Assembly Standing Committee on Insurance

Good morning, everybody. Welcome to the Assembly Insurance Committee. Vice chair, members of the committee, good morning. Today, we're gonna consider eight bills. Three bills are on proposed consent.

These bills are file item six, SB 1170. File item seven, SB 126. File item eight, SB 1444. Today, Assembly Papan will be replacing Assemblymember Alvarez for today's hearing only. So we'll welcome her when she gets here.

Right now, we're gonna start as a subcommittee because we don't have a quorum yet. We have a special order of business today, and the order of business will follow our regular order of business. And two bills will fall under the special order, SB 354, authored by Pro-tem Limon, and SB 129, authored by Senator Allen. And please note that Senator Padilla will be presenting on behalf of Pro Tem Limon today.

The next item is SB 877 by Senator Perez.

Welcome, Senator. Whenever you're ready.

Good morning, madam chair and members. Thank you to the chair and committee staff for their incredible work on SB 877. I also wanna thank all of the stakeholders that came together on this bill to reach a compromise on the recent amendments. These amendments were crafted in collaboration with insurance industry stakeholders to address the concerns raised previously. The first bill that I am presenting in committee today focuses on insurance transparency and has received bipartisan support.

SB 877 ensures transparency and insurance claims by requiring insurers to document and disclose all claim materials, including loss estimates and any subsequent revisions to the policyholder. Over a year ago, the Los Angeles wildfires destroyed more than 18,000 homes and structures, forever changing these people's lives. In the immediate aftermath, survivors faced the uncertainty of not knowing whether their homes were still standing or what, if anything, remained. But for many survivors, that uncertainty did not end there.

Survivors were forced to navigate complex insurance processes from uncertainty about how to file a claim to confusion over how their home's value was determined to fear that low insurance payouts would leave them unable to afford to rebuild.

California regulations already require insurers to maintain all claim related documents used to estimate the value of a loss. However, current law does not require insurers to disclose all of those documents to the policyholder. As a result, homeowners often receive only the insurer's final revised loss estimate without access to the original calculations or earlier versions.

Reports from the Eaton Fire Survivors Network, now the Every Fire Survivors Network, indicate that insurers remove original estimates from claim portals, replace them with revised versions, and fail to clearly disclose those changes. Some of these reductions have exceeded a $100,000 per household without disclosure of the original estimate, the amount reduced, or the rationale for the change.

This is not an isolated issue. Across major disasters nationwide, insurers have been found to alter, reduce, or entirely rewrite loss estimates before they are ever shared with homeowners. Recognizing this gap, the California Earthquake Authority has recommended requiring insurers to disclose all loss estimates, including revisions, the reason for those changes, and who authorized them. SB 877 reflects that approach. When estimates are reduced without transparency, families are left without the resources they need to begin rebuilding their homes and their lives.

SB 877 restores balance by requiring insurers to fully disclose both preliminary and final loss estimate documents, along with any revisions to policyholders upon request. By ensuring full transparency, SB 877 protects homeowners from arbitrary or undisclosed reductions and helps families secure the resources needed to recover, rebuild safely, stabilize their lives, and move forward after the disaster. To testify in support of the spill, I'm here with Sam Sturgisich, a Eaton fire survivor, and Joy Chen, the head of the Every Fire Survivors Network.

Good morning. My name is Sam Sturgicich. I'm a senior and a survivor of the Eaton Fire. The fire contaminated my home with toxic debris. It is not safe for me to live there, so I had to move in with my son and his family.

They welcomed me with love, but their home was already full. None of us imagined that eighteen months later, we would still be unable to return. For thirty six years, I paid insurance premiums believing that if disaster ever struck, my insurance company would help me recover. Instead, I discovered they were trying to lowball me. I have a document.

It is the original loss estimate prepared by the adjuster who inspected my home. It was then revised, covered in red marks where numbers were reduced and entire items were removed. This document was sent to me accidentally. The difference these red marks reflect is hundreds of thousands of dollars. Most homeowners never see this.

The original estimate goes in. The numbers are quietly cut, and we only received the lowered version. That is how insurance companies underpay people. For families like mine, those cuts can mean the difference between rebuilding and never going home again. My family still isn't home, and we don't know if we ever will be.

SBC 877 is simple. It requires insurers to show homeowners the original loss estimates and explain any changes. After losing so much, simple transparency is the least we deserve. I respectfully ask for your risk support of SB 877. Thank you.

Good morning, madam chair and committee members. I'm Joy Chen. I am head of the Every Fire Survivors Network, which is 10,000 plus Eaton and Palisades Fire Survivors and Allies. I'm also an Eaton Fire Survivor. What you just heard from Sam is something that we noticed very early on.

Very early on, we started as a pickleball WhatsApp of the Altadena Country Club. When we outgrew WhatsApp after the fire, we moved to Discord, and we set up a channel for every insurance company. And we just started seeing this pattern happen over and over again. So there's delays, denials, and underpayments. So this is a category of underpayments.

And we kept on seeing this story happening of people saying, you know, the insurance company sent out an adjuster, and I walked through my house for three hours. An adjuster was taking notes the whole time, and then I got the loss estimate and was missing half the damage. And this kept on happening over and over. And then, a whistleblower came to me who was a survivor and also an adjuster working the Eaton and Palisades fire.

And she said, this it's this is happening systemically across some insurance companies.

And the reason why it's happening is that unlike in Florida, California does not does not force insurance companies to disclose original loss estimates. So she said what's happening is that the adjusters are preparing accurate loss estimates of the damage. But then those accurate loss estimates go to some manager at the insurance company who's never seen the house and who has been lowering them down. And those this is a common practice. It's called loss estimate alteration.

And she said that in Florida, this was happening systemically after some hurricanes, and there was a sixty minutes report on it that caused so much outrage that Florida passed this law that says original loss estimates have to be disclosed. And she says, so those same insurance companies are disclosing them in Florida. But because California does not require that, they're not being disclosed here. And this is a big reason for this systematic underpayments problem.

And so last fall, you know, we went and met with our Senator, our champion, Senator Sasha Renee Perez, And we shared this with her, and she immediately said, this is something that we should do something about.

And that's why we're here today. Thank you.

Thank you. Welcome back, miss Chen. Thank you. Do we have any additional, witnesses in support? Please state your name and affiliation.

Good morning, madam chair and members. Robert Harrell. I'm the executive director of the Consumer Federation of California in support. This happened in San Diego. This happened in Santa Rosa.

This happened in Paradise. It happens every time there's a big fire. This is a step, a small step, but important step in changing that. Thank you.

Good morning, chair members. On behalf of the Consumer Attorneys of California, Climate Defenders, Bay Area System Change, not Climate Change, and the Alliance of Californians for Community Empowerment in support. Thank you.

Sarah Brennan with the Weideman Group on behalf of extreme weather survivors, Shelltown Resilience, and San Diego flood survivors in support. Thank you.

Danita Stromgren, volunteer with AARP California on behalf of our 3,200,000 members in strong support of SBA 77. Thank you.

Good morning, chair members. JP Hanna with the California Nurses Association in support.

Good morning. Carmen Balber, executive director of Consumer Watchdog, a cosponsor of the bill, and also sharing support for consumer action, Courage California, RISE economy, and the California Community Foundation. Thank you.

Good morning, chair members. Rebecca Marcus on behalf of the Consumer Protection Policy Center at the University of San Diego School of Law in support. Thank you.

Good morning, members. Chair of the Altadena Town Council and fire survivor showing support, also sharing support from Eaton Fire Residents United, Food and Water Watch, Eaton Fire Renters Coalition, Green America, Dina Rise Up, Pasadena's Organizing for Progress, and the Altadena collab. Thank you.

Good morning, chair members. My name is Damon Blunt. I'm a survivor of the Eaton Fire, Altadena, California, and I strongly support this bill.

Good morning, chair and members. I am Audra Blunt, and I am a Eaton Fire total loss survivor. And I am in full support of SB 877. Thank you.

Good morning, chair and members. Marissa Hagerman with Traton Price Consulting registering strong support on behalf of California environmental voters. Thank you.

Good morning. My name is Miguel Bastidas with the California Department of Insurance here under the leadership of insurance commissioner Ricardo Lara in support.

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

Just wanna say Paul Ramey with Personal Insurance Federation. We've moved to neutral with the most recent amendments. Wanna thank the author for, working with stakeholders throughout this process.

Great. Thank you. Hey. Do we have any questions for the author from the committee?

Thank you.

Just wanna thank the author for her work on the bill and the sponsors for your testimony today, and really appreciate you sharing your experience as well this. I support the bill and happy to move it at the appropriate time. Thank you.

Yeah. I too wanna thank you both for coming forward and sharing your experiences and being here today. And so we will bring this up when we have a quorum. Would you like to close?

I respectfully ask your aye vote.

Thank you, Senator. Okay. I

have another bill. I do.

SB 878. Whenever you're ready, Senator.

Once again wanna thank Madam Chair and the committee staff for their incredible work on SB 878. Thank you to the insurance industry stakeholders and to the Department of Insurance, who, who are co-sponsors of this bill, for working with us on the recent amendments to address the concerns raised previously.

Our second bill before this committee focuses on insurance accountability. SB 878 strengthens California's existing prompt payment insurance laws by imposing automatic interest penalties when insurers delay making coverage decisions or issuing payments.

In the aftermath of a disaster, policyholders depend on these prompt payment protections enforced by the Insurance Commissioner, which require insurers to respond to claims and issue payments within established time frames.

But despite these protections, survivors of the Eaton and Palisades Fire experienced a hard truth. Insurance companies do not need to deny a claim to devastate a family. They only have to delay it. Deadlines are routinely evaded through open ended investigations, partial determinations, and claims left indefinitely under review.

The result is prolonged uncertainty for families who are trying to rebuild their lives and often without financial resources that they are entitled to under their policies. The Eaton Fire Survivors Network has documented nearly 500 firsthand accounts of these delays across multiple insurers and fire events.

Including partial disputes used to delay payment of clearly undisputed amounts, verbal only denials that prevent policyholders from appealing or enforcing their rights, and rotating adjusters that reset claim progress and allow statutory deadlines to lapse. While these practices already violate California law, the lack of automatic financial consequences had allowed them to persist as a routine business practice.

And this is not just anecdotal. An independent analysis points to the same problem. A recent California Earthquake Authority report recommended reforms to improve post disaster claims handling by requiring insurance to pay interest on delayed claim payments and to provide clear documented justification for denials.

The direction of SB 878 reflects a growing consensus that prompt payments must be enforced, not just expected. SB 878 closes this enforcement gap by imposing a 10% interest penalty on delayed payments when insurers miss statutory deadlines without justifiable cause.

Requires insurers to clearly identify in writing any denied or disputed items within the 40 day decision window and explain what is needed to resolve them, and requires insurers to pay all undisputed amounts on time even when other portions of a claim remain unresolved.

By creating clear, enforceable consequences for delays, SB 878 reduces the incentive for insurers to stall coverage decisions and strengthens California's insurance system so families can access the resources they need and begin recovering sooner. To testify in support of today's bill, I have Damon Blount from Eaton Fire Eaton Fire Total Loss Survivor and Joy Chen, the head of Every Fire Survivors Network.

Good morning, Chair and Members and Committee. My name is Damon Blount. I'm a lifelong member of the Altadena Pasadena communities and a survivor of the Eaton Fire. On January 7, 2025, I lost everything. I lost my home, my belongings, and my personal work truck were all destroyed.

I also lost both my weekday and weekend jobs. During the week, I worked as a delivery truck driver serving the greater Los Angeles County areas, including Altadena and Pasadena. But after the fire with so many homes burnt, there wasn't enough work, and I was laid off from that job.

On the weekends for decades, I collected recycled bottles and cans and sold them. That's how my wife and I helped put our three daughters through college. When my truck burned down in the fire, I lost that work too. My wife and I have lived in our home for more than 26 years.

Over the last five years, we poured our blood, sweat, and tears into remodeling that home. That home was our peace, our security, our future that we hope to leave for our children and our granddaughter. After the fire, we expected for rebuilding to be difficult.

What we did not expect was the delays from the insurance company one after another. It's hard to expect something like that happening after one devastation. Instead of getting payments, we needed to move forward. We have faced delayed after delay. Those delays have held up our recovery and added an enormous stress to our already traumatic situation.

As we speak, right now, today, we are in the midst of rebuilding our home. But with the delays from the insurance company, with the denials, right now, we're afraid that we can't go on with remodeling our home. When insurance delays, survivors have to pay the price. Our lives stay on hold while we wait for money that we were owed. We paid our payments on time for 26 years.

We're not asking for a handout. All we want is to be made whole and to be done what's right. SB 78 is about accountability. Families who have already lost everything should not be forced to fight month after month just to receive the payments that we're owed. I respectfully ask that you support SB 878. Thank you.

I'm Joy Chen, again with the Every Fire Survivors Network. Sorry. Listening to Damon speak is so moving. I know that all of you are moved. In fact, Damon's story is just one of tens of thousands of survivors of the LA fires. And the position that Damon finds himself in is a position that every one of yours constituents could find themselves in.

Who pays insurance premiums and expects protection if the worst ever happens to them happen to us. Sorry. So this question of delays is the central problem that has been holding up the Los Angeles recovery. Los Angeles Times did a study of the five major fires before 2025 across California. They all happened between 2017 and 2020.

Tens of thousands of homes burned. Eight years later, do you know how many of those homes were rebuilt? 38%. 38% of homes were rebuilt after eight years. And the number one factor in whether a family rebuilt or not was insurance. The industry that, you know, we're discussing today.

When insurance pays on time, recoveries move forward. And in Los Angeles right now, 70% of LA families are having delays and denials and underpayments impeding their recovery. That's an independent study from the Nonprofit Department of Angels. 70% of us.

So insurance has shifted from being the safety net that we've all paid for, that we have depended on, to being a major barrier to the Los Angeles recovery. And what happened to us could happen anywhere in California. This is a very, just like 877, this is a very elegant, simple response to this problem of indefinite delays.

Right now, eighteen months later, 7 out of 10 of us are still not home. And this problem of delays is a huge reason why. So what this does is right now, some insurance companies... The San Francisco Chronicle just won the Pulitzer Prize for investigating insurer misconduct after the LA fires.

They got hundreds of pages of insurance company training manuals, and they found that one of the practices that is prevalent is telling, they tell in writing to their adjusters, do not put your claims decisions into writing. That is written in the training manuals.

If you couple never getting your claims decisions in writing with the systemic practice of rotating adjusters, people just, you know, you make progress finally with your adjuster, and then boom, the next week, you have a brand new adjuster.

You know, like, the previous guy said he'd cover these three things, and the newer guy's like, well, I don't see that in your file. And then you start over, and it's like a Groundhog Day. And now eighteen months later, 7 out of 10 of us are not home.

So 878 requires all claims decisions be put into writing. Isn't that, like, a simple basic thing that you would expect if you're a policyholder? Basic transparency. Once we have these into writing and all claims decisions, you know, Senator Pérez was saying that there might be quibbling with one part of your claim and then they ignore the rest for months or a year plus at a time.

This says every part of the claim has to be addressed and put in writing so that the existing guidelines on when you have to pay starts ticking. The clock starts ticking. Right? Right now, when you submit a claim, within 40 days, they are supposed to tell you yes, no, or we need more information.

We need to do due diligence. Something. Right? And then for the yeses, they have to pay within 30 days. But if you don't put these into writing, that time clock of you have to pay within 30 days never really gets started.

And so this says you gotta put into writing your decisions so that the clock starts ticking and so that we can move forward and so that we're not all stuck in this position of deep financial and housing insecurity after disaster that Damon and Audra find themselves in and that so many of us find ourselves in now. We ask for your aye vote. Thank you very much.

Thank you very much. I'm gonna pause for a moment so we can establish a quorum. Secretary, can you please call the roll?

[Roll Call] You have a quorum.

Okay. We're going... Okay. Additional support, please come forward. State your name and affiliation.

Good morning, Madam Chair and Members. Robert Herrell. I'm the Executive Director of the Consumer Federation of California. What you've heard is a broken feature of the system, not a bug in the system. Been going on for a long time. Please vote aye.

Good morning. Miguel Bastidas with the California Department of Insurance here in the leadership of Insurance Commissioner Ricardo Lara, proud co-sponsor in strong support.

Donita Stromgren again with a volunteer with California AARP and on behalf of our 3.2 million members in support. Thank you.

Sam Strgacich, Eaton Fire survivor in strong support of this bill.

Audra Blount, total loss survivor, Eaton Fire, and still waiting for decisions on our insurance claims after months and multiple follow ups. I strongly support SB 878. Thank you.

Council Member Nic Arnzen, Chair of the Altadena Town Council and total loss survivor, showing strong support. And once again, sharing support from Eaton Fire Residents United, Food and Water Watch, Eaton Fire Renters Coalition, Green America, Dena Rise Up, Pasadenans Organizing for Progress, and the Altadena CoLab. Thank you.

Sarah Brennan with the Weideman Group on behalf of Extreme Weather Survivors, Shelltown Resilience, and San Diego Flood Survivors in strong support. Thank you.

Hello. Carmen Balber, Executive Director of Consumer Watchdog, also proud co-sponsors. And speaking also on behalf of Consumer Action, Courage California, Rise Economy, and the California Community Foundation. Thank you.

Rebecca Marcus on behalf of the Consumer Protection Policy Center at the University of San Diego School of Law in strong support. Thank you.

JP Hanna on behalf of the California Nurses Association in support.

Kim Stone, Stone Advocacy, asked to convey the support of Consumer Attorneys of California, Climate Defenders, Bay Area System Change Not Climate Change, and Alliance of Californians for Community Empowerment. Thank you.

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

Madam Chair, Members. Denni Ritter with the American Property Casualty Insurance Association. I wanna thank the author, the sponsors, the Department of Insurance, and the committee for all of their work on the amendments.

We have moved to a neutral position. I would, however, like to briefly dispute the characterization of this as a systemic issue. To date, insurers have paid out 24 billion in claims for the LA fires. But if this helps provide a more uniform experience for policyholders, then that's a positive. Thank you.

Thank you. Do we have any questions for the author from Members or comments? Assembly Member Krell.

Again, wanna thank all the survivors who are here. Thank you, Joy and Damon, for your testimony. Thank you to the author this really important bill, Senator, and happy to move the bill.

Okay. Would you like to close, Senator?

Respectfully ask for your aye vote.

Please call the roll, Secretary.

This is item number 4, SB 878 by Senator Perez. The motion is do pass to the Committee on Appropriations. [Roll Call]

Okay. We're gonna leave that on call. Thank you so much, Senator. Thank you for coming.

Okay. We're gonna bring up the consent calendar. Do we have a motion? Thank you. Please call the roll.

This is on the consent calendar, which includes item number six, SB 11,070 by Senator Durazo. The motion is do passed to the Committee on Local Government. Item number seven, SB 126 by the Committee on Insurance. The motion is do passed to the Committee on Appropriations. And item number eight, SB 1444 by the Committee on Labor, Public Employment, and Retirement. The motion is do passed to the Committee on Public Emp Public Employment and Retirement. [Roll Call]

Okay. We're gonna take a S B877. We need a motion. Thank you. Please call the roll.

This is item number three, SB 877 by Senator Perez. The motion is do passed to the committee on appropriations. [Roll Call]

That bill is out. Senator Cabaldon, would you like to present? Please come forward for SB 1054. Welcome.

Madam Chair, good morning. Thank you for allowing me to present SB 1054 today. This solution has two distinct entirely different purposes, but with one solution. Wonkier and nerdier one. As the vice chancellor of the community call system twenty five years ago, I executed the first data sharing agreements between the community colleges and EDD around EDD data for purposes of improving the quality and the effectiveness and student outcomes for our workforce development programs.

It led to a major change in the way that community colleges deploy their programs, more short term programs, more employer based programs, and to allow them to adapt more quickly in the economy to the needs and to the opportunities that students face. That has been an ongoing effort that we've been been undertaking in California to try to encourage more data sharing for the purposes of evaluation and accountability for program planning.

So, SB 1054 is intended to take that to its logical conclusion and to also remove some of the uncertainties. The law, I think, is clear in some ways, and your consultant has identified some of the same issues. But even even some even pretty clear law can sometimes cause general counsels and and others inside of agencies to say, you know, it's probably okay, but I I can't sign off on it because it's not for sure.

And so SB 1050 mark ten fifty one makes it clear, sets up the protocols, the protections to assure much more robust data sharing among the workforce and education related agencies with with the with EDU using the UI wage data file, but also assures that that wage data file matches up with the needs that we have today in deploying the new workforce Pell program, in evaluating workforce development programs across many institutions, not just community colleges, but also proprietary schools where the outcomes are some are great and some are god awful to really take a look at the at these programs, make sure that we're we're we're getting the bang for the buck at the state level, but also Californians are getting the the potential, career and job and employment and life benefits they should be getting from these programs.

And so we to do that more effectively, we have to collect better data. And so this bill creates some additional a couple of additional categories and frequencies of reporting in order to make that viable. The second part of the the the second reason for the bill is entirely different, and yet the solution is the same.

And that is under HR 1. HR 1 imposed, as you know, work work requirements. But even if you meet the work requirement, you still have to report the the work data. Challenge. California's has been automatically determining eligibility for the vast majority of Medi Cal recipients in California using the data that we already have across agencies in order to do so.

But the addition of this additional hours worked data element, we do not collect, and it happens to be the same data element that we need to do better workforce development planning.

But the SB 1050 war four would would add the the hours worked to the same wage and hours, report a wage and, report that's already filed under The UAE wage data system by California employers, in a manner that would satisfy the federal requirements that it has to be within a certain recency, and and so that we can continue in California to automatically determine eligibility for Medi Cal recipients without having the recipient or the counties have to manually go through now twice a year the this determination process.

The administration has done a a great job, by, in the interim to try to resolve this problem by contracting with Equifax in order to do something similar, but that costs us $12 per ping. Every time we wanna check on a single person, it's $12. Now we have to do it twice a year.

So it's very expensive, and this SB 1054 would create the state level infrastructure for us to accomplish that. We've worked closely in doing so with the US Chamber of Commerce. It's been working on this issue across several states, the California Chamber of Commerce, and other employer groups in order to assure that what we're doing will work for the broad range of employers in California and take advantage of existing payroll processing systems that they already use.

So that's the so the bill is both of those things. If you heard heard either one, it is both of them at once, but the core solution is that better data will produce better outcomes both in terms of workforce development programs and their effectiveness for for for Californians, but also to assure that we get better outcomes and keep people who are fully qualified for Medi Cal on the books.

And with that, we'd like to introduce if you're if if it's appropriate, madam chair, witnesses.

Yes. And will you be accepting the amendments?

Yes. Absolutely. Enthusiastically accepting the amendments to

continue this afternoon. Share your witnesses.

For their for their detailed work on this. And I'd like to introduce, Justin Garrett with the California State Association of Counties, Anzine McCreese, the executive director of the California Edge Coalition and ask respectfully ask for aye vote on SB 1054.

Good morning. Justin Garrett, California State Association of Counties representing all 58 counties. CSAC is in strong support of SB 1054, and, thanks, Senator, for his leadership on this issue. This bill is needed because HR 1 creates significant risk for Californians losing their Medi Cal coverage and, CalFresh benefits. And counties are on the front lines in helping individuals maintain their coverage, and really need all the resources and data sources possible, to support those efforts.

And so this bill puts an important toolbox in the or important tool in the toolbox of counties in the state that will prevent vulnerable Californians from unnecessarily losing their health care and nutrition assistance. As we we've just discussed, HR 1 creates new and expanded work requirements for both CalFresh, which went into effect this month, and then Medi Cal, which will go into effect on January 1. And so as part of these requirements, recipients need to demonstrate eighty hours of work per month.

It can also be, community engagement, education, job training. But, of course, we're speaking mainly mainly to work here today.

And counties are responsible for working with those recipients and ensuring that documentation is there to prove that compliance, which is very time consuming and challenging. And so the significant procedural and paperwork burden itself will cause people to lose coverage even when they are eligible and have met the work requirements. And so this bill will ease that burden, by requiring EDD, to collect hours worked data from employers and then facilitating the sharing of that data with DHCS and CDSS.

This data collection sharing will allow for a streamlined verification, that someone has worked the required number of hours and allow them to maintain the coverage and benefits they're eligible for. And this will protect people from losing their coverage, Also allowing counties to focus on those who really need that more in-depth support.

And so for all of these reasons, we're grateful for the author for, his leadership on this and this issue and ask for your aye vote today. Thank you.

Thank you so much. Good morning, chair, members. I'm Zima Creason, the executive director of the California EDGE Coalition. I'm also a trustee serving on the San Juan Unified Board of Education, seventh largest, school district here in California. California EDGE Coalition advocates for education and workforce investments as well as systems change through nonpartisan policy engagement that expands access to family sustaining wages and jobs and economic mobility for all Californians.

We're really proud to co spence cosponsor SB 1054 because California needs stronger workforce data to understand whether our education and workforce systems are helping people access quality jobs and economic mobility. Are are are our investments working? Today, California has limited information about key employment factors, including hours worked in occupation that makes it harder to understand job quality, workforce trends, and whether workers are advancing along meaningful career pathways.

SB 1054 helps close that gap by adding hours worked in occupation data elements to existing existing wage reporting, supporting better workforce outcomes measurement and stronger alignment across educational workforce systems. This bill also supports the safety net by using that workforce data to support streamlined work verification, helping preserve access to food and health care that make work and education possible.

Health care is a social determinant determinant of work. For these reasons, we respectfully urge your support. Thank you.

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

Linda Wei with Western Center on

Law and Poverty in support.

With the coalition of California Welfare Rights Organizations in support. Anaima Diaz Santiago with Latina Advocates on behalf of Hispana's Organized for Political Equality in support.

Jessica Dawn with the University of California in support.

Do we have any witnesses in opposition? Okay. Seeing none, I'll bring it back to the committee. Do you have any questions for the Senator?

to move the bill.

I'd like

Thank you. Okay. Senator, would you like to close?

Simply ask for an aye vote. Thank you, madam chair.

Thank you. Secretary, please call the roll. This is item number five, SB 1054 by Senator Cabaldon. The motion is do passed as amended to the Committee on Labor and Employment. Calderon?

Aye. Calderon, Aye, Wallace?

Wallace, Aye, Addis. Pappen? Aye. Pappen, Aye, Avila Farias? Aye.

Aye.

Avila Farias, Aye, Burman. Chen? Aye. Aye. Chen, Aye.

Ellis, Aye. Gibson. Hadwick. Aye. Hadwick, Aye.

Herbedian. Krell? Aye. Krell, Aye. Nguyen?

Aye. Nguyen, Aye. Ortega. Petri Norris. Rodriguez?

Aye. Rodriguez, Aye.

Valencia. Hey. That bill's out. We'll leave the roll open. Thank you, Senator.

K. We're just waiting for Senator Allen and Senator Padilla. We're gonna go ahead and let members add on. Secretary, whenever you're ready.

Number three, SB 877 by Senator Perez. [Roll Call]

Like to welcome Assemblywoman Papan. Thank you for your service and for joining us today.

Good morning, Senator Allen.

Good morning. How are you?

Good. Good. Thank you.

Great. Nice to see you, madam chair.

Yes. Whenever you're ready, nice to see you too. Alright. You may begin.

Well, thank you. Thank you so much.

Oh, I also wanna welcome our insurance commissioner, Ricardo Lara. Thank you so much for being here, sir.

Thank you.

We're pleased to have him. And this has been a a a a bill that has been a real partnership between our office and the coming out of our experience actually from from the fire. So current law authorizes the commissioner to conduct investigations, examinations of insurers to evaluate their market practices and verify that the insurers are operating fairly and in compliance with with the law. These examinations may identify our operational deficiencies. They can include findings and recommendations designed to protect consumers and improve company practices.

They're intended to propose actions to remediate any violations of law or to improve the financial health of an insured to, you know, avoid potential default and risk to policyholders. Now, certainly, most, insurers voluntarily comply with the actions that are proposed in their reports that are given to them by the department. We have come to understand that there's not a a a kind of a real mechanism to require remediation of violations.

There's no mechanism in law for an immediate formative enforcement to to push for proactive efforts that that that would help to prevent violations from repeating in the future. And, you know, during the madness of the fires, I I would sometimes call the commission and say, hey.

Why can't we do more on this or that as we were seeing things that were happening?

So many calls.

And and and out of that, it turned out they've been working on this for some time and and out of that came this this bill. So, you know, the the proposed so so this bill this bill would allow the commissioner to assess a fine to ensure for failing to address corrective actions proposed in an examination. The proposed actions would need to be adopted within a time frame agreed upon between the commissioner and the insurer.

The bill also establishes a formal process for the commissioner to call the insurer to a hearing to discuss the violations and for the commissioner to determine whether an enforcement action is necessary. An insurer would also be able to appeal a decision by the commissioner.

They they'd be able to go to a court of law if they want to, just like any other determination under the APA. The goal of the bill ultimately is about ensuring that those few bad actors who have been found to repeatedly violate the law are taking proactive steps to improve their practices and avoid future violations that harm policyholders. And here to testify in support of the bill, we have our insurance commissioner, Ricardo Lara.

Thank you, madam chair. Members, it's great to be here, this morning with you all. As you know, and as we had several conversations, California is still recovering from the largest catastrophic fires that we've ever had. And families across the state are depending on us to ensure that insurance companies are financially sound, they're transparent, and accountable.

And we are finally seeing the signs of stabilization in our insurance market with major carriers reentering the fair planned, explosive growth slowing dramatically, and consumers and high risk communities beginning to see more choices return.

But progress alone is not enough, as you know, through our several hearings that we've had in this committee, a modern insurance market requires enforceable oversight. And today, a critical gap exists, as Senator Allen was was describing. My department's ability to ensure that insurance companies follow through on corrective actions identified in our examinations. Our financial solvency, our market conduct, and claims handling oversight all depend on insurers correcting violations before consumers can be harmed.

And when insurers fail to comply with our laws and regulations, the consequences are real.

Delayed claims, as you heard from Senator Perez's bills, improper underwriting practices, unresolved financial weaknesses, and loss of trust in the system. In a market still recovering from years of neglect, climate driven stress, we cannot afford preventable failures in insurance compliance. And so this bill closes that enforcement gap. The bill gives my department clear authority to require insurers to provide timely, accurate documentation to ensure that corrective actions identified in

the examinations are completed and to hold insurers accountable when they fail to comply with existing law. This is not about adding new burdens. I wanna be clear about that. And it's about ensuring that the rules we already have are followed and that consumers are protected. The amendments taken to the bill make it even stronger and more balanced, to be honest.

They clarify the intent of the measure, ensure that corrective actions are grounded in existing law, and the regulation and regulation provide added additional time for licensees to achieve compliance, and to require my department to consider the size and the complexity of agents and brokers when assessing penalties. The chain these changes reflect thoughtful input from stakeholders while preserving the bill's core purpose, which is protecting consumers and strengthening our market integrity. As we work, as we work to stabilize and modernize California's insurance market, consistent oversight is essential.

The gains we are seeing, more carriers returning, more availability in welfare distress, ZIP codes, and a slowing fair plan growth depend on insurers meeting their obligations. This bill ensures that the market we are rebuilding is not only competitive, but accountable.

Members, this bill is straightforward. It strengthens consumer protections. It promotes consistent industry compliance, and it reinforces the integrity of our, oversight, system. I wanna thank Senator Allen for his leadership and collaboration in refining this measure to ensure it's fair and it's effective. With me today are deputy commissioners Tony Signorelli and Laura Clements, who can assist with any technical questions.

I respectfully ask for your aye vote.

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

Seeing none, I will bring it back to the committee. Do you have any questions for Senator Allen? Do we

have a motion? Thank you. Thank you. Senator Allen, would you like to close? No. I just I really appreciate, the the work of the committee. Appreciate our partnership with the commissioner's office and the commissioner. This, you know, it's all about giving the commissioner the tools that that he needs to to to do this work protecting our our market and protecting our consumers. And so I appreciate this very much and and respect for Ashford.

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

This is item number two, SB 129 by Senator Allen. The motion is do passed to the committee on appropriations. Calderon? Aye. Calderon, aye.

Wallace?

Wallace, aye. Addis? Pappen? Pappen, aye. Avila Farias?

Aye.

Aye. Avila Farias, aye. Berman? Chen?

Aye.

Chen, aye. Ellis? Not

voting. Ellis not voting. Gibson? Padwick? Harabedian?

Krell, Nguyen? Aye. Nguyen, aye. Ortega, Petri Norris, Rodriguez? Rodriguez, aye, Valencia.

Senator, that bill is on call. Okay. The next item is SB 354. Senator Padilla will be presenting SB 354 on behalf of Pro Tem Limón. Whenever you're ready, Senator. Welcome.

Good morning, Madam Chair, Members of the Committee. I'm pleased to present SB 354 on behalf of Senator Limón. I wanna start by indicating this reflecting, and I know that our witness will indicate this as well, the substantial progress and dialogue that continues up till late, as I understand, Madam Chair.

As you know, California's been a leader in consumer privacy, and California voters enacted constitutional right to privacy over fifty years ago and reaffirmed this commitment with the enactment of the California Consumer Privacy Act, and most recently in 2020 with the California Privacy Rights Act.

Protecting consumer privacy is becoming more important in a digital world where information is often collated, stored, and shared without the knowledge or consent of consumers. Our current privacy laws regulating insurance date back to the 1980s and did not contemplate all the ways in which data can be collected and shared today or perhaps, of course, the future.

The bill will create a modern structure for protecting consumer privacy across the insurance industry. Specifically, this bill gives consumers the right to opt in to the sharing of personal information that is used for purposes unrelated to insurance with some exceptions.

It gives consumers the right to correct inaccurate information held by insurance providers. Consumers will have the right to know what categories of information are collected and with whom it is shared. And finally, consumers will be able to delete inaccurate or unnecessary information that insurance companies may hold.

Author and sponsor have worked with industry stakeholders and are continuing to engage with opposition to address many concerns. Obviously, I have with me today with me today in support Insurance Commissioner Ricardo Lara and Damon Diederich, privacy officer for the department.

Good morning. Good afternoon or morning. I don't know what day it is now. It's been a long evening, as you know, Madam Chair, in continuing conversations around this measure. Thank you for the opportunity to testify in strong support of SB 354.

I wanna thank the pro tem, Monique Limón, for authoring this important consumer protection bill and for her leadership in ensuring consumers are protected. Thanks, Senator Padilla, for being here with me to present on her behalf.

I also wanna thank the Chair and the committee staff for their time and efforts and working with the author's office and my team on this measure as conversations continue to be fruitful and ongoing. SB 354 confronts a simple but unacceptable reality.

California's insurance privacy laws are more than 40 years old, and they no longer adequately protect consumers in a modern data driven insurance market. Californians are required to purchase many forms of insurance, and insurers collect and hold extensive personal information on nearly every resident in our state.

Yet the rules governing how that information is collected, processed, shared, and safeguarded have not kept pace with the insurance industry's evolution of technology and innovation use. Today, insurers operate in an environment defined by rapid data exchange, new uses of personal information, and the business practices that were unimaginable when our insurance consumer privacy statutes were written.

Consumers have little visibility into how their information is being used, and current insurance laws provides them with few meaningful rights to understand, control, or correct that information. SB 354 responds to this current outdated landscape by establishing a modern sector specific privacy regulatory framework that creates stronger consumer protections, clear limits, and greater transparency than existed at than existing privacy insurance privacy law.

SB 354 delivers heightened consumer safeguards and more rigorous oversight on how personal information is collected, processed, shared, and retained within the insurance marketplace. SB 354 establishes a significantly stronger and more consumer protective framework for the sharing and disclosing of personal information within the insurance sector by imposing clear, enforceable limits on when and how such information may be used.

SB 354 establishes significant stronger privacy protections by both prohibiting the sale of personal information and imposing strict limits on the use of sensitive personal information. Unlike the California Consumer Protection Act Privacy Act, which allows the sale of personal data unless the consumer opts out, 354 adopts a categorical ban, ensuring the personal information cannot be monetized within the insurance marketplace.

The bill also provides heightened safeguards for sensitive personal information by limiting its processing solely to what is necessary to complete or maintain an insurance transaction. This built in restriction prevents the use of sensitive data for secondary or unrelated purposes, whereas CCPA requires consumers to affirmatively request such limitations.

Together, these provisions create a more protective and consumer centered framework that reduces burdens on individuals and strengthens privacy standards across insurance sector. This bill strengthens transparency obligations by requiring insurers to provide notices that contain substantial detailed information and to deliver those notices periodically throughout the consumer relationship.

These requirements ensure that consumers receive ongoing meaningful insight into how their personal information is collected, used, and shared. In addition, this bill mandates specific disclosures identifying the precise personal information collected an actual recipients of any disclosures. Together, these provisions create a more robust and consumer focused transparency framework within the insurance sector.

The author's office and my office have had discussions with the various stakeholders and have concern and have concerns with the bill along with the committee staff and Privacy Committee staff and committed to continuing these conversations while ensuring the bill retains strong consumer privacy protections and robust safeguards to their personal information.

California voters, as Senator Padilla said, have made privacy a constitutional right, and this bill gives real effect the real effect to the mandate by replacing outdated and insufficient insurance privacy statutes with the modern, enforceable framework that reflects today's data driven marketplace.

By strengthening consumer control, prohibiting the sale of personal information, limiting the use of sensitive data, and requiring clear ongoing transparency, this bill ensures that Californians receive the high standard of consumer privacy protection they expect and deserve.

I believe this bill positions the state's insurance sector to operate with greater accountability, clearer rules, and stronger consumer trust. I respectfully ask for your aye vote. And with me today, of course, is my department's privacy officer, Damon Diederich, to answer any technical questions. Thank you, and respectfully ask for your aye vote.

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

Hi. Brooke Bonetti with Kaiser Advocacy in support on behalf of the Privacy Rights Clearinghouse, Oakland Privacy, and Privacy Defense Alliance.

Good morning, Madam Chair and Members. Robert Herrell. I'm the Executive Director of the Consumer Federation of California. We support this measure. Thank you.

Good morning. My name is Cliston Brown. I'm with the Surplus Line Association of California. We are neutral on the bill, but we did have one item we wanted to bring to the committee's attention. We very much appreciate the work that the pro tem and her office, the department, and this committee have done on this bill.

The bill contains language exempting certain types of organizations and agencies from being considered third party service providers. Since 1994, the Surplus Line Association has been the appointed surplus line advisory organization.

I'm sorry. It's just name and affiliation.

Oh, I apologize. Yes. Thank you very much.

You're welcome.

Thank you, Madam Chair and Members. Anthony Helton with the California Land Title Association and representing a coalition of real estate trade organizations, including the California Association of Realtors, California Building Industry Association, California Escrow Association, and the California Mortgage Bankers Association, among others, noting neutrality per recent amendments to the bill. Thank you.

Thank you. Do we have any lead opposition in the room? Please come forward and sit at the table. We're gonna need four chairs. For the opposition.

One more chair? Okay. Great. They're bringing one up for you, John.

Each opposition witness has two minutes.

Sure. Thanks, ma'am.

Yeah. Come on.

Get cozy.

I love the togetherness up here. Yeah.

It's John.

We can hold hands now.

Good. Good. Good. Good. Good.

Good. Good. Good. Good.

Good. Good. Good.

Good. Whenever you're ready. Thank you.

Good morning, madam chair, members of the committee. I'm Allison Eighty here on behalf of the Personal Insurance Federation of California. First, I want to acknowledge the incredible amount of work from all parties to try and make and then make this bill workable and improve it, particularly the work of the committee and the committee staff.

We remain committed to achieving a modernized and workable model, a middle ground that provides protection but does not cripple innovation in the insurance industry or set it decades behind other businesses and other insurance markets nationally. SB 354 has not yet reached that middle ground.

Prop 24 required that California privacy agency review the CCPA and the IIPPA to determine which was more protective, whichever was more protective retained jurisdiction. We've supported the efforts to bring the IIPPA up to the CCPA standard and even to exceed it in some places, ensuring that CDI remains our sole regulator. But three fifty four goes well beyond that. This is the most stringent data use law in the world across any industry.

Both the CCPA and the Global Data Protection Regulation, the GDPR in the EU, treat sharing and internal processing separately, Understanding that how personal information is shared and sent outside of an organization and how personal information is used internally are two very different activities.

This bill does not make that distinction. The CCPA has a reasonable and reason reasonable and proportionate standard that controls data processing and use not an opt in or even an opt out. SB 354 commingles the sharing and processing in a way that subjects processing to the same stringent consent requirements that sharing is subject to. This does not work. Our prior proposed amendments would bring the IIPPA up to and in some places exceed the CCPA.

It would bifurcate the processing and sharing issue providing substantial consent requirements that exceeds CCPA for sharing, prohibit the sale, which exceeds CCPA, and subject processing to a reasonable and proportionate standard in line with the CCPA. The author and sponsors have said they're committed to ongoing conversations to address major concerns regarding the operational problems in this bill. We remain committed to making this workable. We're not there yet, but as long as there's a table, we remain committed to being at it. Thank you.

I'll defer to my colleague from ACLIC for more.

Thank you very much.

We're all here.

Thank you very much. Good morning, madam chair and members. Matt Powers with ACLIC. As my colleague Allison mentioned, we continue to have serious concerns with the bill as it is in print. It's also important to note that insurers are already complying with the CCPA for large portions of their data, collection and maintenance.

Members, this bill is really about three things. It's about data selling, data sharing, and data processing. On selling, we've consistently said that insurers are not data brokers, and we do not sell personal information. We can work with prohibition, so long as insurers can continue to operate their websites like any other business. On sharing, we've accepted this bill will go beyond the CCPA by applying sharing limitations to all personal information, not just the narrow categories, addressed under CCPA, although we already comply with them.

We have also agreed to an opt in consent for most non affiliate sharing outside of an insurance transaction, along with expanded disclosures to inform consumers of their rights. On processing, meaning how insurers use lawfully collected data, the bill imprint remains, as Allison mentioned, the most restrictive globally. It goes far beyond any other precedent. That said, last Tuesday, we did offer amendments to conform the bill's processing provisions to CCPA's reasonable and proportionate standard. We think that is their appropriate direction for this bill.

Another major concern is notice. CCPA does not require notices in every instance of indirect collection of personal information. Sending written written notices to every household member, including minor children, beneficiaries, emergency contacts, trusted designated trusted contacts simply because their information is collected under an insurance policy does not seem to be a balanced approach.

So while we continue to have serious concerns with the bill in print, I do want to acknowledge the work and the openness of the Pro Tem staff, the commissioner, his staff, in engaging with us. Madam chair, you and your staff have also taken on a hugely complex issue, and I wanna thank you for your engagement and patience, as we have worked through the granular details of our data practices.

With that, I'll turn it over to, I believe, mister Norwood.

Thank you very much. Good late morning, I guess. Madam chair, members of the committee, John Norwood. I'm appearing today on behalf of a coalition of independent agent broker and wholesaler organizations. Our current position is oppose unless amended on this bill, and we're seeking a small business exemption for independent agents, brokers, and wholesalers similar to what's in the CCPA.

Consumers opt in to the services provided by our members. They voluntarily provide their information to our members to shop for insurance for them. Our members take that information, and they use it solely for the purpose of shopping for insurance for their members. The consumer understands they're going to share that information for that purpose. When finally, they present options to the consumer and place that insurance, the insurance company that the coverage is placed with, complies with all the obligations of this act.

The insurance agents do not do other things that are addressed by this bill that require expanded notices of consumer rights and disputes. They're not in a position to negotiate with third party service providers. They do not make adverse underwriting decisions. They do not have compliance attorneys to advise them on written data management, storage, security plans, and breach protocols. The as the commissioner described this bill, it's designed to apply to large national international insurance corporations.

However, the way the bill is written, it applies to any insurance agent that has the ability to place insurance with more than one insurance company, independent agents. That result is beyond our member's ability to comply with, to afford, and it's doesn't match the role in this process as outlined. There have been, as people indicate, hours and hours and hours of conversations with the insurance company representatives on this bill. We have had limited opportunities, and that's understandable because that's the first step.

But I like to point out that there are 1,800 insurance companies operating in California.

There are over 500,000 licensed insurance agents and brokers, wholesalers, and agencies in the in the state. Four kinds of licenses, four kinds of delivery systems. The sophistication range is from the, you know, large brokers to the life agent that works out of their house or the agent on Main Street in Ione, California. So, you know, what we're asking for is a small business exemption that recognizes the result the the role of our members in this process.

And we're either gonna have to spend many more many more hours to go through this or we, you know, deal with that exemption, which fails in comparison to the exemption that the legislature provided in CCPA.

And just as a reminder of that, businesses in California can have $26,000,000 of income annually. 49% of that income could be from selling their customer's information, and they're still exempt from the law. So, you know, with that, certainly, look forward to participating, continue to participate in the process. Thank you very much.

Thank you. We're welcome. Do we have any additional opposition in the room? If so, please come forward and state your name and affiliation only. Thank you.

Good morning, chair and members of the committee. Laura Curtis on behalf of the American Property Casualty Insurance Association in respectful opposition. Thank you to the committee staff and the CDI and the Pro Tem for the work on the bill. Thank you.

Good morning. Sherry McHugh representing the Pacific Association of Domestic Insurance Companies, the National Association of Insurance and Financial Advisors, and California Credit Unions in respectful opposition unless the bill is amended. Thank you.

Good morning, madam chair and members. Robert Moutri, California Chamber of Commerce. Also oppose unless amended, particularly for our non insurance members who are looped in.

Thank you.

Good morning, madam chair and members. Vince McCailey on behalf of CJAC. Oppose unless amended. Thank you.

Mister chair and members, Cliff Costa today on behalf of Copart, which is a third party service provider for insurance companies. We are in respectful opposition over one provision.

Thank you.

Madam chair, members, Rob Grosskalz on behalf of Verisk and its subsidiary, insurance services offices, in in the post unless submitted. Thank you.

Morning, madam chair and members. Dylan Hoffman on behalf of Technet, respectively, post unless submitted. Thank you.

Madam chair, Randy Pollock on behalf of the Consumer Data Industry Association. That's a credit reporting industry. We're in opposing less amended as the credit reporting industry is already covered by many federal and state law laws and asking for an exemption. Thanks.

Good morning. Megan Loper on behalf of the American Council of Life Insurers, oppose unless amended.

Chris Schultz with the California Bankers Association. We have an oppose unless amended position. The author and sponsor are considering one amendment related to Gramm Leach Bliley joint marketing agreements. We'd like to continue them to encourage them to continue assessing that amendment. Thank you.

Okay. I'm gonna bring it back to the committee. Do you have any questions for Senator Padilla from Assemblywoman Avila Farias. Go ahead. Thank you, chair, and thank you, Senator Anh and the Pro Tem. I'd like to understand if the how the the California proposal matches up to other state programs that are out there.

Madam chair, I will defer to my key witness.

The the goal of the conversation that we're having is to actually match it up to the to to get as close as possible to the CCPA. So those are the the ongoing conversations we're having. So we're we're getting very close to those conversations with the with the with the Pro Tem and my staff and the Assembly Insurance Committee Staff. So we're really close to getting there.

Oh, great.

Yeah. And just a follow-up to that. I know this is a really complex bill. I really do appreciate the Pro Tem and all who have been working on it. And I'm wondering if there's still gonna be continued discussion, because as we've heard the testimony, there's still various concerns out there. And so what are we gonna be doing to address those concerns?

Absolutely. Assemblymember, the goal is by the time you see this this bill again, the goal is to to see a a fresh bill that will have a significant change in what you're seeing. Again, the goal is to to to really mirror this bill to the standardized regulations that currently exist within CCPA. So you'll you'll hopefully see that. We're we're we're very close to that.

Oh, excellent. So do you feel pretty confident that, the the remaining issues on the opposition regarding the private right actions and the opt in standards that you guys will reach some type of compromise?

We're very, very confident that we are gonna have, I think, in the next week, have very fruitful conversations.

Excellent. Thank you so much. Assemblywoman Addis.

Thank you. Thank you to the pro tem and the insurance commissioner and the Senator for presenting this bill. I really appreciate have a lot of local, overlap with the pro tem and then have been doing my own work in privacy in a different space. And so really appreciate the efforts to get at this issue. I've also heard concerns from local people, friends and family that work in the insurance industry.

So just similar kind of questions, particularly around some of the smaller folks, you know, that I'm hearing from directly locally that are saying this is challenging for them. And, I trust the Pro Tem, obviously, to keep working on the issue to come to agreement. But if you wanna elaborate, I know you've already probably said it all in your testimony. But if there's anything else you can elaborate on, particularly for by smaller folks.

Absolutely. You know, in in trying to be as expansive as possible, we wanted to make sure that we're also mindful of of the smaller, the smaller folks on that. We we inadvertently captured some of the folks that we unintentionally did want did not wanna do.

And so that's what we're doing this next week is making sure that we leave out some of the folks that we inadvertently captured until we're going again through every single section to make sure that, you know, we're being appropriate and who's captured and who's already regulated through any other entity. And so, again, we're being very mindful and demure about what we're what we're doing with this bill.

It's been two years of work. And, again, we wanna get this right. We're we're trying to mirror this to CCPA. Again, we don't wanna, you know, be the most you know, what we're saying, a stringent in the world. But we wanna be we also wanna make sure that we go up to code because we haven't updated these codes in forty years, and we know that insurance is is evolving.

We don't wanna stop that evolution because we know that consumers, also are engaging in their insurance products differently. Right? No longer is it necessarily an agent coming to your neighborhood and collecting a check anymore, and that's okay. We want people to access we want people to use technology to access coverage. That is important.

We want people to be able to engage in their insurance and in the insurance market the way they feel comfortable because the more coverage, the better. And so we don't wanna stymie any of that. And so we're, again, looking at this with a new fresh code of eyes to make sure we're not doing any of that inadvertently.

Well, I I really appreciate that having done a little bit of work aligned with CCPA more in the PIPA side and the student data side. And I think it's an it's incredibly important that consumers are able to engage with flexibility, but also trust what's happening Right. On the privacy side.

In all fairness too, you know, the industry has come come a long way in terms of not selling the data, not doing all this stuff. So we've I have to say, we've all we've all given somewhat, and it's taking us two years to get here. So we're we're we're getting very close. And so, again, kudos to the the insurance committee staff and and the chairwoman who have brought us together. And the table is still full.

People are still at the table, and we're getting very, very close. It's just a matter of these these legislative timelines that that were here before us.

Well, I I appreciate the work. I'll be supporting it and certainly wanna see the conversation continue to move.

Thank you.

Assemblymember Ellis.

Thank you. Question for the opposition. You know, for every action, there's an equal and opposite reaction from my chemical world. So I don't know how it applies here, but my question is that, you know, we're in a world of affordability to the consumer. And how does this trickle down ultimately from the insurer that has to implement more programs and then follow it on to the consumer? So any of you, please. Sure.

I'm happy to answer that. Thank you for the question through the chair. This will absolutely increase cost. There are going to be administrative hurdles in implementing this. So there's going to be a certain degree of onboarding and meeting the new standards that are set.

If the notice issues are not addressed, it's going to be more costs in terms of outreach and regular communications with consumers, whether or not those are actually informative. So there there will be administrative and operational costs that do wind up getting rolled into rates.

Mister Norwood, when you when you said that it would affect your small insurance and agents,

can you elaborate?

Yeah. If I may, for the chair. For insurance agents and brokers and wholesalers, we can't just merely pass those costs on. We're our income is commission income. So it's set by the insurance company. There are there is some fee income and that type of thing.

But I'm more worried about, you know, well, independent agencies that are especially in small towns or communities and and, you know, small agencies that just don't have the ability to comply with this and, you know, to afford the consultants and attorneys and things that were necessary. And so they may well put them out of business and, you know, limit what they can do. And that's the worry from that standpoint. Thank you.

And, that's actually a good question because I if if I may also that's something of a consideration that we're looking at in the department, not just in this, but in overall how how the smaller agencies and how those insurance agencies that actually have employees and have brick and mortars overall, how they are being impacted as more insurance companies are going into more of a a technology platform based.

And we're looking and other insurance commissioners around the country are also looking at how we can actually incentivize for more insurance companies through the regulatory process.

How can we provide more incentives for insurance companies that have actually brick and mortars and have employees, and how we can alleviate and maybe modernize our own regulatory scheme to, eliminate some of the regulatory hurdles so that we can incentivize more insurance companies or lessen the the regulatory burden for folks that actually are employing people, who are actually have brick and mortars, as opposed to just moving towards agencies that are just moving towards a technology platform, for example.

And what are the regulatory schemes that we should eliminate, to incentivize folks or just a different regulatory scheme and regulatory process for folks that employ folks and those that actually are just moving towards a platform only.

And that's something that we're looking at nationally. How what are regulations that we should eliminate for folks, or how should we treat them differently? Because right now, they're they're treated the same, and we don't think that should be equal. Because if you're investing in a a brick and mortar and you're hiring folks, and you're just moving into just a sole, you know, technology platform, you should not be treated differently. You should be treated differently in the regulatory scheme.

And and both are fine. Right? But you shouldn't be treated the same in the regulatory scheme. So we're trying to figure out how we lessen the regulatory scheme for folks that have brick and mortars because we feel that you're actually investing in communities. You're you're hiring people, and you'll be seeing some sort of regulatory reforms around that in the department.

So

Thank you for that, commissioner. I I would tell you that as an owner of several companies that every time we see a regulation, it costs us more money. Absolutely. And therefore, we have to charge our customers more money. Therefore, it ends up in the consumer's hands, and we're all talking about affordability.

Mister Norwood?

Well, commissioner talked about insurance companies or hiring employees and investing in brick and mortar. We would encourage them to use independent agents who also hire people in communities and invest. Thank you. I agree 100. Very well. Thank you.

Assemblywoman, Petra Norris. Thank you.

Or sharing the mic. Good morning, Senator. Good morning, commissioner Lara. Thank you for being here. So I think picking up on, I think the the thread, from assembly member Ellis, I do think it's important for us to to recognize that, the cost of regulation, you know, is not free.

Right.

It does get passed on to Californians. That doesn't mean that we shouldn't establish new regulations, but it does mean that we should have, I think, very good reasons for establishing new regulations. And so I guess I am a little bit confused about why insurance would be subject to different roles than other financial service providers who are using the same types of information to make decisions. So that's my first question. Like, why do we need an insurance specific regime?

Because the the currently, right now, insurance is regulated only through the Department of Insurance and not CCPA. Unless we then unless I would then forego my authority and then have CCPA do regulations for the insurance industry. And that is something that both I don't want and the industry does not want. I am the sole regulator for the insurance market. Insurance is regulated to the states through the insurance commissioner, director, or superintendent, depending on what the states call it.

So for the past forty years, we haven't modernized the the consumer technology protections. And so this is what this bill is attempting to do. So I think the industry will tell you we're all in agreement that it should be under the Department of Insurance and not this new agency. So, currently, we've been acting without updated modern regulations in this space. This bill seeks to do that, and we're very close to getting agreement and how this gets done.

We're very close. And and just because of the legislative deadline, we we we're not there yet, but I we're very close. So that's so that's how insurance is regulated in the in The United States, through the states, through the departments of insurance. And in California, we haven't been able to modernize our regulations unless I see that to CCPA, and we don't we don't wanna do that. I would never wanna give my authority, especially as I'm leaving, and there's a new commissioner coming in.

And I don't know if the opposition wants to provide some commentary on kind of an approach that you think could be taken that would perhaps, achieve the stated so, I mean, it sounds like this this stated goal is to modernize, you know, IPPA and preserve CDI's authority. It does feel like and I believe the opposition has offered amendments that would achieve those goals without some of the unintended consequences that Yes. Have been detailed part of this conversation.

And they can speak for themselves, but we've I like I said earlier, we've both given and I I we've we both have, you know you know, come to an agree we're almost close. We have we're having conversations, and we both kind of come to we've we've both given. So we're very we're very close to that.

And I think they can speak for themselves, but I I think the general consensus is the the regulator the chief regulator of insurance should be in the depart the Department of Insurance.

Okay. Can I

maybe respond to someone? Yes.

Please. Absolutely.

Yes. We agree that that we want the department to be our primary regular. I think the challenge is that this regulates all data that we collect. So currently, CCPA covers non insurance transaction data. For the insurance transaction data, it's regulated under IPAA under the the existing codes.

And this brings that all together. So it does create some workability challenges. But I I think to your question about precedent, I think that is why it's so important that we then model based upon CCPA because we do already have some level of compliance built in for that. And, yeah, I think that's why we are so worried with what's currently in print where it just goes so far beyond that.

And as as we've kinda mentioned, it exceeds the the the European model and puts a lot of restrictions on, on us that really are are are unprecedented.

So I think to the extent that, as the commissioner mentioned, you know, that we conform to CCPA, that certainly does alleviate a lot of that, I think, friction. But the details are critically important. You know? And I I think this is the challenge. And there's also, you know, overlapping federal law, which we spent a lot of time, which we're talking to your staff about, and that that gets really, really challenging.

And so, yeah, the the balance is critically important, but absolutely, conformity with CCPA will definitely help alleviate some of that.

Yeah. If I may, I agree. The insurance should be regulated by the insurance commissioner. Heretofore, the IAPPA has been basically a notice privacy notice statute. And the way it's been implemented and operated is that as long as a licensee, let's say a producer, agent, broker, is an agent employee or associated with another licensee that complies with the provisions, they don't have you know, the licensee doesn't have to.

That's great. It's worked for forty years that way, and that's wonderful. This bill goes way now beyond that. It's not it's no longer just a kind of a notice bill. It now gets into, you know, how you store information, how you, you know, through how you whether you can negotiate with third party providers of how they deal with your the information, which we're not in a position to do.

A whole number of other things that we've never had to look at before. So it's a whole new world. And, you know, the our members just don't have the capability of doing some of that, so we have to find a way, you know, to thread the needle, and that's what we're trying to do.

Sorry. Just one more thing on this. And I'm sorry. I'm gonna turn my back to you so that

the mic is on. Our concern has just been where this is experimental. We we are absolutely open to meeting the CCPA, exceeding the CCPA, where we know that we can do it. Our concern has been areas of this bill that are entirely unprecedented, and our companies have not been able to determine how they would implement it, what the consequences would be. And those are the areas where, we have pushed back that that is a step too far.

And that's where we've we've now been able to agree in what what sections we have conceded and said we're gonna we'll agree to the CCPA threshold and benchmark so that we're all in agreement there in our conversations. Okay. And you will see those pretty soon.

Got it. And I guess what I would what I might offer is that in the if if there are places where you think that the CCPA threshold needs to be exceeded, I think that it you should have a reason for that and be able to point to examples of concrete harms to real people that would, therefore, like, justify that. Because I I'm not understanding because this right now doesn't just exceed the CCPA.

It also ex we often point to Europe as kind of the, you know, fashion of privacy standards, and we model a lot of what we're doing of the EU. This as it's written, actually, you said it's not your goal to be the, like, leading standard in the world, but this would be the most restrictive standard in the world.

I know. I wish I could just yes. Yes. Yes. That's something we're featuring.

Yes.

So is but are you so can you help us understand I I'm very happy that you say you all are getting closer. But can you help us understand in concrete ways what does that mean?

That means that we we are I would tell you, 95% there in the conversations. And we are I think you're gonna you're gonna see us pretty much almost done in our and we're very fruitful in our conversations. I just wish we could have this all done, but in time to present to you. But the conversations are going very well.

Okay.

Let me just flag one other Yeah. One other thing on your radar You

As part of the conversation. So I think I I I I also am a little concerned and don't understand the justification for the expanded private right of action. Is that on the oh, that's okay. Alright. So I don't yes.

tell me.

I I can't so I can't support the bill today. It feels like there's still a lot of moving parts, but I will see this again in privacy. So

Yes.

Excited to hear that. It sounds like you all are close to landing this claim.

To talk to you in privacy.

And I will look forward to supporting it in privacy. Thank you, commissioner.

Woman Crowell?

That is a that is a one of the biggest points of contention that I that I think we we are in the next couple days should be no longer a concern.

So if I may, we have shared amendments with the commissioner and his staff that would broadly align our processing standards with CCPA. It would disentangle sharing and processing. And the conversations that we've had recently have been very fruitful on that. So, I think we are optimistic, and especially hearing what the commissioner is saying now, that we are optimistic that we can that we can get there.

Okay. That's great to hear. So, processing won't be treated as sharing?

The conversations are very, very fruitful. We're trying to keep it within the parliamentarian rules. Okay. Assemblymember Krell.

Okay. Thank you so much, Commissioner. And then just again, on the private right of action, that's the - okay. Okay. That's really helpful.

Thanks for your work on the bill.

Thank you, Assemblymember.

Assemblymember Wallis.

Yeah. Thank you, Madam Chair. Very appreciative to hear that conversations continue to be fruitful. Commissioner, thank you for that. I am curious: what happens if the legislature does nothing this year? Is there an immediate enforcement gap, consumer harm, or legal deadline that requires California to act now?

That that is a great question, Assemblymember Wallis. I'll tell you, and just us these past two years, I think we're we're very close to, to just come to final resolution on these important issues. We would be one of the few states that hasn't modernized our consumer protections in this space. And we run we run into the issue of where CCPA has been asking us to move in this direction.

And then we run into the fact that another agency can just start proposing regulations on this issue, and the Department of Insurance loses its jurisdiction.

And with the new insurance commissioner and new governor, who knows what can happen? And the last thing I wanna do is lose my jurisdiction or you lose the jurisdiction and being able to regulate in this space. And at the end of the day, where we're seeing consumers moving into these platforms, and we are and not that is happening in California, but we are seeing, in other parts of the other country where new actors are coming in. Insurtech companies are growing in this space.

Each so called "insurance interrupters" are starting to sell insurance products more and more.

You're starting to see new products coming into the market: parametric insurance products, microinsurance products, that are selling into low income communities. How do we regulate how they're communicating, how they're selling products, and how they're communicating with small businesses? And it's very difficult to be able to capture these folks. All insurance commissioners are trying to grapple these issues, and this is happening in all over the country. And we're trying to capture these folks.

And if we don't have set regulations, it's hard for our enforcement teams to then be able to go after them, our law enforcement folks to start being able to go after them in court and our attorneys. So, we need to modernize. And again and we work a lot with our insurance companies to in tandem to go after these these bad actors. And so we need to protect our consumers.

We need to protect the integrity of our insurance companies, and we need to start regulating a lot of these new companies that are coming into these these spaces.

We welcome, the technology because this is what our consumers want. They want these new companies entering. We know that our consumers wanna engage. The way they're engaging with their insurance companies is changing. They don't necessarily wanna talk to an agent in some cases.

And so we know this is it's modernizing. And I, as the insurance commissioner, wanna give the consumer all the different ways they wanna be able - I, at the end of the day, want them to be able to access insurance in the way they wanna do it. Right? They wanna talk to an agent.

They wanna go into a a brick and mortar. That's fine. You wanna go into a platform. That's fine. At the end of the day, I want you to be protected and be able to get the product that you want.

I wanna make sure that the department is able to regulate that, to be able to make sure that it is a viable product and that we're regulating that to the best of the ability to make sure that they're that we can say that that is a viable product for the consumer. And right now, in California, we're operating under forty-year old regulations that don't meet the the need for the consumer. And so, that's that's where the sense of urgency lies.

And again, in a next year when we're gonna have a brand new commissioner, a brand new governor, that's where I feel the sense of urgency. And I think we're we're really close.

We're really close to getting this done after two years of negotiations.

So, I think we're all in agreement that we wanna support modernization, and it sounds like we wanna keep, regulatory authority within the department. But is there a date specific or date certain that requires us to to act this year?

No. I mean, there's no date specific or or that, but, you know, this has been two years in the making, but, obviously, there's no -

Alright. Appreciate it. Thank you sir.

Assemblywoman Papan.

Well, I'm only seven in, but I figured I gotta say something. Lucky for you. So, it seems to me that the drafting of the bill certainly is being dictated by the potential for harm. And the way that I'm coming up to speed on it, it looks like we got three tranches. One is the who, and not everybody in this equation that might be covered by this bill causes a similar harm.

Mister Norwood's folks are more independent. It's harder for them to, a, comply, but, b, they may not have a greater risk for harm depending on what they do with the information. Then we heard from the larger folks, the other tranches are how we process it and how we release it. Got that part. Okay.

So, it just seems to me that, the potential for harm because we heard from the commissioner that we might be revising things that is brick and mortar, independent folks, whether you get it online, the potential for harm for each of those scenarios might differ. And so, I think that's probably where the bill is getting jammed up. But I just I'm a little concerned that we're here today in the insurance committee. I thought we'd be farther along in the second house to really know where we were.

So, I'm gonna take it on leave of faith that you are as close as poquito, as you say you are, so that we can get somewhere on the bill.

Because there is a need for protection. I totally get it. 40-year-old laws, when we're distributing information differently -

Right.

- are not gonna be applicable to protecting folks. And I worry a lot about what they do with the information on the underwriting part of it. I will tell you that's kind of where my Achilles' heel might be. But in any event, I'm hopeful, and I'm doing yes, vote. I know I'm subbing in, but on a leap of faith.

And I don't think we should be here, though, doing this on a leap of faith. This bill's been around. You all know what you're dealing with, and you have an a another regulatory screen scheme that you can kinda pick off from. So I hope we get there. Did you wanna say something?

There's really no question, but I'd love to hear from you.

I mean, we will be in another legislative committee. So, you'll see a a much different bill in the neck in the next committee, in the privacy committee. So, that gives me faith that you'll you'll legislators will have another another go at it.

Assemblywoman Ortega.

I think I'm ninth in order. So, I just wanted to appreciate the work that's been done from the pro tem and and new commissioner over the years in working on this issue. You know, when we work on things that's such is so complex that could have so many different outcomes. It's important that we ask all of these questions and we have thorough conversations and we bring everyone to the table, which is what you've done, today and will continue to do moving forward.

But at the end of the day, as someone who sits a member, who sits on insurance and privacy, I understand that at the end of the day, I have to go out and talk to the constituents who sent me here to do the job.

And so I was trying to bring it back to the question that was asked earlier, what's the urgency and is there a deadline? I mean, I think, and you can answer this, as a consumer, I feel like the risks are very much happening every single day with all these different platforms or information being out there, and no one really stepping up to regulate this space.

And so, I really appreciate this bill and wanted to bring it back to the question of, as a consumer, what is the benefit to me in moving this forward and moving it forward today?

Well, I think the - what I the sense of urgency that I feel is that if you come up to a platform where somebody's selling you insurance, there is an assumption that that product is regulated and that that product is regulated by the Department of Insurance and that what you're buying is an actual product, that it is by a reputable insurance company, and that it's gonna protect you from and it's gonna be a product that's gonna protect you when you need it.

And right now, we're operating under forty year old rules. And in an era where we are living a catastrophe prone state, where we keep asking people to buy more coverage, to be protected, we don't know when the next earthquake is happening, when the next fire, the next flood, you know, that and and people are always shopping around for, you know, the least expensive product.

And we wanna make sure that if they're gonna go on a platform or they're gonna use technology, that their data is protected, that the product is real. And, again, we're not accusing anybody of anything, but that product is gonna be able to pay out their claims and that's a a real product.

And things are changing so rapidly with technology that we need to have the regulate the regulatory scheme in place to protect that consumer. And so I think, again, I wanna be honest. Both sides have made real concessions here. Both sides have been talking, and I've been at the table for the past two years. I where - I wanna say, 95% there.

We've made real progress. When we get to privacy committee, you're gonna see, a real different bill, and I feel confident that we're gonna have a real different conversation when we get there. And so, I respect the members. I would have rather be in a different place today, but because of the legislative calendar, we are where we're at. But, I look forward to having this discussion in the next committee.

It gives me it gives me some peace that we're gonna have another legislative go at this bill. And so, again, these are complex issues. These are very detailed, you know, bills. But, again, I think that it's time for us to really modernize our our system in California. Thank you.

Assemblyman Gipson.

Thank you very much, Madam Chair, Commissioner. Just had to deliver and present a couple of bills and other committees. And I'm sorry I was at the I didn't have the benefit of hearing my colleagues ask questions. So, sorry if I'm being redundant. But for the benefits, I will ask my questions.

How does California's proposal compare to other states. If that question was already asked.

Well, no. No. Did you already ask it?

Yeah. It was already asked. Okay. We are gonna - by the time the bill will be the conversation we're having is to make sure that the bill is uniformed by CCPA in in many of the aspects. So, we - the conversations we've been had and the the ongoing conversations are gonna be very reflective to make sure that we don't go beyond Europe, the UN, or the world as they say.

Okay. And I came in that you're gonna be taking, so I guess, some amendments in the next committee.

We're gonna be - we're having conversations, and the the bill's gonna look very differently in in privacy committee. We have - we've made very we're making we're making a lot of headway. Okay.

I won't ask any more questions. Alright. Everything.

I don't think there's anybody else. So - oh, Assemblywoman Rodriguez.

Appreciate all the work being done on this bill, but I've been on the outside looking in for several years where we've been told, oh, we're gonna fix the bill the next committee, and it sometimes it doesn't get done. So, I'm just hoping that with you telling us this, that it's really gonna happen. And I don't see the urgency there in having to get it done right now, but I just hope you work on it with the opposition.

Alright. Okay. So, I wanna thank madam pro tem for bringing this bill forward, the insurance commissioner, and Senator Padilla for presenting today. I appreciate you being here. This is a really big bill, and it's gonna have a major impact on a wide range of stakeholders, many of whom you've heard from today.

Since this bill was introduced last year, we've seen a lot of progress in addressing some of the practical concerns raised by stakeholders and some of the technical issues that come with such a substantial bill. But as you heard today, there are many remaining issues, both practical practical and technical, that still need to be addressed. I know that negotiations are still ongoing around some of the necessary fixes, and I greatly appreciate that. I do.

So, I really hope to see the fruits of these negotiations as this bill moves forward.

Insurance is a very sensitive industry and it relies heavily on data. And I think we can all agree that consumers deserve rights and protections for their data that match the sensitivity. I think we can also agree that a strong, efficient insurance market is in the best interest of the consumers and Californians. And I don't think that those things need to be in conflict. Again, I appreciate the hard work of madam pro tem, insurance commissioner, all the stakeholders.

I recommend an aye vote today, and I encourage you to, you know, take seriously all the concerns and questions that you've heard here today as you move forward with this bill. And with that, Senator, would you like would you like to close? I almost asked the insurance commissioner to close. Sorry. I was like, Senator Lara.

Yeah. So, Madam Chair, remember, since these parties did all the work that's most appropriate. But I will just say on behalf of Senator Limon, first, thanks for the Chair's engagement and indulgence to all the members the same. And on behalf of Senator Limon, would respectfully ask for aye vote.

Thank you. We need a motion and a second. Thank you. Secretary, please call the roll.

This is item number one, SB 354 by Senator Limon: the motion is do passed to the Committee on Privacy and Consumer Protection. [Roll Call].

That bill is out. Okay. We're going to open the roll for add ons.

[Roll Call]

Gibson, aye. Hadwick? Aye. Hadwick, no. Hairbidian?

We're adjourned.