folks in terms of what the actual problem is. We do want to address the problem. We think that this is a productive first step, and we hope that we continue to have negotiations and discussions with administration to try to resolve this matter.

Their proposal basically eliminates the program, completely guts the program, and not only does that going forward, but retroactively. So cases that have been in progress and been processed for three, four, or five years would basically be eliminated.

That's not the way we do public policy in California. It's certainly not the way we do workers' comp law. There's never been, in our regulations, never been an instance where benefits were awarded retroactively. There's never been legislation or a budget action that would eliminate benefits retroactively, and that's what this proposal does. And for those reasons, we support wholeheartedly Assemblymember Ortega's efforts to reform the system.

Thank you.

Thank you. Do we have any additional support in the room? If so, please come forward and state your name and affiliation.

Thank you, Chair and members. Evan Corder on behalf of Arrowhead Evaluation Services in support. Appreciate the author's leadership on this issue and look forward to working on this as it moves.

Good morning. Stuart Gerard from CCIW, California Coalition of Injured Workers. We support Madam Ortega's bill. Thank you.

Hello. My name is Scott Warren. I'm a qualified medical evaluator, and I support the bill. Thank you.

Thank you. Okay. Do we have any lead witnesses in opposition? Please come forward.

Good morning, Madam Chair, members. Ashley Hoffman on behalf of the California Chamber of Commerce, respectfully in opposition. The author did detail the background of the SIBTF. But one thing I really want to emphasize about the fund is how it is funded. It is funded through annual assessments that are levied on every single employer in the state, including the state and including public entities as well as private entities.

As noted, in recent years, bad case law and other circumstances have changed so that now the claims are ballooning out of control and the fund is no longer aligned with its original intent. According to the LAO, about 70% of claims are based on underlying injuries that are common health issues like hypertension, trouble sleeping, allergies, or headaches.

And in light of the Todd decision, a one hundred percent disability rating applies to approximately eighty percent of claims, which is out of balance when you actually look at the severity of some of the claims presented. This fund is effectively now cannibalizing the department which administers it. They have nearly 30,000 backlog cases with an average wait time of five to ten years for workers who truly do belong in this fund.

They do not have anywhere near the staff to handle those cases, and the estimated cost is in the tens of billions of dollars for those cases, which will be funded by local entities, the state, and private entities. Within the last five years, some figures about how much these assessments have risen because of this fund: LA County's assessment related to the fund, 248% increase. Orange County, 119% increase. San Diego, 389% increase.

San Jose, 247% increase. City of Sacramento, 325% increase. And the department estimates that if the trailer bill language, which we believe is a more complete fix to this problem, is not implemented, those premiums will continue to rise this year another 95% alone and so on and so forth.

And so while we appreciate the author's efforts here, we believe that the trailer bill, which more fully encompasses recommendations from both RAND and LAO, is the appropriate fix, and I will leave it to my colleague to talk about some of those specific recommendations. Thank you.

Good morning, Madam Chair and members. I'm Michael Pisani with Schools Insurance Authority testifying today as a member on behalf of the California Coalition on Workers' Compensation in opposition to AB 1576. We appreciate the author's efforts to address the SIBTF, but this bill does not address the core structural issues driving the rapid growth in costs. AB 1576 ignores the primary cost drivers and policy recommendations identified by RAND and the LAO.

Among these are court decisions like Todd versus SIBTF that expanded benefits far beyond the legislative intent.

These disproportionate portions of the program's mission have played a major part in creating the $30,000,000,000 of liability the SIBTF now faces. We need a comprehensive reform to confront this problem now because liability grows every year. AB 1576 fails to do so, and recent amendments have moved the bill in the wrong direction. The current liability, estimated at $30,000,000,000, is growing quickly, adding $3,000,000,000 in new liability each year. For public entities and the broader state economy, these are not abstract numbers.

They're real costs that directly interfere with essential services and are detrimental to jobs. For schools, this comes at the same time they're managing significant financial pressures related to AB 218 and subsequent legislation. These pressures are directly diverting resources away from the classroom, student services, and staffing. The unjustified expansion of the SIBTF has resulted in benefit awards far exceeding the intent, and this has affected its ability to timely serve the workers it was designed to protect.

If changes don't apply, or if changes only apply prospectively as proposed by AB 1576, the system we are trying to fix today will continue to operate unchanged for years, carrying with it the existing and growing $30,000,000,000 liability.

My grandma always told me, difficult work doesn't get easier by waiting. If we don't address this problem today, we'll continue to pay for it tomorrow at a much greater cost. For these reasons, we oppose AB 1576 and support the trailer bill.

Thank you. Do we have any additional opposition in the room? Please come forward and state your name and affiliation.

Good morning, Chair and members of the committee. Laura Curtis on behalf of the American Property Casualty Insurance Association in respectful opposition. Thank you.

Good morning. Dylan Elliott on behalf of the counties of Fresno and Kern in respectful opposition.

Good morning, Chair and members. Julissa Ceja Cardenas on behalf of the California State Association of Counties in respectful opposition.

Good morning. Kaylin Dean, on behalf of the California Hospital Association in respectful opposition.

Good morning. Matt Easley on behalf of the California chapters of Associated General Contractors in opposition.

Thank you. I'll bring it back to the committee. Do we have any questions? Thank you. Just thank you.

Would you like to close, Assemblywoman?

Yes. Thank you, Madam Chair and members. You know, in closing, I would like to address the opposition's comments about the trailer bill language. And I actually agree with your grandma and your grandmother. I think we all need to work together and work on something so important such as this. The impact of this bill is large.

And I agree that there are issues that need to be fixed. But as legislators, that is our job, is to legislate and to go through a very robust process to ensure that we're talking and we're dialoguing and we're negotiating. You know, I find it astonishing that we continue to try to do things such as this through a trailer bill process as opposed to doing it as the voters sent us here to do, which is to legislate.

And so I'm asking for an opportunity to continue that conversation and address some of the big issues in this bill through the legislative process. With that, I respectfully ask for an aye vote.

Thank you. Okay. Will you please call the roll?

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Okay. We're gonna keep that bill on call. Thank you. Okay. Next, we have AB 1931 by Assemblywoman Papan.

Good morning, Madam Chair.

Good morning, Assemblywoman.

We have witnesses. We got talking points.

Okay. Thank you so much. So AB 1931 helps protect homeowners from costly, unexpected repairs by creating an optional limited lines license for utilities to offer for home protection projects. So utilities have long given customers the option to purchase home protection contracts to cover repairs to heating and AC systems, as well as water and service lines.

At a time when household budgets are increasingly stretched, these products can provide peace of mind by shielding homeowners from these very sudden and very expensive repair costs. Across California, many utilities already offer direct repair contracts or connect customers with third-party providers of these products. These programs also help clarify the shared responsibilities between utilities and homeowners. Like, you know, where do you pick up the sewer line or the water line, and where does the utility have to pay for it?

However, California laws have been unclear about how utilities may facilitate these offerings.

While the utilities are allowed to, quote, unquote, announce the availability of these utility related home repair products, The line between announcing and soliciting remains vague, which can expose utilities to liabilities or penalties for being unlicensed. So in the limited license world, California currently offers other businesses limited lines insurance licenses for insurance products associated with things like travel, shipping, self storage, rental cars, portable electronics, all of those limited lines liabilities.

And in reading the staff report, by the way, just as an aside, the limited lines licensure requirements for rental cars was a bill that my dad carried in 1999. Because I saw Papan, and I go, I've never carried that bill, and then I looked at the year. So it was kinda cool to see this sort of come full circle in a certain way.

But, anyway, I digress. Alright. So AB 1931 sort of builds on this existing framework by creating a limited lines license for utility-related home protection products. And this limited lines license allows utilities to then associate directly with home protection companies and/or a licensed property and casualty agent to offer customers home protection products, making it easier for homeowners to manage the cost of essential repairs. So with me this morning, I'm delighted to have Kristen Olson on behalf of HomeServe, which is one of these businesses.

And then also joining us is Scott Paris, who's available to answer any technical questions. Thank you both for being here.

Thank you. Good morning, Madam Chair and members. My name is Kristen Olson, and as was said, I'm here on behalf of HomeServe, a long-standing home protection company that serves customers across California and the nation. I'm here with Scott Paris, HomeServe's senior counsel for government and regulatory affairs, who, as was said, is available to answer any technical questions.

We want to start by thanking Assembly Member Papan for carrying this important bill that will allow home protection companies like HomeServe and utilities to continue serving customers who rely on our services to repair major appliances and utility service lines at an affordable cost.

When a utility partners with a home protection company to deliver these repair plans, the transactions fall under the insurance code. And under current law, that would require the utility to obtain a full property and casualty license. AB 1931 creates a better pathway forward by establishing a limited lines license tailored to this specific activity.

AB 1931 is the product of months of genuine, ongoing collaboration between HomeServe and the California Department of Insurance, a process that continues as we work through some final details together. That shared commitment is reflected in the bill's design.

It maintains clear regulatory guardrails while creating a more workable framework for utilities and the customers they serve. It also strengthens consumer protection for utility customers by adding required seller training, utility-specific disclosures, a thirty-day free look period, and CDI authority to act swiftly if concerns arise. We respectfully request your aye vote, and Scott and I are happy to answer any questions.

Thank you. Do we have any additional support in the room? If so, please step forward and state your name and affiliation.

Good morning, Chair and members. Caitlin Johnson with Political Solutions on behalf of the California Water Association in support. Thank you.

Good morning. Lily Mackay on behalf of SDG&E and SoCalGas in support. Thank you.

Madam Chair and members, Kelly Jensen on behalf of the Service Contract Industry Council in strong support. Okay.

Mark Sektnan with American Property Casualty Insurance Association, also in support.

Sarah Brennan with the Weideman Group on behalf of Cal Water in support.

Okay. Do we have any lead opposition in the room? Alright. Seeing none, I'm gonna bring it back to the committee. Do we Second.

Hey. No questions? Assemblywoman Papan, would you like to close?

I just thank the committee for its effort. I thank the sponsors for working with a bureaucratic agency known as the California Department of Insurance, and I respectfully request an aye vote.

Okay. Secretary, please call the roll.

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That fills up, but we're gonna leave it open.

Thank you, Madam Chair.

Have a good day, you guys.

Okay. Next, we have Assemblywoman Pacheco to present AB 2361. Please come forward and whenever you're ready.

Morning. Good morning. And thank you, madam chair and members. I am here today to present assembly bill twenty three sixty one. I also wanna start by thanking the committee staff for all their hard work on this bill and just wanna say I will be accepting the committee amendments.

A B 2361 updates California law governing vicarious liability for peer to peer vehicle sharing platforms by aligning liability with fault while preserving strong insurance protections for injured parties. California is an outlier. No other state imposes uncapped vicarious liability for peer to peer vehicle sharing platforms. AB 2361 ensures consumer protection by requiring that minimum insurance insurance coverage always remain available. The bill brings California in line with other states by limiting liability default.

AB 2361 will keep car sharing viable and affordable for hosts and users who rely on these platforms for income and for transportation. And with me here today to testify in support is Larissa Caspedos on behalf of Turo.

Good morning. Thank you, chair and members. Larisa Cespedes here on behalf of Turo. I wanna thank the chair and the committee consultant for the thoughtful amendments and for attempting to, negotiated, an agreement with the opposition. Unfortunately, we didn't reach that, but appreciate the effort.

Turo was headquartered in San Francisco with over 300, employees, over 17,000 hosts or vehicle owners with their cars on the platform, and 100 and hundreds of thousands of Californians who use it every day. AB 2361 is about bringing fairness and clarity on how California treats peer to peer car sharing companies. Under current law, based on an outdated statute passed in 2010, peer to peer car sharing companies must stand in the shoes of the owner of a vehicle for an uncapped amount.

No other state has this uncapped expansive vicarious liability provision. With the amendments being taken today, California will adopt model language that has been passed in 30 other states.

We are not asking to strike the vicarious liability provisions. We are simply asking for them to be capped at a reasonable amount. This will bill will not make any changes to when Turo or a driver is at fault. Importantly, this bill does not reduce the amount an injured party can recover. It does not change insurance coverage.

Turo will still be responsible for ensuring that there is insurance in all instances at levels of 45, ninety, and fifteen. The only change is to cap the amount peer to peer platforms are responsible to pay and when a vehicle owner is at fault. This bill ensures con strong consumer protections while allowing Californians to continue to earn extra income and preserving diverse mobility options in the state. Thank you and respectfully ask for your aye vote for this measure.

Thank you. Do we have any additional support in the room? Please come forward and state your name and affiliation.

Good morning, madam chair and members. Annalee Augustine with the Civil Justice Association of California, pleased to support. Thank you.

Do we have any lead opposition in the room? Please come forward. Good morning.

Good morning, madam chair and members. My name is Casey Johnson, president-elect of the Consumer Attorneys of California. We respectfully oppose AB 2361 unless amended because the bill would significantly limit accountability when individuals are seriously injured by unsafe vehicles rented through peer to peer car sharing platforms like Turo. Turo operates a commercial marketplace with billions in profits from placing privately owned vehicles into service for public rental.

While the platform facilitates the transaction, sets the terms, and earns revenue from each rental, the bill will allow Turo to shift responsibility for vehicle safety entirely on the individual vehicle owners, many of whom lack the financial resources to compensate victims in catastrophic injury cases.

Unsafe maintenance claims are rare, but when they occur, they involve serious injuries or death with damages far exceeding the $45,000 per person limit proposed by the committee. COC has proposed a reasonable compromise amendment requiring peer to peer platforms to maintain at least a million dollars in liability coverage when the platform is deemed to step into the shoes of the owner.

This mirrors existing consumer protection standards for other platforms like Uber and Lyft and Vacation Rental Insurance Limits offered by Airbnb and VRBO and ensures that individuals harmed by unsafe vehicles are not left without recourse. We're also in strong opposition to the new exemption language added by the committee at the request of Turo over our opposition related to owner conduct. Because vehicle owners list cars through a simple click through process regarding the safety of their vehicle.

This language would allow platforms to avoid responsibility in nearly every case by claiming there was a material misrepresentation. In practice, this amendment will fully immunize the platform from any liability whatsoever for unsafe vehicles and further eliminate meaningful protection for injured consumers. Platforms that profit from placing vehicles into commercial service should retain responsibility to ensure reasonable safeguards and financial accountability. Without amendments, AB 2361 shifts the financial burden of catastrophic harm onto injured Californians while allowing the platform to continue profiting from each transaction.

We urge your no vote unless amended to preserve meaningful consumer protections. Thank you for your consideration.

Thank you. Do we have any additional opposition in the room? Okay. Bring it back to the committee for questions, comments. Okay. Assemblywoman, would you like to close?

Thank you. And and as always, I have an open door policy, so always willing to have conversations. Thank you all for this opportunity to have, this bill heard, and I respectfully ask for your aye vote.

Secretary, please call the roll.

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Okay. That bill's on call. Thank you. Thank you. Okay.

We're looking for Assemblyman Kalra. If the staff's watching the committee, could you please send him over?

Hey. We're gonna open the roll and let members add on.

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Welcome, Assemblyman Kalra. Whenever you're ready, sir.

Good morning, member chair and members. AB 2098 will ensure that California employees can receive the leave they need to seek treatment for their occupational injuries. In 2024, there were over four hundred and fifty thousand nonfatal occupational injuries and illnesses across California's private and public sectors. These injuries range from simple overexertion to damage caused by slips, falls, and exposures to harmful substances. Many of these injuries were serious enough to require professional medical care, putting examinations, tests, and treatments like physical therapy.

However, many of these services are only available during working hours or are so far away that workers must leave work early or arrive late in order to travel to and from appointments. Unfortunately, workers currently lack the legal protections they need to secure this leave, forcing them to forego the treatments that keep temporary afflictions from turning into chronic lifelong conditions. AB 2098 will address this issue by prohibiting employers from denying leave to employees who must seek care for occupational injuries during work hours working hours.

This bill contains a number of safeguards that minimize impact on essential workplace activities. For instance, it requires employees to make a reasonable effort to schedule treatment outside of work hours.

It also requires employees to give their employers reasonable advanced notice of treatment that will take place during work hours. Additionally, AB 2098 affirms that employers will not be required to grant leave if business necessity would require the treatment to occur at a different time or on a different day. With me to provide supporting testimony is Mitch Steiger, legislative representative with the bill sponsor of the California Federation of Teachers.

Thank you, madam chair, members, and staff. Mitch Steiger with CFT, Union of Educators and Classified Professionals. Proud to sponsor this bill. Great to work with assembly member Calra on this one. Great to be back in front of the Assembly Insurance Committee with this bill.

We ran it through this committee two years ago, and, a much stronger version of it was approved, but, sadly, the problem persists where, it's one that when we first heard about it, kind of assumed that this must not be legal, but we looked into a little bit more closely. And it finds a weird kinda gap in the law where it's unclear whether or not this is legal or not. But what is clear is that it is happening.

We have seen the written communications from an employer to injured workers very clearly stating, you are to schedule your medical treatment outside of work hours, which, as we all know, can be very difficult to do. You cannot get physical therapy at 9PM or on a Sunday morning.

So while it would be bad enough if it was applying to all health care, we think it's especially offensive given that it's happening to occupational injuries where you've got workers who were hurt on the job. They wanna stay on the job. They wanna get better so they can keep working, but this roadblock is being put in front of them that makes it that much more difficult. And what happens is they're presented with this very difficult choice of, well, I'm

not really sure what's gonna happen to me if I just go see the doctor so I can roll the dice and risk facing some sort of retaliation or termination. I can basically lie to the doctor and just say that it's not occupational and use my own health care and pay for it myself or, forego care, which is what most of our members wind up doing, which it doesn't help anyone. It means the worker's injury is gonna get worse. Their suffering is gonna get worse.

And more than likely, the eventual cost to the employer are going to be more as that, as that injury progresses and as the author mentioned, becomes something that may be permanent.

So the bill contains a number of amendments at the request of opposition that were adopted two years ago. Those are all still in here. Right now, there is nothing that requires a worker to try to secure this treatment outside of work hours. This bill would put that into law. Right now, there's nothing in law that says the leave has to run concurrently with SIFRA leave.

This adds that into law. So we have done everything that we think we can to respond to the employer's concerns and make this something that should be easy to comply with. But we really do think it's an important measure to make sure for our members that when they do face one of these injuries, they're not also presented with this really terrible choice of, do I let this injury get worse? Do I risk not being able to provide for my family?

They know they'll be taken care of and that they have the right to go get this care and get better and get back to work. We urge your support.

Thank you. Do we have any additional support in the room? Please state forward and say your name and affiliation.

Good morning, chair committee members. Brian Maramantes, California Teachers Association in support.

Good morning. Cassie Mancini on behalf of the California School Employees Association in support.

Hello, madam chair. Yvonne Fernandez on behalf of the California Labor Federation in support.

Great. Thank you. Do we have any lead opposition in the room? If so, please come forward.

Good morning, madam chair and members. Ashley Hoffman on behalf of the California Chamber of Commerce. We are in an oposed and less amended position and really do thank the author and the sponsor for, again, including amendments that we had discussed a couple of years ago. So I wanna talk about one outstanding concern we have. So as stated, the bill does allow employees to take time off for workers' compensation appointments as long as they make a reasonable effort to schedule them outside of working hours.

The one exception where an employer can ask the employee to potentially reschedule or find a different time is that the employer can show a business necessity. Business necessity in the bill is defined quite narrowly and is taken from a case that is actually related more to, treating protected classes differently.

And so we actually believe that rather than the business necessity definition in the bill, that it should align more of the test for undue hardship under the reasonable accommodation framework in the Fair Employment and Housing Act, which is a lot more similar to what we're talking about here, which does a lot you know, balances various factors, allowing especially small businesses to take into account, any expense it would cost of having that worker out, especially if it's gonna be repeatedly, the size of the business, what have you.

In practice, really only small businesses can ever take advantage of the undue hardship. It's a it's a really high bar to me in and of itself.

But we do think it's more appropriate for what we're talking about here. And, page nine of the analysis does state and agree that undue hardship may be the more appropriate standard here rather than business necessity. Thank you.

Thank you, madam chair and members. Jason Schmelzer here on behalf of CCWC and PRISM. I just wanna start by saying I think there's common ground here, and we'll continue, obviously, working with the author and sponsor. In addition to associating myself with the chamber's comments, I'll add just one point. Our strong preference is that labor code Section one thirty two a, remain unchanged.

Labor code section one thirty two a is a generally applicable anti discrimination statute, that protects injured workers from discrimination. It's been widely interpreted to apply to, any provision of benefits under the labor code, so there's no need to add, that last paragraph there. And that's sort of the last issue, for us other than what, miss Hoffman raised.

K. Thank you. Do we have any additional opposition in the room? Please come forward. State your name and affiliation.

Good morning. Kalyn Dean on behalf of the California Hospital Association in opposition.

Mark Sektnant on behalf of the American Property Casualty Insurance Association, and the California Joint Powers Authority. Thank you.

Thank you. K. I'm gonna bring it back to the committee. Do we have any questions for the author? I'll move it.

Thank you. Okay. Mister Call, would you like to close?

So appreciate the the opposition's work with us on this, and I respectfully ask for an aye vote.

Thank you. Secretary, please call the roll.

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Thank you.

Hey. We are going to leave the roll open for five minutes and let, authors add on.

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Okay. I I adjourn. Assembly insurance committee is adjourned.