Assembly Standing Committee on Insurance

Good morning, vice chair, members of the committee. Welcome to the Assembly Committee on Insurance. Today, we will consider 11 bills. Four bills are proposed consent. These bills are file item five, AB 1554.

File item six, AB 1683. File item seven, AB 1781. File item 11, AB 2471. We are gonna start as a subcommittee today so we can establish quorum. Today, we have a special order of business.

Four bills fall under the special order, AB 1559, AB 1680, AB 1798, and AB 1888. I'd like to welcome insurance commissioner Ricardo Lara who will be presenting on these measures. We're gonna start with AB 1888, Assemblywoman Ortega, whenever you're ready.

Thank you, madam chair and members of the committee for allowing me to present AB 1888 today, which is a joint authored by myself and the chair. AB 1888 would require any work performed by the California Safe Homes Grant Program to be performed by a skilled and trained workforce paid with prevailing wages. Last year, AB 888 by chair Calderon established the California safe homes grant program to help low and middle income homeowners in high wildfire risk areas afford home hardening upgrades.

This program launched in January '20th, this year, tackles the issue affordability and home insurance market while helping to reduce the instance of then damages caused by wildfires. AB 1888 is a companion bill to ensure that taxpayer funds are used effectively and productively.

Here to testify with me today is our insurance commissioner, Ricardo Lara from the California Department of Insurance and Jeremy Smith, chief of staff for the state building and construction trades. We also have Amanda Jimenez with the climate resilient analyst for climate and sustainability at the Department of Insurance in the room to answer any technical questions.

Thank you. Good morning, madam chair, mister vice chair, and members of the committee. Thank you for allowing me to speak in support of AB 1888. We know that wildfire risk is not a theoretical, theoretical in California. It's a constant pressure on homeowners, insurers, and our entire communities.

We know that mitigation is one of the most effective tools we have to improve insurance market stability and protect consumers. That is why I proudly sponsor AB 888. Last year, as our author said with the chair, establishing the California Safe Homes Grant Program administered at my department to help, income eligible residents afford critical measures like, fire safe roofs and defensible space.

We are now building that program in real time, but thanks in part to you to all of you for the funding approved in the current enacted budget to help cover my department's, start up cost. Without clear workforce standards, we risk funding projects that could be inconsistent, incomplete, or ineffective.

Homeowners can be left with false sense of protection, public funds, being spent, and yet the underlying risk remains. That creates two problems, re reduced protection and the potential for costly rework. AB 1888 addresses this gap and ensures that the work funded through the program is done correctly the first time. The bill requires that, mitigation work is performed by qualified licensed professionals, used a use uses skilled and trained workforce, and meets the prevailing wage standards.

A skilled and trained workforce brings consistency, accountability, and the technical expertise needed for work that directly affects whether a home survives a wildfire.

It also supports a stable pipeline of trained workers who can meet the growing demand for mitigation work across the state. The prevailing wage requirement ensures workers performing mitigation work are well trained and appropriately compensated. Other states with similar state funded mitigation programs like Alabama, Louisiana already recognize the importance of workforce standards and include labor components in their programs. California is going to step further by aligning our workforce standards with the scale and complexity of our unique wildfire risk. With that, I respectfully ask for your aye vote.

Thank you, madam chair. Jeremy Smith here on behalf of the State Building and Construction Trades Council of California in support of the bill. I'd like to thank the insurance commissioner, miss Ortega, madam chair, and you, madam chair, for this bill for including without even being asked, standards to protect the workers who are going to do this work, prevailing wage and ensuring that they are skilled and trained. That also protects taxpayers.

These are projects that need they're gonna be using taxpayer dollars in this grant program, and I think the taxpayers would want workers doing these projects to earn a living wage with health care and benefits and all the things that we all take for granted in the white collar world.

Also, it's important to note that we wanna make sure this is done right the first time as the insurance commissioner mentioned. Skilled and trained statutes require apprentices and journeymen and journeywomen to be graduates of California state approved apprenticeship programs, approved by the division of apprenticeship standards. There are union and nonunion state approved apprenticeship programs in California. So this ensures that the work is done right the first time, and it's important to note as I wrap up here one more thing.

The skilled and trained statutes, for many crafts only require 30% of the workers to meet their requirements.

So three in 10 workers on a project that require skilled and trained need to meet the standard. For some crafts, it's 60%, depends on the craft. But my point in saying that is that this isn't a 100% skilled and trained statute. This is just the legislature saying over and over again and many other bills, we need to make sure workers are skilled and trained in this state who are doing construction projects. It's important here.

It's important everywhere. We appreciate the inclusion of it and the prevailing wage, and we urge an eye vote. Thank you.

Thank you. Do we have any other witnesses in support? Please state come forward and state your name and affiliation. Okay. Seeing none.

Do we have any witnesses in opposition? Alright. Seeing none. K. I'll bring it back to the committee.

Do we have any questions? Comments? No? Thank you. We can't.

We gotta wait till we have a quorum. Okay. We can hold that thought. No. Please hold that thought.

Okay. Assemble, would you like to close?

At the appropriate time, I would respectfully ask for an aye vote.

Okay. Thank you very much.

Thank you.

Alright. Next up, we have file item number two, AB 1680 by Assembly member Calderon. Assembly member, please, proceed when you're ready.

Thank you, mr vice chair. Today I'm presenting AB 1680, the California Make It Fair Act. With me today, I have special guest, California insurance commissioner Ricardo Lara, the sponsor of AB 1860. And without delay, I'll let the insurance commissioner begin his testimony.

Thank you. Good morning, mister vice chair members. Thank you for the opportunity to testify in strong support of AB 1680, the Make It Fair Act, a measure I'm proud to sponsor. With me today is deputy commissioner Laura Clement to answer any technical questions, that may arise. As you all know, the California wildfire reality is now a year round problem.

Fires are larger, faster, and more destructive than ever. 2019 was a definitive turning point for California's wildfire landscape, making the transition into a new era where a 100,000 acre mega fires and 1,000,000 acre giga fires became the recurring reality rather than an anomaly. Last year's 14 destructive fires across LA and San Diego counties made this painfully clear once again. The Eaton Fire and the Altaedina Fires and Pacific Palisades alone destroyed and damaged more than 16,000 homes.

While the sustainable insurance strategy continues to build momentum, continued wildfire risk, ensure withdrawals from writing in wildfire risk areas, and widespread nonrenewals have driven unprecedented growth in the fair plan enrollment.

As a fair plan increasingly functions as a major insurer rather than a limited backstop, gaps have emerged in its coverage offerings, operational flexibility, and accountability and mechanisms. The fair plan's statutory framework that was originally created by the legislature back in 1968 has not kept pace with the scale of its responsibility or the needs of its policyholders who rely on it today.

Since my first year in office, I have pushed a fair plan to modernize, expand coverage, and meet basic consumer customer service standards and treat policyholders fairly. Yet the fair plan has resisted several key reforms and continues to fight others in court. The Southern California wildfires again and smoke damage crisis that followed didn't create these failures.

They exposed them. Families are still fighting for simple answers about contamination and safety. That that is completely, unacceptable. My department has also taken formal legal action against the fair plan for illegally to nine hundreds of smoke damage claims. This case is still pending.

Despite major efforts to improve the fair plan's performance and accountability, wildfire survivors have continued to report ongoing problems assessing the fair plan insurance benefits with delays, denials, and miscommunication at the top of the list of consumer complaints filed with my department since January 2025. And this is in regards to the Los Angeles wildfires, considered the largest urban wildfire disaster in the state history.

So the Department of Insurance report examination findings further, my department staff's two part report of examination on the fair plan completed this past January and adding to the previous September 2023 examination is the most comprehensive review of the fair plan in decades and revealed systematic problems that have left wildfire survivors struggling, particularly after the twenty twenty five LA wildfires.

This examination evaluated the fair plan's financial conditions, corporate governance, and controls to protect policyholders across 32 areas, finding that in more than half of them, the fair plan had not started or fully implemented these critical recommendations since 2023. My department's report examination in January 2026 found that the fair plan had specifically failed to comply with 17 critical administrative recommendations, and these are not minor administrative issues.

They are structural weaknesses that directly affect policyholders who rely on the fair plan when they have nowhere else to go. AB 1680 responds directly to those findings with targeted necessary reforms. I can go through all of 17, but I will spare you. If you have those questions, we'll more likely we could answer those, directly. Again, just in closing, the fair plan is no longer a niche backstop.

It is the insurer of last resort for hundreds of thousands of Californians, and it is failing to meet that responsibility. AB 1680 is not optional. It establishes standards of accountability, transparency, and consumer protections that Californians deserve when the state created the insurers such well, they ensure such as the fair plan, again, ignoring 17 critical recommendations. AB 1680 ensures the FAIR plan modernizes its operations, strengthens its governance, and protects policyholders while our state's insurance market gets back on track.

Californians are counting on us to fix what the examination made very clear.

The fair plan must do better, and AB 1680 with AB 1680, it will. I respectfully ask for your aye vote.

Do we have an additional witness in support? Alright. Do we have additional witnesses in the room in support who would like to come up to the microphone?

Thank you. Good morning. My name is Joel Lautcher. I work for United Policyholders, a nonprofit that assists, consumers with insurance issues countrywide. I'm gonna be testifying on a couple bills, so I'll just mention my background.

I started a career as a commercial lines underwriter, joined the Department of Insurance.

I'm sorry. We're just in Me Too testimony right now.

So if

you can just name, affiliation, and position.

Alright. I will say this, ensuring that there is adequate coverage with the fair plan is essential for I'm

sorry. I gotta cut you off. We're just doing name, affiliation, and position here.

Name, position?

Position on the-

bill. Position is in favor of United policyholders, Joel Lauter.

Thank you. Appreciate that.

Do we

have additional witnesses in support?

Mister chair, members, Andrew Antwih with Shire Yoder, Antwih Schmelzer and Lang, here today on behalf of Los Angeles mayor Karen Bass, proud to support this measure, thank the insurance commissioner for the good work, and thank the author.

[Roll Call]

W e have a quorum. Let's now head to, lead, opposition witness. You have two minutes.

Thank you.

Good morning, mister vice chair and members. My name is Obed Franco with Public Policy Advocates here today on behalf of the California Fair Plan Association. First, we would like to thank the author and the author staff and committee staff for their work and continued engagement on this issue. The bill has improved and but we remain respectfully opposed unless amended, to AB 1680 as we continue, reviewing the updated language.

The review process is focused on how these provisions may be interpreted and implemented in practice, including whether further clarification is needed.

We remain committed to working with the author and stakeholders

as this bill moves forward. Thank you.

Thank you very much. Do we have any additional opposition witnesses in the room? Alright. Seeing none, let's bring it back to the committee. Any questions from we have a motion by miss Ortega, second by miss Peachy Norris.

Assembly member, would you like to close?

Yes. Thank you, mister vice chair. I wanna thank the insurance commissioner for being here today. This measure strengthens accountability. The fair plan was established to step in when California faces a voluntary market failure.

Therefore, we need the fair plan to be transparent, accountable, and responsive, which AB 1680 aims to do. I respectfully ask for your aye vote.

Thank you, Assemblymember. We have a motion and a second. Adam, secretary, please call the roll.

[Roll Call]

Bill's on call. We'll leave, the role open for additional members. Next up, we will have file item number one, AB 1559, by Assemblymember Calderon. Please proceed when ready.

Thank you, mister vice chair. AB 1559 provides new consumer protections to homeowners when insurers use aerial imaging to make decisions about coverage. Insurers have been increasingly using images from drones, aircraft, and satellites in lieu 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 turns out that the images were inaccurate or outdated.

AB 1559 requires insurers to provide notice before collecting aerial images of a residential insurance policyholder's home and allows policyholders to receive any aerial images taken of their home. If an aerial image is used to non renew, cancel, or reduce coverage, AB 1559 also ensures that the image is up to date, providing the policyholder with the right to request an in person inspection to verify the accuracy of the image or to verify remediation of the issue. I respectfully ask your aye vote. This bill is sponsored by insurance commissioner Laura who is here with me to testify today.

Thank you, mister vice chair and members of the committee. I also wanna thank chairwoman Calderon and speaker Rivas for authoring this important measure, which would give consumers better protections when insurers collect or use aerial images to make decisions on new or existing insurance policies. A widely reported by widely reported by the media and documented in consumers' complaints to my department, insurers are increasingly using aerial imagery to inspect their homes. Just a few weeks ago, this issue made headlines again in Southern California.

A homeowner was told by the insurer to replace her entire roof or face a non renewal. There was no explanation provided, and she had to investigate on her own and understand why, she had to do all this work. Consumers have the right to know when the aerial image images are being used to make decisions about their policies and a right to access and dispute those images. This bill gives consumers that right.

Insurers are and, more often, third party vendors are using not just drones, but also satellite images and manned and unmanned aircrafts to collect images of homes and property often without the homeowner's knowledge and then using these images to make changes to insurance policies, deny coverage, or nonrenewal policies. This bill is not about the capture of just aerial images.

It's about ensuring that when insurers use those images to make decisions about coverage, consumers have transparency and a fair opportunity to respond and respectfully ask for your eye vote on this important measure.

Thank you, commissioner. Do we have any additional witnesses in the room in support? Please come up to the microphone, state your name, affiliation, and position on the bill.

Yes. Mister chair members, Jolena Voorhis with the League of California Cities in support.

Mister chair, member is Anna Buck on behalf of the California Association of Realtors in support.

Eduardo Rubalcaba with AARP representing one 3,200,000 AARP members in support of AB 1559.

David Bullock is an individual in strong support.

Bank. Joel Laucher with the United Policyholders in support.

And do we have any witnesses in the room in opposition? Seeing none, let's turn it over to oh, we have one coming up.

Christopher Sanchez, the Consumer Federation of California, not in opposition, with the position of concern. Apologize to the committee for submitting our letter late. We like the direction the bill is going. We would just like to see it go further. Thank you.

Appreciate that. Thank you. Let's turn it back to the committee. Any questions or comments? Move.

We have a motion and a second. Assembly member, would you like to close?

Yes. Thank you, vice chair. Insurers need to be able to accurately and cost effectively price risk, But the burden shouldn't fall on homeowners to make sure that aerial images are used responsibly in this process. Thank you. I respectfully ask for an aye vote.

Thank you, Assemblymember. We have a motion and a second. Madam secretary, please call the roll.

This is item number one, AB 1559 by Assembly member Calderon. The motion is do passed to the committee on privacy and consumer protection. Calderon, aye. Calderon, aye. Wallace?

Rollcall.

Valencia.

That bill's on call. We'll leave the roll open for absent members.

I'd like to request a motion and a second on the consent calendar.

[Roll Call]

Okay. Now we're gonna take up AB 1798. Assemblywoman Wilson, whenever you're ready.

Thank you, Madam Chair and Members. I'm honored today to present AB 1798. Today, more Californians than ever are turning to genetic testing to better understand their health. These tools allow individuals to detect risk early, pursue preventative care, and make informed medical decisions.

This is exactly the kind of proactive health conscious behavior we should be encouraging, but instead our current system creates risk and uncertainty. That is why my bill, 1879, 1798, prohibits life and non health disability insurers from using non diagnostic genetic information to deny coverage or increase premiums.

The bill also addresses the growing role of direct to consumer genetic testing, which considered non medical and is not currently used in underwriting. It prohibits insurers from seeking or using genetic information that individuals obtain on their own, ensuring that consumers remain in control of deeply personal data that they chose to explore for their own health benefits.

At the same time, AB 1798 is carefully balanced, and this type of policy is already being implemented in states like Florida. It does not prevent insurers from accessing medical history or asking about family history. It simply makes clear that genetic data, whether obtained directly or indirectly, cannot be used to make underwriting decisions.

In other words, insurers can still evaluate risk, but they cannot rely on data that is uniquely sensitive, speculative in nature, and often uncertain. It is extremely important to note that genetic data is fundamentally different from traditional medical data. As emphasized by, and in many cases, the science is still evolving or correlational, not causational.

Members, this bill is necessary because the consequences of inaction are real and growing. When people believe their genetic information could be used against them, they avoid testing. They delay care. They opt out of research that could lead to life saving breakthroughs.

According to the Center for Disease Control and Prevention, a majority of individuals expressed concern that genetic test results could impact their access to life insurance. I would like to personally thank the Chair and committee staff for their thoughtful engagement on this bill and confirm that I am accepting all committee amendments.

I have also personally had many impactful discussions with opposition. And I am committed, as I always am on every single bill that I put forth through the legislative process, to navigating further conversations with opposition throughout this process to ensure the bill is fair and balanced.

That said, I would like to take a moment to directly address some of the concerns opposition has raised and detail the committee amendments we are accepting to address those concerns. After much discussion and compromise, AB 1798 incorporates a 1.5 million coverage threshold. This committee amendment was not included lightly.

It is a result of thoughtful, good faith negotiations with industry stakeholders to address concerns around high value policies while still protecting consumers. This approach protects the vast majority of Californians and follows proven models in countries like the United Kingdom, Australia, and Singapore where similar limits have not disrupted insurance markets.

In fact, the international and domestic precedent shows no evidence that reasonable limits on the use of genetic information lead to market collapse or significant disruption. Life insurance continues to be widely available, competitive, and sustainable in jurisdictions that have adopted these protections. So when we talk about the 1.5 million cap, we are not stepping into the unknown.

The evidence is clear. We are not choosing between consumer protection and market stability. We can achieve both, and this bill does exactly that. Some argue that this bill creates information asymmetry. That if insurers cannot access genetic data, they cannot accurately price risk, potentially leading to higher premiums or market instability.

That concern deserves consideration, but we've already accepted limits on underwriting when fairness demands it. California law prohibits the use of protected characteristics like race or sexual orientation even where statistical correlations may exist because we recognize that some factors are simply inappropriate for pricing risk.

We prohibit their use because fairness and civil rights outweigh purely actuarial considerations. Members, if we agree that people should not pay more or be denied coverage of because who they are, then we should also agree they should not be penalized for what's written in their DNA. Ultimately, this bill really is about balance.

AB 1798 ensures that genetic testing leads to better health. It protects privacy, promotes early detection, and reinforces trust in both our health care and insurance systems. I would like to now introduce my two witnesses, California State Insurance Commissioner Ricardo Lara, and Melanie Lendnal, Senior Vice President of Advocacy at the ALS Association.

I mean, I'm done. Just fantastic. Thank you again, Madam Chair. Look. The fear of genetic discrimination is not hypothetical, as our amazing author was saying. It's real. Californians have told our department several times directly that they are afraid to undergo genetic testing because of how insurers might use the results.

They worry not only for themselves, but for their children and their grandchildren because genetic information is inherently familial. The fear has consequences. Study by the Journal of Empirical Research on Human Research Ethics found that 28% of individuals who declined whole genome sequencing cited insurance discrimination as their primary reason.

UCSF researchers have told my department time and time again the same thing. Fear of discrimination is a major barrier to participation in genetic research, and whole genome sequencing work is essential for developing new treatments and advancing medicine. Genetic testing is not widely accessible.

And many people choose not to be tested. It's fundamentally unfair to penalize only those who do get tested, especially when testing is voluntary and when scientific understanding evolves rapidly. Someone who tests today could be judged by risk standards that look very different in five years. No one should be punished simply for seeking information early.

Just in closing, Madam Chair, this bill again strengthens consumer privacy, promotes fairness, supports genetic research, and empowers individuals to make informed medical decisions without sacrificing their financial security. Again, as our author said, we look forward to continue to talk with the industry and with opposition to continue to make sure we strike the appropriate balance.

Other countries have found that balance without disrupting the insurance market. That is the last thing I wanna do as the Insurance Commissioner. We'll continue to have those dialogues with the author, with the opposition, and with your office. I respectfully ask for your aye vote.

Chair Calderon and Members of the Committee. My name is Melanie Lendnal. I lead the advocacy department at the ALS Association, and I'm here in strong support of AB 1798 because allowing insurers to use genetic information creates preventable risk. It undermines care. It suppresses research and slows progress.

10% of ALS cases are genetic. But today, an FDA approved treatment is showing not only that it can slow progression, but people are actually regaining function. And most importantly, researchers are today studying whether it can prevent symptom onset of this disease in its entirety.

But that future depends on genetic testing, and the evidence is clear. As you've heard, without protections, people decline testing and avoid research out of fear of insurance discrimination, and I know that because I'm one of those people. So the question is simple.

Will we allow fear to determine who is able to access life saving information? The industry claims that this bill creates an uneven playing field. It does not. Genetic information is not a diagnosis. It is uncertain and not grounded in credible actuarial data. What they are asking for is not fairness.

It is the ability to price risk based on speculation. Their amendments do not fix this. They entrench it. The science is ready, but the barrier here is real. The only question left is whether we allow the fear to persist or whether this committee takes action to remove it. AB 1798 does exactly that. I thank you for your time and encourage an aye vote.

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

Chair and Members. My name is Natalia. I'm with Greenberg Traurig on behalf of Equality California urging your support. Thank you.

Good morning, Chair and Members. Zoe Johnson on behalf of California Life Sciences in proud support.

Terry Walter, a private individual, but part of a family of FTD, frontotemporal degeneration, and ALS genetic family, and I support this bill.

Chair and Committee Members. Gilbert Lara here on behalf of Biocom in support of AB 1790. Thanks.

Sara Noceto on behalf of the California Chronic Care Coalition and GeneDx in support.

Ann Blackwood on behalf of Ancestry in support.

Chris Kahn representing the ALS Network in support.

Madam Chair and Members. Adam Keigwin on behalf of Natera in support. Thank you.

Thank you. Okay. Do we have any opposition who'd like to come forward and testify? Two witnesses. Thank you. Whenever you're ready.

Alrighty. Good morning, Madam Chair and Members. My name is Michael Mares, and I'm NAIFA California's Government Relations Chair and immediate past President. NAIFA is the Association of Insurance and Financial Advisors, which represents financial professionals who provide individuals and families with secure financial protection through life, disability, and long term care coverage.

In my own practice, I work directly with clients to evaluate their needs and help them obtain appropriate coverage. I help people protect their todays and plan for their tomorrows. I'm here today in opposition of AB 1798. Of course, we support the goals of protecting Californian's personal information.

And people knowing more about the health, their health through all types of medical advances, including genetic testing. Our opposition is based upon our concern that this is proposal ignores a basic tenant of insurance underwriting, that being able to accurately predict risk is critical to fair and accurate insurance rates for my clients.

CDI, the sponsor of the bill, has even acknowledged this principle in statements on other lines of insurance. Unfortunately, as proposed to be amended, this bill will create two classes of applicants, those whose genetic information can be considered and those whose information cannot.

One of the underlying justifications that we have heard from the supporters of this bill is that using genetic testing in life and disability underwriting could somehow deter people from taking a genetic test, understand more about their health.

In my experience working with clients every day and representing thousands of agents across our districts, this concern has not materialized in the marketplace. Clients routinely discuss their health, family history, and coverage needs, but concerns about genetic testing in the context of insurance underwriting are not a primary driver of their decision making.

It is in no, it is no more top of mind to most consumers than other common health indicators, such as cholesterol, weight, or blood pressure. I also want to emphasize that today's market already provides a range of options designed to expand access to coverage.

These include guaranteed issue policies, simplified or accelerated underwriting products, and fully underwritten policies. As a result, the vast majority of individuals are able to obtain some form of coverage. Industry data consistently shows that over 90% of applicants receive life insurance at standard rates.

Finally, from a practical standpoint, my role as an agent is to advocate for my clients. I regularly work with carriers to ensure that applicants are evaluated fairly based on their full health profile. For example, if a client has a family history of breast cancer but does not carry a BRCA mutation, that distinction is highly relevant to their actual risk.

And I work to ensure that they are priced appropriately. So the idea that genetic testing information is used only adversely is simply inaccurate. For those reasons, we respectfully oppose AB 1798. And with that, I'd like to turn it over to the other witness from New York Life. Thank you.

Whenever you're ready.

Good morning, Madam Chair and Members of the Committee. My name is Dr. Paul Quartararo. I am the Chief Medical Director at the New York Life Insurance Company. I've been there for 23 years, and before that, I practiced internal medicine for ten years. Let me begin by acknowledging the patients and the families who shared their stories.

I'm truly, truly moved by what they shared. That is an important message. However, while those stories are tragic, people with severe medical conditions are often not insurable today. There is nothing in AB 1798 that will change that.

Life insurance is designed to insure people who are healthy and have modest impairments, and those people are expected to live over a long period of time. That is the contract we sign. At the core, life insurance depends on accurately stratifying risk.

As a physician, I evaluate an applicant's health holistically and risk appropriately. When it is incomplete, we have uncertainty. And uncertainty leads to blind spots, It leads to increased risk, and ultimately, it leads to higher premiums for other policyholders.

AB 1798 removes access to information that is part of the complete picture, and the cost of uncertainty will be born by all policyholders. Genetic tests are not fundamentally different than other medical tests. They are simply an evolution of medical technology.

Like a cholesterol test, it indicates the risk of a developing disease. We believe that if a physician who takes care of a patient orders such a test, patients should adhere to that advice and take that genetic test. And insurers should then be able to consider the results alongside the physician's guidance.

In many cases, individuals with abnormal genetic findings who follow medical advice, such as lifestyle changes or surveillance, can still obtain coverage, although it may not be at our best rate. We do not require genetic testing, and we only review results already included in the medical record.

Consistent with any other clinically relevant medical information, we use genetic information solely for risk assessment and only when it is actuarially supported. We are requesting amendments that allow appropriate access to this information.

We believe an approach that preserves our access to the medical file will strike the right balance, protecting consumers while preserving a fair, stable, and affordable insurance market. Thank you, and I'm happy to answer any questions.

Thank you. Do we have any additional public opposition to this bill? Please step forward and state your name and affiliation.

Good morning. Kent Teixeira with NAIFA California as board member in opposition.

Is the mic on?

I don't think the mic's on.

Jerry Garcia representing NAIFA California out of San Leandro, California, and I oppose.

Phil Calhoun from NAIFA and also have an agency in Southern California in Orange County, and I oppose.

Matt Powers with ACLHIC, also in respectful opposition. Appreciate the work of the author and staff on this. Thank you.

Good morning, Madam Chair. Meghan Loper on behalf of the American Council of Life Insurers. Appreciate the continued dialogue, but in opposition today.

Hi. My name is Ivy Rappaport. I'm a life insurance agent with New York Life, and I'm from Woodland Hills near Los Angeles. I am someone with a genetic defect, and I oppose.

Morning, Madam Chair and Members. My name is Roberto Hernandez. I'm a New York Life agent from Vallejo, California, and I oppose the bill.

Good morning, Madam Chair and Members. My name is Chrisann Coustenis. I'm a New York Life agent in Riverside, California. I'm here to oppose AB 1798 unless it's amended. Thank you.

Good morning. My name is Steve Morgan. I'm with New York Life. I live right up the road here in Orangevale, and I oppose this bill unless amended.

Good morning. My name is Scott Vitebskiy. I'm an agent with New York Life out of Lake Forest, California, and I oppose the bill unless it's amended. And we do look forward to working together with the Insurance Commissioner and the author.

Hello. I'm Ralph Sklar from Oakland, California. I am with New York Life Insurance Company as an agent for 31 years, and I oppose AB 1798.

Also New York Life, Lars Willerup, Modesto, California. I do oppose the current bill as authored. Thank you.

Hi. My name is Ted Ngo from Orange County. I'm an agent with New York Life, and I would oppose this bill as as written right now unless it's amended. Thank you.

Thank you. Okay. I'm gonna bring it back to the Committee Members for questions.

Madam Chair, one of the members of the community who spoke wasn't able to get his voice on record because the mic wasn't on.

Okay.

Should we have him come and do that? Thank you. The very first person.

Here, we're good. Good afternoon. Thank you again. NAFA California, Kent Teixeira as a board member. I oppose the bill. Thank you.

Thank you. Okay, bring it back to the committee. Do we have any questions? Go ahead, Assembly woman Rodriguez.

I just wanna state that I appreciate the work you've been doing on this bill and hope to see you and still engage with the stakeholders and see continued collaboration moving forward.

Absolutely. Absolutely. Thank you. Assembly woman Krell.

Hi, Assembly member Wilson. Thank you so much for your work on the bill. I appreciate your position, I also appreciate what the sponsors have shared today. This is a really important issue, and it's a weighty one.

I plan to vote for the bill today. My concerns are though that the bill, even with the amendments, will raise premiums for the people that can least afford it, people that need life insurance, and won't get it because they already are priced out, and they'll be more priced out kind of the middle market, of insurance consumers.

And I'm wondering if you can speak to that a little bit maybe in your closing, but that's my biggest hesitation with the bill, which I think addresses some really important issues.

Thank you. And I would say and I'll look to the insurance commissioner, Lara, to add on. And I would say that currently, it's not used. And what happens is that the insurance providers receive a medical file related to the person that they're carrying, and they still have access to all that information.

And it's based on the diagnosis of the medical professional or a risk of the medical professional who's directly interacting with patient where they base their current risk now, and then on their side of the insurance, a medical professional review there's a medical professional on the insurance side that also reviews that as well, and that's what it's based on.

And we're not disrupting that at all, but we're saying if you voluntary get genetic testing, then that can't be used against you. If you mention that because they get the whole file, if you mention that you voluntary did it and you were concerned about a risk, and then the doctor was assessing that risk and didn't say that you have that risk, then that can't be used against you.

But if the doctor says, yes, you have that risk, let's do additional testing, then of course that information can be used. And so I don't think it will have an impact because it's not being used today. And like I said, we haven't seen this collapse in other markets, including Florida, including other countries that do this. We haven't seen this contraction in the market.

Yeah. I would just say, Senator McCrell, in in the academic review research that we've seen in countries in Canada, UK, and in other EU nations, The review show that's minimal market impacts, again, for the reasons that the author was stating. It isn't being used now. We're just trying to protect the sensitive information.

And I'd add the middle market is-

Yeah. Hi, I'm Beverly Brand, I'm with the legal branch of the California Department of Insurance. And middle market, some might be medically underwritten in this face amount, but it tends to be a lower face amount. So when you hit a medically underwritten policy, you tend to start going into the higher level of the marketplace.

You wanna,

Was there an additional related to that or or any follow-up?

I mean, it just, it seems like there is, like, a bit of an information deficit though between the information that the consumer knows about their risk and the information that the insurance company knows about their risk. And I think what your side is saying is this isn't really risk if this is more attenuated. If it gets diagnosed by a doctor, that's one thing, but this is something else.

Exactly. Because you might, so I did '23 and me and it told me all these kinds of potential risks that I have. Right? And some of it said low, some of it said medium, and it was just doing this correlation, like, between people who have this genetic or more than likely to that, and I can assess that, you know, with my doctor.

My doctor can determine the real risk of or maybe you shouldn't, you know, somebody else who doesn't have that risk, I'm gonna use something really simple, is, like, if I have a risk of disease X and I eat grapes, then I will likely get disease X.

But if somebody else has no risk, they can eat all the grapes they want. And so I might decide that I'm not gonna eat grapes because eating grapes will actually increase that risk. But that's arbitrary. Right? But if my doctor says, you know, in the file, oh yes, this is a real risk and you should be doing X Y Z.

And then I regularly every year not doing X Y Z, and then that medical file goes because I'm trying to get a certain type of, life insurance, especially permanent life insurance, which has a higher threshold. Then, of course, life insurance companies can use that information because the doctor has opined on information that they got from me.

But they just can't say, oh Lori has this risk from 23 and Me, and then now out of automatic she's a higher risk person because they don't know know that information. And so, I mean, we don't know that yet. Now maybe five years down, ten years down the road, we get really precise with the science and we start to draw a direct correlation that if you have this, it is really truly a risk, then that's different and we can assess it this time.

But at this time, we don't have that tech we don't have that data that proves that out. And so we wanna make sure that the information that the insurance companies are using is real information that has been assessed by a medical professional that is interacting with the patient, not someone who's just reading a file and saying they mentioned a 23 and Me test or, and I hate to pick on 23 and Me. There's lots of genetic testing out there.

So they did some type of genetic testing, and it's just noted. And then now all of a sudden, they get to give them a higher risk as it relates to that. And we and we don't want that. And we recognize that there is a difference. That's why we were not amenable to the cap. But part of the legislative process, you can ask for the world, but then you work with the policy experts, the subject matter experts to adjust. And so that's where the cap came from is recognizing your average policy and well, let me back up.

Well, your average policy in California, we figured it out with median home prices, looking at income and all that, that it was a reasonable that your average person was not getting a life insurance above $1,500,000. But we also know that if you get higher life insurance that sometimes they require blood testing, sometimes they require additional things. So that okay. Fine. If you're getting a higher insurance, a premium I mean, not a higher premium, but a higher surge coverage, then then you can look at additional testing.

Got it. Thank you.

Well, one thing I'd like to add, if I may, and I really do appreciate the question, is I do want to underscore the fact that this has been done not only in other countries, but right here in The United States. The Florida insurance market has not taken a hit. It is alive and well. And even in countries that have had this on the books for long periods of time have not seen an impact in the insurance market. The other thing that I think is really important to note here is that

I'm sorry. Thank you. I I'm sorry. I'm gonna have to stop you right there. Okay. Assemble and Petrie-Norris, could you please

Thank you, madam chair.

Ask your question?

And thank you to the author. I have a couple of questions as well. Though, your answer to Assembly member Krause's question makes me think perhaps I do not fully, didn't fully understand the proposal. So I understood you to say that this is only prohibiting the use of direct to consumer genetic testing being incorporated into the underwriting process. Is that correct?

Yes.

Go ahead.

Well,

Okay. So if..

Oh, because you use the word only. They've give like. Sorry. Go ahead.

It is in, it's predictive only. So it's testing in the absence of symptoms or disease or conditions.

Okay.

If you're concerned, you have a family history, perhaps you're concerned you want to do predictive testing. Some doctors will do that, some won't within the medical records. Some, you know, if you come in with a direct to consumer test, right, that your doctor may decide to do a medical test because there is different quality between the two tests, so they can be in the medical record. And where there's an absence of diseases, just to give you, you know, peace of mind or information for preventative care.

That's what the bill is aimed at. So it does include direct to consumer, but it's possible a doctor also would do a similar type of test.

And I very much can totally understand that, the direct to consumer piece. I guess what I don't understand is just even in terms of the underwriting process, how would, like, a medical professional who's providing an overall assessment of someone's, you know, health and attendant risk, how would they look at a medical file and then understand, like, oh, I can utilize this genetic testing, but I can't utilize that conclusion.

I guess I don't understand how you would even distinguish between those if you're making an integrated assessment of someone's health risk.

Because the, did you wanna, the doctor would be making this. The doctor who's interacting with the patient, not the person reviewing. So the doctor interacting with the patient would make that assessment on whether there was a real risk there. And so the insurance provider would be relying on the doctor's assessment, not the underlying predictive assessment. There are some genetic testing that you do to determine if there's an actual disease there.

Like, you do the genetic testing and it comes back, then you have that disease. Right? Like, so we're not talking about that. So we're talking about and really, you're it's a diagnosis. So then they get to use it because it's a diagnosis.

It doesn't matter how you diagnosed it. But then we're talking about the predictive, where do you have a risk of this or not? And assign, you have these symptoms, and you have now, we've done this genetic testing and this risk. Now we determine that you're at this risk. That's at a doctor who's interacting with the assessment. That can be used.

Okay.

There's nothing that prevents insurance company from using that. Right?

Is that the understanding? That the doctor

Once there’s, yeah. If it's in the presence of symptoms and disease and they're using it to diagnose or to treat or to look at that and that's part of it, there'll be other testing. Right? Certainly, once you have disease or a condition, that's that is all fair game.

Okay.

The underwriting I mean, there is an issue, and I don't know if this is what you were hitting on, between you can't unsee what you've seen. And so by not barring it from being in the medical record, it's possible the underwriter will have seen it. Underwriter is gonna follow the underwriting guidelines. I think that's perhaps whats right? And so they'll go through and look, grade different things, so they'll grade what's in there.

And if it says that they're to omit the predictive test that they saw in the medical record that someone has a10% chance more than another person of a particular disease, that's something that they wouldn't rate on the rating sheet.

And as I shared with the author, I will be supporting this bill today in committee, but I think, you know, my frame of reference with this is that we should be consistent in terms of how we're utilizing, you know, sort of this genetic testing information and how we're utilizing the other things that happen when you're getting life insurance.

Like, when I've only done this once, but, like, I had to go in, you know, you get a cholesterol test, and that becomes part of it. Like, I think that you had to, like, run on a treadmill and they monitor your heart rate. Like, none of those

Do you want to know? Yeah.

Data points. None of those data points, you know, necessarily then mean it wasn't like, oh my gosh. She's, like, definitely got this as a problem. They use that

Right.

to make an assessment. So I guess my question is, is it your intent that we will utilize this genetic testing in a way that's consistent with the, you know, data points? I just

So, you’re right on track, and this is where we're trying to differentiate because the genetic information is uniquely sensitive and it's immutable. Right? So you can change your weight. You can change your blood pressure, or your lifestyle. You cannot change your genome.

Right? Genetic data reveals information about your entire family, not just you. And once it's disclosed, it can't be taken back. And that's what we're trying to figure out what are the parameters here where it should be protected, and how it's gonna be used in the under underwriting. And so, again, those are the things that we continue to talk with the opposition on what the appropriate appropriateness of this use.

They don't they don't use it. But then again, the technology is changing so rapidly. And in the countries that have been able to put some parameters around it, we haven't seen, really significant or minimal market impact. Again, the science is changing rapidly. We're trying to provide those, and again, allow for people to join these studies as well.

Because, again, a lot of the complaints we're hearing in our department is they don't wanna be part of these studies because they're scared of the discrimination from their insurance policies. So it's just having multiple effects. So we're trying to strike that balance, hence the amendments that we're taking this committee and the future conversations we're gonna be having with the opposition.

And I would also note that the opposition noted that when people are coming to get life insurance, that's not top of mind. It's voluntary, so those people have already decided that's not an issue for them. So this is the people who are deciding not to do it. They're not going to seek life, or they wanna seek life insurance, but they're not doing it because they're concerned about genetic information and the advent of, you know, and just scared of like technology in general.

Right? And how it's impacting discrimination. And so we don't want to create this environment where people are not participating in genetic testing because for every person that does that, we get way more information. And something that might be a 50% risk today, we might learn through the number of people that do it that really that's like a 5% risk, you know. And so we want people to get genetic testing at the end of the day.

Okay. Alright. Thank you.

Assembly man Chen.

Thank you, madam chair. I appreciate that. I really appreciate the response of the author and also the medical professionals. I am curious in terms of, Dr.Paul, your thoughts in terms of some of the questions and the answers that were raised right now, especially in the aerodynamic testing.

Thank you, Assemblyman Chen. I agree that we can find compromise here. We do see genetic testing from a different perspective. I do not view genetic tests as exceptional compared to other tests. I stated that in my comments and I'll stand by that.

And here's the reason why. Genetic testing has been around a long time. It has become more accurate and more reliable with time, much like many other tests we use. So let's take cholesterol for a second. When we first started doing cholesterol test, you got a total cholesterol measurement.

Over time, we learned to check LDL and HDL, triglycerides. Now we're looking at subfractions of those, and there's recommendations to check lipoprotein A, VLDL. The list goes on. Science changes. What we are bound to do in the life insurance industry is different than what happens in the health world for a big reason.

First of all, our product is voluntary. Second of all, it's paid for with discretionary income. So your concerns, Assembly woman Krell, I think are very real. And the fact is that we are bound by actuarial standards. I can't just say, oh, there's a new test out there.

I'm going to use it to underwrite. If commissioner Lara gets a complaint about one of the cases that we underwrote, I need to prove to him and his team that we made a rational decision with sound actuarial principles or reasonably expected claims experience. I cannot willy-nilly adopt a genetic test that is not helpful to miss election. I will agree with you that there are genetic tests that are not very helpful.

And as you, I'm sure, are aware that genetic tests pretty much fall into, one of three categories. Unhelpful, a variant of uncertain significance, and an actionable. In general, we are looking at actionable genetic variants if we make an underwriting decision with that. A variable of uncertain significance is not statistically sound from my point of view, and I will not make a decision on that. It doesn't meet the criteria of the guardrails that are in place. So I can understand your concern, not only as a physician, but as a patient.

I'm a human being too. So I fully understand your concern. But what I'm trying to impress upon this committee is that we take our responsibility very seriously, and we want people to have genetic testing done if their doctor recommends it. As to the issue of symptomatology, if symptoms are present, of course, then there are symptoms and a diagnosis for which I need to put into the holistic equation of what is the risk. However, if there is an abnormal test with no symptoms, take high cholesterol.

Most people with high cholesterol and even some with high blood pressure have absolutely no symptoms. But those two measurements tell me that that person is at risk of a stroke or a heart attack. Should I ignore that? No. If somebody has a genetic abnormality, I need to put that into the perspective of that physician who assessed that patient.

And I know that we've been discussing that I will have access to the medical record to see that. But I believe that that access to the medical record needs to extend even to people without symptoms so that the physician can tell us what the risk is. I don't see the applicant. The physician sees the applicant. The physician knows the applicant.

And even when no symptoms are present, there may be actuarial risk. And that's what I need to balance because I need to help two things happen. I need to help all those agents and you sell a policy to provide protection to people that's going to help them with financial stability in case of an unpredictable loss, a premature loss in their family.

Someone who becomes a widow or a widower in their 40s with children needs to have a life insurance policy in place to pay off the mortgage, pay for college. That's one thing very much in my head.

But the other thing in my head is that I need to keep the company financially solvent by making reasonable mortality assessments. And I can only do that when I understand the full story. And I have to use the full story. And I am, I don't wanna say conservative, but I'm cautious about how I use information that is not necessarily clear. But we get that all the time in the medical records.

Right? Medical records, you've seen them. They're highly variable. We have to make decisions in the gray zone. That's my life.

And I understand that through the chair, if I can respond. And I appreciate your comments, and we've had a chance to engage. And you are thoughtful. And, but you also represent one company. And I appreciate that your policy, as you direct that company's advice, as you advise that company through this process, that you are a man of integrity. And I found that in our interactions.

But there is more than one company in this field, and people have different assessments. And through your testimony, you noted that when you look at genetic testing well, you don't look at genetic testing now, but as you consider the role of genetic testing, that it's about what's actionable, that there are various levels to it.

Thank you.

But what's actionable is assessed by the doctor, the primary care physician that is in front of the patient, and that is noted in the medical file, which you have full access to.

And so what we have been talking primarily about is the direct to consumer. So when someone does a 23 and Me test, which, you know, our expert from CDI has noted is a lesser grade quality than an actual genetic test. And they go to talk to their doctor about it.

And if the doctor dismisses that 23 and Me assessment because there are no symptoms and there is no reason to do additional genetic testing, then that should not be used against them in whether it's New York Life or any other insurance company. And that's the issue.

But if a doctor says, “Oh, there is a concern there. Let's do our own higher grade medical testing.” They do a higher grade medical testing and note a definite risk there. You would have access to that and be able to incorporate that in your actuary assessment. Nothing in our bill stops us from doing that.

So what we're noting is that we have a lot of patients, a lot of consumers, human beings, going around getting genetic testing from numerous companies, looking at their health, doing all kind of testing to determine what's going on with their body, in case there might be something so that they can have a better successful outcome at life, live longer. Kinda do a biohack, so to speak. We want people to able to do that.

The other thing that that does is it gives us additional information to work with, so that we can be more accurate in whether genetic testing even matters that we can move more things to actionable. But every genetic testing that leads to an actionable result is actually assessed by a primary care physician in the medical file, and you get to see a 100% about and our bill does nothing to disco to to to distinguish from that.

Madam chair, may I respond?

Yes. You may.

As you and I have discussed, if somebody and as you described just now, if somebody gets a 23 and Me response that is adverse some way and they bring it to their physician, and the physician says, I'm not worried about it in you, we're both happy. If they say, if the physician says, I'm worried about this in you.

That was great. Thank you. Now, okay. My concern is not about direct to consumer testing. If this whole room wanted to go out and get 23 and Me, I'd say, fine. Save your money for something else is my opinion. But if that's what you wanna do, go ahead and do it.

Let's do more specific testing and maybe you need to see a specialist and get more testing, I think we'll agree that I have access to that in the medical record. The question will become, one, if the information comes back, is it actionable by my company? Even if that person has no symptoms. Because the physician or the specialist or both of them have decided that this person has extra risk of developing a disease.

But the doctor assessed that risk and you're allowed to base on the doctor, not the genetic testing, but on the doctor's assessment of that risk, you were allowed to take action on that. And nothing in our bill says that you cannot do that.

Well, that gets us to the definition of what a genetic test is and the use of the word solely, doesn't it?

No. It does not. I disagree.

So then we we need to have an additional conversation.

Yeah. Because you are allowed to make assessments on a doctor's assessment. If a doctor assesses risk, you are allowed to adjust the coverage in any way, shape, or you fit based on or set the premium based on that primary care physician that is in front of the patient that is looking at the complete picture, and nothing in our bill changes that relationship.

But what happens if the person decides not to go for those tests that are recommended and not to have

And if they decide to do that, that's on them as well. And you can't take action on that. If they decide not to see a doctor, you can't ask them for it.

You are at risk.

Okay. We're gonna go to the next committee member that has a question. Okay. And someone Alvarez.

Yeah. And I wanna apologize. I had to present the bill while you were and I really wanted to be here for the questions that I'm sure everybody asked, and I got to catch just the end of this. And I think you're getting to sort of, like, the disagreement or friction. So I would just encourage that communication continues.

Absolutely.

That's right.

It's not gonna get resolved here right now.

At least given the two of you here, it gives me, I think, some hope that there can be an understanding of where you're trying to reach

Or land this. And I think, but a very sensitive, and I hear the you know, there's in my thinking, people have heard this before. I think of two Venn diagrams. What is the desire of a Venn diagram?

Welcome to our conversation,

Right.

But I

What is the desire of the policy you're seeking, the folks who are opposed, and then where is that sweet spot in the middle? I think there's something there. I don't think you're there yet. And maybe it's refining some definitions, it sounds like, may have the place.

But I think I'm supportive of giving the full picture to the decision makers who are have to make decisions based on that full picture to the extent we are not providing information, or creating a situation where people are discouraged as you have, I think, appropriately described.

We wanna protect against that. And so I think you're getting there to the right place, and I hope that this continues. I think it would be worthwhile. I'll support this today. Look forward to the, end discussion of this. Thank you.

Thank you.

Thank you. Okay. So would you like to close, Assembly woman?

Thank you, madam chair and members, and thank you for the discussion. California has always led the nation in recognizing that innovation must be matched with responsibility. As genetic technology advances, so too must our safe safeguards. We are standing at the intersection of innovation and policy, and the choices we make today will shape how Californians experience the future of medicine. AB 1798 ensures that the future is one of trust, access, and protection, not fear.

I appreciate insurance commissioner Lara being the leader on this front, and with that, I respectfully ask for an aye vote.

Thank you. And I just wanna take a second to thank the insurance commissioner and Assembly woman Wilson for working with my staff, working for the stakeholders. This is a very important issue for the industry and for the consumers that benefit greatly from this. And, Assembly woman I appreciate you saying that you're gonna continue to engage with all the stakeholders. I know you'd be a woman of your word and so I'm heartened by what I heard here today. So thank you for that commitment. Secretary, please call the roll.

Aye.

Chen? No. Ellis?

No.

Calderon, aye. Wallace? No. Wallace, no. Addis?

Alvarez, aye. Avila Farias? Berman? Chen?

This is item number 3 AB 1798 by Assembly member Wilson. The motion is do passed as amended to the committee on privacy and consumer protection. Calderon.

Aye.

Addis, aye. Alvarez?

Aye.

No.

Ellis, no. Gipson?

Aye.

Gipson, Aye. Hadwick? Hadwick, no. Harabedian? Hairabedian, Aye. Krell?

Aye.

Krell, Aye. Nguyen. Ortega?

Ortega, Aye. Petri Norris?

Aye.

Aye.

Petri Norris, Aye. Rodriguez. Rodriguez, Aye, Valencia.

K. We're gonna hold the roll open. That bill is out. Thank you. Thank you all.

Thank you very much.

Thank you.

Thank you. Appreciate it. Yes.

Next, we will hear AB 2038 by Assemblyman Harabedian and Zibur. Thanks.

Next, we will hear AV twenty thirty eight by Assembleman Harabedian and Zibur. Thanks.

Whenever you're ready, gentlemen.

Well, thank you madam chair, and thank you to my colleagues for moving the bill and seconding it. I'm just gonna briefly kick this off and hand it off to my joint author, Senate member Ziburr. And this bill is is fairly simple, and it extends the moratoriums that apply to victims of wildfire and it does so for those that have suffered a total loss of their home. It would extend the moratorium from two to three years.

And for homes in and around the fire zone, it would extend the moratorium from one to two years.

As many of you know, SB 824, which was authored by, then Senator Ricardo Lara, allows the, insurance commissioner to institute a moratorium so that anyone who's affected by wildfire does not, get canceled, from their residential insurance policy. I would just like to give before handing it over to a Senator Zibur. Senator Zibur, a big shout out for really championing this.

And I think, as the chair knows at the beginning of the legislative session, this was really top of mind for him and is is why we're here today. So I just wanna thank you for everything you've done and just allow you to to give your introduction.

So thank you.

Thank you very much, chair members. And so first of all, you're giving way way too much credit. I did speak to both you and, of course, our committee chair about these issues, and I wanna thank both you and our committee chair and the members of this committee for your leadership on really addressing this insurance crisis. You know, this AB 2038 is critical to protecting Californians and advancing affordability.

One of the things I hear from people in my district more than anything else is basically the insecurity that they are facing and the uncertainty that they're facing about whether or not they can continue to get have, insurance for their homes.

The growing threat and destruction of wildfires has severely increased across the state with record breaking disasters occurring over the last decade. As I mentioned, just over a year ago, the state was victim to the catastrophic Eden Of Palisades Fires, which took the lives of over 31 people and destroyed more than 15,000 structures. And I wanna thank my coauthor for his incredible leadership and the members of this committee also for stepping forward on these on these issues.

Of the people who lost their homes in the Palisade fires, a large portion of those displaced families now reside in my district and are now my constituents, unfortunately, for the for them and the fact that they had to lose their homes and are now living in displaced quarters. The total monetary damage from the Eaton and Palisades fires is estimated to total over $250,000,000,000 in damage when long term economic damage is included.

And the devastation coupled with the ongoing insurance crisis facing California has put our community members at severe list risk. In my district alone, which borders the fire areas, I've heard countless devastating stories from constituents who are completely out of options and are faced with either leaving California or paying unreasonable insurance premiums from the not admitted market or living without insurance at all. And in some cases, that means losing their mortgages because they end up not having insurance to to cover their homes.

Additionally, in these high fire risk areas, they also deal with the significant delays in identifying which policies they can receive as replacement for canceled coverage and unpredictability on the status of their existing policies in the admitted in the in the admitted market. AB 2038 will help these Californians.

Again, it's a very simple bill, but it will help these Californians by extending the insurance moratorium, which will give Californians who are at risk of losing coverage, from the admitted market more time to protect their homes and will give more time for the state insurance commissioner and for the state of California to address the underlying causes of our insurance crisis. This is critical to support and to to support those facing insurance instability and create a pathway to a more affordable California.

So, again, I wanna thank the the author of this bill, the the lead author of this bill, and all of you for really your dedicated help in protecting Californians, and I urge an aye vote at the appropriate time.

Thank thank you, Senator Spurr. We here as our witness is Joe Lauter with the United Policyholders.

Okay. Thank you. I know this is my opportunity to speak, so thank you for that. My name is Joel Lautcher. I have over forty years of experience in the insurance world versus an underwriter and as a regulator California Department of Insurance for thirty five years where I was started as a market conduct examiner and ended my tour there as chief deputy commissioner under, then commissioner Dave Jones.

So for the past five years, I've worked for United Policyholders, a nonprofit that assists consumers, homeowners, renters, anyone who is dealing with the aftermath of a catastrophic loss. And, these are very challenging times for those people. Working through their insurance coverages is very difficult, and, so they already have a lot to deal with. Our surge in major wildfires has shown over these many years that recovery is not a short term process.

When losses are widespread, infrastructure is damaged, and contractors, materials, and labor, and adjusters insurance adjusters themselves are all in high demand, and they're just not ready readily available for people to use.

As you might expect in any region, there are only as many contractors as there is typically work to do. So this surge that comes after a catastrophe, there just isn't the workforce to deal with it. Current insurance moratorium protections are an important safeguard, but the existing time frame does not reflect the real world pace of recovery. AB 2038 helps close that gap by ensuring families are not placed at risk of losing insurance coverage in the middle of rebuilding their homes and stabilizing their lives.

I'll mention here again that United policyholders is having routine, community events still about the rebuilding process, how to get through it, the permitting.

All of this continues despite, you know, how much time has already passed. This bill does not ex increase policy limits or expand coverage. It simply provides additional time for policyholders to use the coverage they already have, often under extremely difficult circumstances. Homeowners are not delaying recovery by choice. Delays are driven by system wide constraints in labor and materials and claims resolution capacity.

The ability to get their claims adjusted by the insurer. The impacts of catastrophic events extend beyond beyond the directly burned areas and neighboring communities also experience con con significant market disruption and insurance instability that this bill appropriately addresses. This proposal aligns insurance protections with the actual timeline of recovery in California following major disasters today. So we urge your aye vote for this bill. Thank you.

Thank you. Do we have additional public support? Please come forward. State your name and affiliation.

Good morning, madam chair and members. Christopher Sanchez with the Consumer Federation of California in strong support.

Good morning. Staci Heaton with the Rural County representatives of California representing four d rural counties statewide in support.

Juliana Flores here on behalf of the League of California Cities in strong support.

Cal was with the California Community Foundation in support.

Thank you. Do we have any witnesses in opposition? Please come forward and come to the table. Whenever you're ready, gentlemen. Good morning.

Morning, chair and members. My name is Mark Sektnan. I'm vice president of state government relations for the American Property Casual Insurance Association here in respectful opposition to AB 2038. AB 2038 further constraints an insurer's ability to underwrite, rebalance its portfolio, and align exposure with available capital and reinsurance. At a time when the homeowners insurance market is already under severe strain, this bill risks accelerating market pullbacks and reducing new writings in California.

We believe this dynamic is already contributing to the growing reliance on the FAIR plan. When insurance insurers cannot actively manage exposure, particularly during a period of elevated risk, they're forced to make difficult decisions. If a significant portion of the company's book is locked under moratorium, that company may be compelled to reduce exposure even in lower risk areas to remain solvent. These mandates are especially problematic because sections six seventy five point one doesn't contains no explicit exception for ensure financial condition or capacity.

In other words, there's no solvency safety valve.

This issue was raised during the consideration of AB 824, and the amendments to address it were requested but ultimately rejected. The same underlying concern remains unsolved today. When the commissioner last appeared before this body, he acknowledged that the decisions you make will have real impacts on the insurance market As insurers consider whether to expand their writings in California or reenter the market altogether, legislation that further restricts underwriting decisions becomes a sir serious deterrent. It's also important to understand the scale of these moratoriums.

A Moratorium triggered by wildfire does not just apply to homes that are damaged or destroyed.

It applies to entire ZIP codes adjacent to the fire, capturing far more homes and the total loss caused by the fire itself. California has more than 8,000,000 homeowners insurance policy. In 2024, the department reported that 1,000,000 homes were under a nonrenewal moratorium, a very substantial number. Just this year, a moratorium was declared covering a 150,000 policies around current Santa Barbara, San Luis, and Ventura Counties following the Gifford fire even though the fire damaged five structures.

Similarly, in December, nearly 1,400 14,000 policyholders received a one year moratorium after the Pac Fire, which destroyed 30 structures.

These examples highlight the imbalance between the actual loss and the scope of mandated continuation. When extended repeatedly without regard to insurance capacity, these policies undermine the stability of the market rather than protect it. For these reasons, APECI must respectfully oppose AB 203. Thank you.

Morning, madam chair and members. Paul Ramey with the Personal Insurance Federation of California. I'd like to start by thanking the author and his team for what has been a candid and collaborative process to this point. I think it goes without share without saying that we share the desire to create predictability and stability. We certainly share concerns about the slow pace of recovery in the aftermath of the Eaton and Palisades fires.

Our challenge, as you all know better than most, is that the insurance market across the state has been in crisis for years. We're optimistic that the commissioner's sustainable insurance strategy will significantly improve the health of the market, but the ink on the cyst is barely dry, and we are certainly not far enough along to start seeing real results. In this fragile environment, taking hundreds of thousands of homes out of play for years means insurers have to turn to the rest of the market to rebalance risk.

The result is that those homes not under moratorium bear a disproportionate share of the burden. Although this bill creates temporary stability for those homes under the moratorium, it exacerbates the availability and affordability crisis across the rest of the market, including for homeowners and communities who have done the work to reduce risk.

For these reasons, we are respectfully opposed to AB 2038.

Thank you. Do we have any additional opposition? Please come forward and state your name and affiliation. Good morning, chair members. Neil Mujidrone on behalf of the Pacific Association of Domestic Insurance Companies.

Respectfully opposed. Thank you. Okay. I'll bring it back to the committee. Do we have any questions? Assemblymember Alvarez?

Thank you. I'm trying to understand how to better approach this because I think what the opposition is saying, and this is gonna sound probably harsher than it's intended to, but the idea that you're would be forced to provide insurance coverage in certain areas is not one that you you're favoring. In this case, the areas where it'd be areas surrounded by by fires.

I guess I'm trying to understand I'm trying to get to the to the why, and I know it has to do and and I'm sure you'll respond partially with the fact that the cost of insurance is increasing in California, and the rates that you need to charge in order to ensure that their stability in the market isn't there. I know that's part of the response.

I I I fully not only have heard you, but understand that. But I'm also trying to understand in in areas and and maybe I'm trying to understand if if all areas should be treated the same. So I I can see an urban area perhaps being different in this the the catastrophe that occurred in the communities that our colleagues represent, you know, are perhaps not as prevalent as some other rural areas where it it happens often, but but we're also talking about less structure.

So I'm trying to get, like, more into the detail as to why the resistance, particularly in these communities that are not necessarily and you could find some some a a picture for me as to why why why the opposition in these communities?

Assemblymember, I I don't think it's opposition to these communities. This moratorium happens all over the state. It's just a question of for the greater insurance market, while we appreciate the needs of these individuals, what is the impact on the greater insurance market? When you talk about ZIP codes adjacent to a a recent fire, those same just so disc codes could have similar risk to those ZIP codes that just burned down.

But because of the way the wind blew at a particular time where the firefighting resources were deployed, they didn't burn down.

So the risk may be the same. And now you're locking in a policy potentially at a rate that is lower than would otherwise be considered when the right the the rate and the risk is actually known better. And so that's one of the problems we have. Like, if you're an insurance company and you need to reduce your book of business, say, 20% of the policies are locked up under moratorium, where else do you go? Well, you have to go somewhere else to do that.

And that's that's our concern, and that's one of the reasons we think that you know, we're always surprised that that's fair plan. It's picking up low risk business. Now part of it could be price, but part of it also could be is that that's where insurers have to non review new policies to balance their boat because they can't in these other areas.

Tell me, I was intrigued by your comment about the fire where there was five structures, and you said that if that was deemed to meet the definition of this and now every adjacent ZIP code essentially, would face the moratorium even though perhaps the I don't know if you were you're trying to communicate that maybe in that case, the fire zone was so limited. So why is this so far reaching?

The opposite. I think one of the challenges we had to this when this bill when Senator Laura introduced it. Initially, it was it was introduced as it would apply to all the entire county. So for example, if you had a small fire in West LA County, there was an emergency and almost while all wildfires are cleared emergencies, the entire county of LA could be under a one year moratorium. We're able to get that down to a ZIP code.

But the problem is some of these ZIP codes can be very large and they may just be tangentially related to the wildfire, And that's where you get these large numbers. One of the things I do enjoy is the commissioner always does a press release on these, and they always put in how many policies that they quote and protect, and that's where I found those numbers. Okay.

Let me ask the authors on on the selection of of ZIP codes. And and, yeah, I think it's true some ZIP codes are very large, some are very compact. Was there some other discussion about a perimeter that you ever contemplated?

So under SB824, the perimeter and the ZIP codes are are chosen by the Department of Insurance in conjunction with CAL FIRE and with the experts at the forest department. So this doesn't change that process. And that is a that would be a scientific method that applies with or without this extension.

Okay.

Can you tell us what the impacts are and and why the two years resolves? Or maybe you might think it doesn't resolve, but it's perhaps your approach that you're taking here. The concern of individuals who are being non renewed. Are you just buying them a year? Because then they're gonna be facing this essentially in year three.

Yeah. I mean, I think that it's a fair question. And I think that you could argue that you're just delaying the inevitable. I hope that's not the case. And hopefully, the industry would would not agree with me.

Hopefully the inevitable is not that they just get non renewed. But the two to three year for the total loss really is just trying to align with the modern constraints of rebuilding. We're seeing timelines that, folks are facing to rebuild that go well beyond two years. And three years, we think, is a a much better timeline for those folks who are having to rebuild from the ground up. But it is a temporary fix.

I mean, we have to fix these broader market And

I and I think I understand that and feel completely compelled to support that in in the areas that are impacted. But this bill now reaches areas that don't need to rebuild. Yes. And that's where I'm trying to understand what are we trying to accomplish.

Right. And and I'll let, my joint author weigh in as well. But for those areas, I actually think that this is why the bill is so critical. In many ways, if you think about it, when there's a total loss, insurance companies are insuring, in in many ways, most of the time, a vacant lot that then gets rebuilt. If I was an insurance company, that's an easy deal for me to make.

I'm going to extend that policy. There's not a lot of risk. The fire has already happened. It's in these communities that, Senator Zibur represents where this bill is really needed because those areas have seen historically, more non renewals over time because of its tangential nature of the fire that preceded it.

And that's why the moratorium going from one to two years gives those folks, a lot of whom may have experienced smoke damage, obviously, maybe housing folks who have been displaced by by the fire, more time to figure out their insurance policy.

Give give our colleague, mister Zabura, a chance to respond. Do we have data on nonrenewals and adjacent ZIP codes? Have we seen this play out in data from the Department of Insurance?

We we haven't I mean, I don't see a lot of data yet, but anecdotally, what happened after the Palisades fired, I represent the areas that abut it. And so after the Palisades fire, there was a host of notices that went out to all of these homeowners indicating that their insurance may not be renewed. It was because of the moratorium that they actually had a year where they had some amount of certainty.

This is also coupled with reforms that I know this committee is making and our chair is making under the fair plan because there's also limitations on some of these folks not having the ability to be insured under the fair plan, which I know that the chair is actually focusing on now as well.

So these folks that got these notices, basically, we're looking at not being able getting their insurance canceled, not potentially having any availability to get insured under the fair plan either because of the limitations on the on coverage or other other factors on how the fair plan ensures folks, and then having to go to the not admitted market and facing insurance premiums that were north of a $100,000 a year to that were, you know, mere fractions of that into the admitted market.

So this gives them I mean, this, you know, this is a bit of a Band Aid.

It's a Band Aid in the sense that it gives more time for the state to address the underlying issues related to the insurance crisis that we're facing, and it also gives us more time to sort of shore up even though that is, you know, the the insurer of last resort, but at least it gives more time to shore up some of the criterion under the fair plan to give them the them a backup for that.

So, you know, these folks there's folks now that have actually gotten their insurance canceled in this gap, but there are other folks that their insurance is not coming up yet, and this will help those other people by giving them more time. And, frankly, them losing their insurance, I mean, in many cases, this is about getting their mortgage just canceled. We can't leave people without an ability to have any insurance from any place.

I'm I'm interested in getting the data on that, to understand the scope of the problem before we get to the final decision on this bill. To to the folks who are here testifying in opposition, what would it take in your opinion I think I know what the answer is gonna be, but in your opinion for for there to be no notices of of cancellation that we maintain some stability from folks who are as is being described in this region, perhaps no longer ensuring.

I'm not sure I can answer that question. It would depend on company by company. I mean, if the company has the financial solvency and still wants to continue writing in those areas, then they certainly can. If they have financial issues and need to reduce their risk, that does put a challenge on them.

And so I think, really, it's all it comes back to is we need to figure out a way to make the amended market work better, and we're not sure while we appreciate what the assembly member is saying and do appreciate the struggles that the folks go through.

Not sure that this is the right tool. What you may wanna do as a stop gap, at least, to improve the bill for those companies that may have financial issues is put in the amendments that we suggested in SB 824 when the bill was sent to put some type of a solvency stop gap. There is language in other parts of the code that if the insurer can show a financial risk, they may be able to get off these policies.

Now that won't help those individuals, but it could, stop a a wider spread of nonrenewals.

I'm I'm interested in that. I'm also interested in how many rate cases are there before the department in ZIP codes that we're talking about?

I have I have no way of knowing that information Because most rate cases are built on a statewide basis, and then they'll do rating bans based on where the ZIP code and the risk are. But I I don't have it. I don't know.

Yeah. That that will be in my questions. I I'd like to if you can help us, somebody can help us get that information. Because I think, you know, there's legitimacy to the argument that if if if people can't sustain the market can't sustain, what are we what do we expect they're gonna believe? And if that's due to the ever consistent problem, which I know the sustainability strategy is supposed to address of rate cases not being adjudicated, then that's a problem.

And so I'd like to know what is the real on the ground scenario with people who are getting cancellation notices and to the the scope of the problem on that front and the scope of the problem to those who do wanna continue to offer, a product that are not able to, or we're not moving fast enough as government to provide you the tools to do so, in addition to following up with you on on the suggestion that perhaps on the solvency issue because I think that's a real issue.

But I think for now, you're supportive to move this forward, but I'd like to see that information before I get another chance to vote on this. Thank you.

Thank you. And and your last question, CDI might have that data. So we can certainly ask. Okay. Seeing no oh. Assemblyman Chen.

I think that's one really relevant question. I I do wanna thank the authors for bringing this forward because I know that the devastation that was experienced in your district and no one has been a better advocate for your district in terms of and expediting, and also financial stability for constituents than both of you. I I have a question in terms of kind of the trickle effect that you mentioned and alluded to in the previous conversations with my colleagues.

I guess the first and foremost is, what is the potential impact for those properties that are currently engaging in fire mitigation projects? Are they gonna be impacted from this trickle fend via the moratorium?

And two, as you know, insurers look at emergency declaration ZIP codes to calculate and to mitigate risk in their financial analysis. What happens with the possibility of the folks that are outside those declarations zip codes? Are there potentials for, as you alluded to, non renewals? So I'll kinda open it up for the authors as well as the opposition.

I would just say, thank you for the questions, assembly member. The this bill does not change underwriting processes, rate making. There should not be a cost shift from certain members to other members. Frankly, that would be arguably legal, and it would be against, I think, the practices of, I think, all the insurers here. So I actually think that those questions are best left to be answered by the opposition witnesses, but nothing about this bill would change any of those factors.

Thank you, Assemblymember. I think, fundamentally, the concern is that as these moratoriums grow and more and more of these homes are taken out of play as it were, it's the rest of the market that winds up bearing a disproportionate burden when insurers need to rebalance their books and redistribute their risk.

And so I I think, again, while this bill will create some temporary stability in the aftermath of these disasters, during that time period when the rest of the market needs to react to this catastrophic event, it it's the rest of the state that is not under a moratorium that winds up potentially bearing a disproportionate burden of of the nonrenewals that that would have to take place.

Okay. Would you gentlemen like to close?

We respectfully ask for an aye vote. Thank you.

Thank you.

Secretary, please call the roll.

[Roll Call]

That bill's out. We'll hold the roll open. Okay. Next, we have AB 1800 by Assemblywoman Krell.

Hi. Good morning, Madam Chair and Members. Today, I'm pleased to present you with Assembly Bill 1800. Thank you all for your overwhelming support on this bill. Very briefly, this bill adds eyewear to the framework of insurance for portable electronics.

As you know, smart eyewear can be increasingly expensive, not this particular pair of glasses that I'm wearing. But there are expensive, nice pairs of glasses out there, and consumers deserve to be able to get insured for those products. With me today is Kelly Jensen who represents Asurion in support of this bill. I respectfully ask for your aye vote.

Okay. Whenever you're ready, Mr. Jensen.

Yes. Thank you, Madam Chair and Members. Kelly Jensen on behalf of Asurion in support of the bill. Happy to answer any questions, given the lateness of the committee. Thank you.

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

Mark Sektnan with the American Property Casualty Insurance Association in support of the bill.

Thank you. Is there any opposition to this bill? If so, please come forward. Seeing none. I'll bring it back to the committee. Do you have any questions? Okay. Would you like to close, Assemblywoman Krell?

I respectfully ask your aye vote. Thank you.

Alright. Secretary, please call the roll.

This is item number eight, AB 1800 by Assembly Member Krell. The motion is do pass to the Committee on Appropriations. [Roll Call]

That's out, and we'll hold the roll open. Okay. Next, we have AB 2198 by Assemblywoman Rodriguez. Whenever you're ready.

Thank you, Madam Chair, for allowing me to present... I do, David. For allowing me to present this important legislation. Current law requires title insurers and underwritten title companies to file rate schedules with the Insurance Commissioner.

For decades, practice has been clear. Title insurance files... The title insurers file title rates, while underwritten title companies file escrow rates. Underwritten title companies do not set title rates. They act as agents of the title insurers. Recently, confusion has arisen about whether underwritten title companies must also file title rates.

This has led to the duplicative filings, delays, inconsistent practices, and operational challenges. It also creates confusion for consumers trying to understand rate information. AB 2198 codifies long standing practice and clarifies who is responsible for filing which rates.

This bill reduces duplication, improves efficiency, and provides regulatory clarity. It also modernizes transparency by requiring rate schedules and to be posted and readily available. With me here to testify is Anthony Helton, Executive Vice President of California Land Title Association.

Thank you, Madam Chair, Members. Happy to keep my comments... Happy to keep my comments brief. Appreciate the author introducing the bill on our behalf and happy to answer any questions the committee may have. Thank you. Respectfully ask for your aye vote.

Thank you. Do we have any additional support in the room? Please come forward. Seeing none. Is there any opposition to this bill in the room? Okay. Seeing none. Any questions from the committee? Seeing none. Would you like to close, Assemblywoman?

Sorry. I came back winded, so. I came back running. Anyways, thank you for your time, and I respectfully ask for an aye vote.

Okay. Thank you. Secretary, please call the roll.

This is item number 10, AB 2198 by Assembly Member Michelle Rodriguez. The motion is do pass to the Committee on Appropriations. [Roll Call]

That bill's out. We'll hold it open. Okay. We're gonna go through the roll for any Members that need to add on.

[Roll Call]

Thank you. Assembly insurance committee is adjourned.