Senate Standing Committee on Insurance

Welcome. Thanks for your patience. So we'll convene the Senate Committee on Insurance. There's a lack of a quorum, but with consent for the minority caucus, we'll proceed as a sub. I do see that we have an author present among us, Assemblymember Calderon, with respect to file item number two, AB 1559.

I'll note as we begin that file items one and three are for proposed consent. Assemblymember Calderon, welcome. Thanks for your patience. Please proceed when ready.

Thank you. This is, my first presentation in the Senate, this year. So I'm really glad it's in your committee, Senator. Okay. Well, thank you, mister chair.

There's no nobody else here, so I think I'm just speaking to you, in the audience right now. AB 1559 provides new consumer protections to homeowners when insurers use aerial

imaging to make decisions on homeowners when insurers use aerial imaging to make decisions about coverage. Insurers have been increasingly using images from drones, aircrafts, and satellites in lieu of in person inspections to make underwriting decisions. California homeowners have reported that they were blindsided by non renewals based on these pictures. In many cases, it turned out that these images were inaccurate or outdated.

provides new consumer protections to homeowners when insurers use aerial

AB 1559 requires insurers to provide notice before collecting aerial images of a residential insurance policyholder's home and allows policyholders to receive any aerial images taken of their home.

If an aerial image is used to non renew, cancel, or reduce coverage, AB 1559 also ensures that the image is up to date, providing the policyholder with the right to request an in person inspection to verify the accuracy of the image or to verify remediation of the issue. Here with me today to testify is Mike Peterson, senior deputy commissioner for climate and sustainability at the California Department of Insurance, and Joe Laucher, program specialist at United Policyholders.

Hi. Welcome. Could both of you state your name again for the record, please. Your time be limited to two and a half minutes. And hope the mic works.

Good afternoon. Mike Peterson, senior I serve as senior deputy for the California Department of Insurance. Thanks for having me. Good afternoon, Chair Padilla, Vice Chair Neillo, and Members of the committee. As a proud sponsor of AB 1559, insurance commissioner Ricardo Lara thanks Assemblymember Calderon and Speaker Rivas for the authoring this important measure, which would give consumers better protections when insurance companies collect or use aerial imagery.

From our oversight of the California insurance markets and review of consumer complaints received by the department, we see that insurers are increasingly using aerial imagery to inspect homes. Insurers, often through third party vendors, acquire images of properties using drones, satellites, and aircraft, and use those images to make insurance coverage decisions, including non renewals. Consumers should understand what information is being used to alter, cancel, or non renew their coverage and to access those images. AB 1559 would deliver on those protections.

The department continues to receive consumer complaints and provide support to those affected by flawed or outdated aerial images used in insurance decisions.

In some cases, insurers have relied on images that were made or that were more than eighteen months old to assess property conditions, including roof condition, and that places homeowners at risk of losing coverage based on inaccurate information. AB 1559 allows consumers to request copies of any images used to make changes to their policies. It also requires insurers to provide those images automatically when they are used in whole or in part to terminate coverage.

AB 1559 strikes a balance by continuing to allow insurers to use fast cost effective aerial imaging tools to assess risk, while ensuring consumers have access to those images and an opportunity to address any issues before their coverage is cancelled or non renewed. On behalf of insurance commissioner Ricardo Lara, I respectfully ask for your aye vote.

Thank you.

Welcome. State your name.

Thank you for having me. My name is Joel Laucher. I hear I'm here representing United Policyholders, a nonprofit that helps consumers with an array of insurance issues, including, underwriting and claims issues. And United Policyholders greatly appreciates your leadership on this issue. California homeowners are often blindsided by non renewals and cancellation notices based on aerial images.

In some cases, those images are outdated, show someone else's property, or lead to erroneous conclusions about the subject prop property. You know, there are shadows thrown. There is ice on the roof. It is someone else's roof that you're looking at. The angle is wrong because you see a tree, it looks like it's hovering over the roof line and it isn't.

So it's very important that we get this right and that we give people the time they need to take steps to correct the issue if it's realistic or protest if it doesn't apply to their property. So the requirement that aerial images used to support a decision to cancel non renew or reduce coverage be no more than a hundred and eighty days old is a critical protection. Another provision that's important is that the image be given to the policy holder.

So they can actually see what we're talking about here. And that's something, you know, that just a couple phrases do not capture, which is what the typical non renewal notice includes, just some citation of conditions with your roof or your property or a tree.

So the images themselves really give the consumer the opportunity to directly rebut the issue that caused the the adverse action. And while UP strongly supports AB 151559, We would also support a Senate floor amendment to extend this bill to apply to all insurers, not just admitted insurers. California is working hard to retain and attract admitted carriers because our DOI has full authority over their rates and claim handling.

So it would be important to make sure people are able to stay in the admitted market and not be abused through surplus lines carriers. So we would appreciate your vote in favor of this bill. Thank you.

of this bill. Thank you.

Thank you. Thank you both for your testimony. This time, I'll ask any individuals who'd like to register support for the bill to please approach the microphone. State your name and affiliation. Welcome.

Mister Chair and Members, Jolena Voorhis on behalf of the League of California Cities in support.

Nicole Wortleman on behalf of San Bernardino County in support. Caitlin Leventhal on behalf of the California State Association of Counties in support.

David Azevedo on behalf of 3,200,000 AARP members in California. We're in strong support.

Anna Buck on behalf of the California Association of Realtors in support.

Thank you. Anyone else like to register support for the bill on behalf of an organization or themselves? Seeing no one, we'll ask for any lead witnesses in opposition. Are there any lead witnesses in opposition of the bill? Please feel free to approach or individuals who'd like to represent opposition to the bill.

Seeing no one confer, we'll bring it back to the committee. Welcome, Senator Becker. I don't know if anybody has any questions or comments. Nope.

good. Alright. I would just add, thank the author. I think you've struck both an equitable and operational balance here. We are living in evolving times as we all know.

That's good. Alright. I would just add, thank the author. I think you've struck both an equitable and operational balance here. We are living in evolving times as we all know.

Appreciate your leadership on that matter. And if you'd like to make any closing comments.

Yes. Thank you, Senator. So insurers need to be able to accurately and cost effectively price their risk, But we certainly don't want the burden to fall on the homeowner. And so, we just wanna make sure that the aerial images are used in a responsible way in this process. And I respectfully ask for an Aye vote at the appropriate time.

Thank you. Thank you. For lack of a quorum, we will return to that. I see that we will hold that item. We also see we have another our other remaining presenting author with respect to file item number four, AB 2038, Assemblymember Harbibi.

Welcome. And in good company this afternoon, I see as well. Remind us all why we're here.

That's right. That's my seven year old Joshua.

Welcome, Joshua.

He likes to yell during the hearing but

It's alright. Keep it's gonna keep us all awake.

And and I wish I was like Assemblymember Calderon that had no lead opposition witnesses. I'm very very jealous. And, thank you very much for for all the work that you have done on this bill, mister chair and staff. AB 2038 is really a simple bill, and it would extend the moratorium on total losses in a disaster for homeowners on residential insurance policies and any home that is within the perimeter of a fire zone. And it would extend both up to a year.

The current, moratoriums are two years for a total loss and one year if you are within the fire perimeter. And it's the number one thing that I hear from my constituents is most, I think everyone knows I represent Altadena home, unfortunately, the Yeen Fire and, lots of conversations about how to help survivors during this critical time. And, at top of that list is extending the moratorium because folks are, reasonably, worried that they're not gonna have insurance, while they're trying to rebuild their lives.

And and just for some perspective, less than 1% of homes have been rebuilt in both the Palisades and and the Eaton Fire areas. And the surrounding areas of those fires, there's a lot of consternation.

My joint author, Assemblymember Zibur happens to represent one area, that falls into that category, and a lot of his his constituents are equally as worried. So this bill would extend SBA 24 protections, and I think it does it in a reasonable way. I think that the delays in rebuilding are real. I don't even think an extra year will be totally sufficient, but I think it'll allow the sustainable insurance plan and other reforms to take hold and hopefully stabilize the market.

It does have the support from, our insurance commissioner and a number of different groups, including, my witness in support, the California Consumer Federation.

And I'll hand it over to Mr. Harrell now for his comments.

Welcome. State's name again for the record. We'll give you five minutes.

Good afternoon, Mr, Chairman and Member. Robert Harrell, I'm the executive director of the Consumer Federation of California. We're pleased to support the bill. I'll try to be brief. The author noted the two provisions within the bill.

I think big picture, this just reflects the reality that we're living in now. I wish it wasn't the reality that we're living in now, but it is taking longer. The author of this bill and I had a conversation shortly after the fires began and we're finally put out. And and I sort of predicted sadly that people are gonna find out two things, the hard way.

One was they're significantly undershared, and that's been happening, and they're now they're battling their insurance companies to try to get paid, etcetera.

And number two is it's gonna take them much much longer, and it's gonna be much more expensive after an event of scale to rebuild. This reflects that. I happen to, in a prior part of my career, mister chairman, be at the Department of Insurance in 2018 when SB 824, authored by then Senator pre insurance commissioner Latta, was moving through the process.

And I can tell you that the proud folks at the Department of Insurance, including myself at that time, some of whom are still there, some of whom are not, worked on that bill very hard. And that was the best we could do with the what the picture looked like at that time coming out of is what you recall the twenty seventeen fires.

So here we are almost a decade later, and I think this is an absolutely appropriate, reflection of the world we're living in. And we would strongly urge an iPhone.

Thank you for your testimony. Any other individuals, on behalf of themselves or an organization who wanna register support for this bill, please approach the microphone, state your name and affiliation. Welcome.

Mister chair, remember, Jolene Voorhis again on behalf of the League of California Studies in support. Thank you.

Joel Lauter on behalf of United Policyholders supports this bill. Thank you.

Thank you. Any other individuals wanna register support for this bill? Say no one come forward, we'll invite, principal witnesses, in opposition to the bill. Please feel free to approach. Welcome.

Each of you will have two and a half minutes. State your name again for the record. Please proceed when ready.

Mark Sektnan with the American Property Casual Insurance Association in respectful opposition of AB 2038. AB 2038 further constrains an insurer's ability to rewrite, rebalance its portfolio, and align exposure with available capital and reinsurance. At a time when the homeowners market is already under sphere strain, this bill risk accelerating market pullbacks and reducing new writings in California. We believe the dynamic is already contributing to the growing reliance on the FAIR plan.

When insurers cannot actively manage exposure, particularly during periods of elevated risk, they are forced to make difficult decisions.

And a significant portion of the company'S Book is locked under moratorium, that company may be compelled to reduce exposure even in lower risk areas to remain solvent. The mandates are especially problematic because section six seventy five point one contains no explicit exception for ensure financial condition or capacity. In other words, there's no solvency safety valve. This issue was raised during the consideration of SB 824 and amendments to address that were requested, but ultimately rejected. The same underlying concern remains resolved today.

When the commissioner last rep appeared before this committee, he acknowledged that decisions you make today will have real impacts on the insurance market as insurers continue whether or not to expand the right as a California or reenter market altogether. Legislation that further restricts underwriting decisions becomes a serious deterrent. It is also important to understand the scale of these moratoriums. The moratorium triggered by wildfire does not just apply to homes that are damaged or destroyed.

It applies to entire zip codes adjacent to a fire, capturing far more homes than the total losses caused by the fire itself.

California has more than 8,000,000 homeowners policies. In 02/2024, the department reported that 1,000,000 homes were under non renewal moratorium, a very substantial number. Just this year, a moratorium was declared covering a 150,000 policies across current Santa Barbara, San Luis Obispo, and Ventura Counties following the Gifford fire even though the fire damaged five structures. Similarly, in December, another 14,800 policyholders received a one year moratorium after the pack fire, which destroyed 30 structures. These examples highlight the imbalance between actual loss and the scope of tended amended continuation.

When extended repeatedly without regard to ensure case capability, these policies undermine the stability of the market rather than protect it. For these reasons, a APCI must respectfully oppose AB 2038.

Thank you, Chair and Members. Paul Ramey with the Personal Insurance Federation of California in respectful opposition. Members, we share the author's concern about the slow pace of recovery in the aftermath of the Eden and Palisades fire. We understand the need to extend the non renewal moratoriums for policyholders that are trying to rebuild their homes and their lives. Our objections are not with this portion of the bill.

Our concern is with the other half of the bill that expands the same priority protections to homes that are near but untouched by a future declared disaster. Insurers have finite resources with which to cover their exposure. When legislation dictates that certain homes need to be locked in for multiple years, those restrictions limit insurers ability to write new policies in other parts of the state, effectively prioritizing some communities over others.

While that prioritization might be appropriate to give homeowners that are rebuilding peace of mind, we question the appropriateness of extending it to all zip codes adjacent to a declared disaster for an additional year. At a minimum, we recommend those that the additional year for homes untouched by disaster be used as a carrot or an incentive to encourage homeowners to harden their homes and mitigate against future disasters.

For these reasons, we respectfully oppose AB 2038.

Thank you for your testimony. Any individuals like to register opposition to the bill for themselves or an organization, please approach. State your name. Seeing no one come forward, we'll then bring it back to the committee members for questions or comments. Senator Jones.

Thank you, Chairman. I apologize for being a little bit late on. For the, folks in opposition, a couple of clarifying points I'd like to dig into a little bit. That last comment that you made, carrot or incentive, can you expand on that and and what you mean by that because that that's kind of confusing to me.

Sure. We've had some conversations with the author's office about tying the second year for for homes that are untouched by disaster, tying that second year of protection to a mitigation standard. So if the homeowner were to mitigate, they would get or or harden their home, They would get that second year of protection. We think that there's value in creating that incentive if there's a disaster that was recently nearby, plus there was some incentive to harden their home.

Perhaps that would create a real motivation to to Harden homes, which we know is a critical issue around the state.

We need to really, harden a lot more homes.

Okay. And then one of the other comments in opposition is, in in in areas that were that that the fire's already burned through, And keep in mind, this is, you know, an experience I've lived through twice now, 2003 and 2007 in my district. Parts, not very many anymore, but there's still even some lots that haven't been rebuilt even now, twenty years later, from those spots.

The one comment that is interesting to me is that there's there's continued risk in an area or even an adjacent area similar to the risk before the fire. Let me back up.

The houses that are left and the areas that are left in or near the fire, the risk is similar, to what the risk was before the fire. And I'm having a hard time making that connection. You know, once a fire goes through an area, it, you know, that that to me seems like a fire safe area after that, because a lot of the fuel has been removed. So can you can you speak to that argument a little bit?

Senator Jones, I think that's the difference between those homes that are located within the fire perimeter, which currently has a two year. And I as Pip said, we're willing to move that to three year. Because in those cases, you're right. The risk has been reduced.

But for those homes that may be outside the fire perimeter, remember, since some cases, these zip codes can be very large, and there may only be a small part of the zip code that was set by the fire, but the entire zip code gets the moratorium.

And there's then that zip code could have the exact same conditions that the areas that burned down had, they the firefighters were just able to stop it before it got there. So the rest may be very, very similar.

Okay. And I okay. I understand that too. And and and, you know, certainly, I'm not gonna, you know, sit up here and defend every policy that the state has put in place, you know, regarding the insurance market, you because it does need a lot of work.

And and and I okay. I understand that too. And and and, you know, certainly, I'm not gonna, you know, sit up here and defend every policy that the state has put in place, you know, regarding the insurance market, you because it does need a lot of work.

I'm not as concerned, you know, I'm not as concerned about this bill in particular as I have been other other bills, you know, that I've I've come to this committee regarding wildfire and such like that. And maybe to the author, do you wanna respond to the comment about, you know, trying to work that out?

Is that an accurate statement? Where where we at on that?

And if the Senator wouldn't mind and the author would suspend momentarily while we establish the quorum, please call the roll.

I'll give him time to think of his thoughts.

[Roll Call]

Jones?

I'm here.

Jones here. Mendeavor?

Mendeavor here. Richardson Rubio? Present. Rubio.

Here.

Thank you. We have a quorum. Appreciate that. The author is recognized.

Thank you, Mr. Chair. And thank you, Senator, for the the comments and the questions. Open door open door policy. We continue to talk about the issue. I think we're waiting on the next round of amendments.

I would just say that, generally speaking, home hardening is incredibly important. And it's incredibly important to get it right throughout the whole state. I would be hesitant to to tie any sort of short term moratorium measure to more to to home hardening regulations, standards, or anything that wasn't very clear cut set by this legislature, and certainly not standards that are set by industry that could change outside the scope of this committee or the entire body.

And, I think that those are critical issues that we we still haven't been able to nail down. But, of course, the state isn't going to survive and the market isn't going to survive unless we have robust home hardening.

I think that this bill shouldn't be conflated with that issue, but we will continue to talk about it. And they they have made some some good points that I think in their next round of amendments, I'd be interested to see if we could get closer, but, I'm open to it.

Okay. Mister Sheryl, can I now, one more so let's dig down on the hot home hardening a little bit because we've we've passed some legislation, in the recent years re requiring home hardening? The industry is, I think, done a good job of requiring the home hardening, for renewals and things like that.

So what in addition to what you guys already did when I see you guys, the industry generally, I know each company is a little bit different, but there's a general consensus on what the home hardening looks like and what home hardening has currently as has been passed through the legislature. What can can you speak to some specifics on what exactly you're looking for, related to this bill?

Alright. Sure. Thank you. There the the science on home hardening and the mitigation measures that make the biggest difference have really come a long way in the last handful of years. We have passed on those items that are top tier priorities to the author's office.

I think we'd appreciate the commitment to continue working with the author and staff on nailing those down. I think if the question is what are the mitigation measures, I'm confident we can get there on what those items are. The data is very clear.

You know, it's a class a roof. It's defensible space. It's zero to five. It's really not a mystery at this point. And so if it's a question of codifying those exact measures, I'm confident we can provide the land on those.

it's a class a roof. It's defensible space. It's zero to five. It's really not a mystery at this point. And so if it's a question of codifying those exact measures, I'm confident we can provide the land on those.

Okay.

And look, there's there's plenty of current examples. I mean, KB built an entire community in my district in a very high fire prone area. And because of the way they built these brand new homes, you know, the we had the insurance commissioner came down, did a tour, you know, we had a bunch of folks there, you know. So, obviously, it can be done.

I would really like to see this bill get to a spot where it it's solving a problem, and I think the author has is is moving in the right direction.

And I appreciate the the comments from you guys today. I'm I know it's it's carried a lot of no votes on it from Republicans up to this point in time. But I'm gonna lay off on it today and, hope that as as this con conversation continues that, we can get to a good spot on this bill.

Thank you, Senator Jones. Senator Rubio?

Yes. Thank you. Thank you. And I did have a discussion with the author, and I've already expressed my concerns, but, you know, I already just see so many bills that are coming our way.

And, you know, as I share with you, I have the fortunate or unfortunate, I guess, stands here that I get to I've known insurance so personally for the last seven years just being in the weeds of every bill and we talked about how I have concerns with expanding outside the affected zip codes.

Zip codes. And I'm sorry, I walked in a little bit when you had already introduced and and talked about. Can you just speak to that? Where are we with extending it to other zip codes that are not Yeah. Within the affected area.

But I do wanna say for the record that it's it's not about not wanting to support those zip codes. It's I do understand the unintended consequence of pushing risk and cost onto other policy holders at a time when we're trying to sustain, you know, the market. We're trying to ensure that people are not dropped in other places. We're trying to make sure that we have availability and affordability. So all that plays into my decision making these days.

And so can you share where you're at?

No. I appreciate it. Thank you, Senator. And, and have appreciated our conversations on this bill. As I explained and I'll explain to the committee, this bill merely extends the timeline within SB 824.

SB 824, which was then insurance, insurance commissioner, Laura, when he was a Senator, passed the bill, was a negotiation between the industry, the Department of Insurance. Some of the individuals here were in the midst of that. They defined a fire perimeter based on zip codes. I'm not changing that. I am leaving the bill as is.

I'm just extending the timelines. I don't know that's why that was the deal that was struck. I'm not exactly sure what the justifications were. My understanding was that was an industry and department, of insurance compromise. We can debate what would be a better, way of doing it, but I have not touched that.

I'm leaving the existing way of defining the fire perimeter as is. And I think that we could probably come up with seven different ways of of doing that, but I do think that that is what has been the law, the state of the law now for, know, nearly seven or eight years. And I appear to from my standpoint, I haven't I haven't seen any evidence otherwise, it has worked thus far.

This is a bigger fire zone than maybe fires passed, but I'm not sure exactly how an elegant solution would be crafted here today that would make it better.

Okay. Thank you. Can I just turn it over to both? So let me hear first your thoughts on on how this impacts the trickle down effect. How can it impact the availability and affordability for other consumers?

I mean, what are your thoughts on this?

State your name again.

Sure. Thank you. Paul Ramey with the Personal Insurance Federation. So insurers have a finite amount of resources to cover their exposure. And when that when those resources are tied up through legislation regulation in explicit policies, that that means those resources are not available to write in other parts of the state.

And again, we understand the public policy trade off that that might be appropriate for folks who are rebuilding their homes and lives to have that peace of mind. Understand that willing to, you know, move off of that issue.

I think where our concern lies is for and my colleague has these statistics for some of these examples where a fire can impact a couple of zip codes and even just a couple of homes, but the outcome is all of the adjacent zip codes can be hundreds of thousands, in some cases, millions of homes that were not touched by fire and were unclear what the rationale or or if it's an appropriate public policy to choose though to prioritize those communities over the rest of the state when they aren't the ones rebuilding.

The extra time isn't a matter of labor or local government permitting or what the myriad of factors that are part of the rebuild question. And so that that's I think the piece of the proposal that we are calling into question.

And I'm sorry. I walked in, and I always like to hear from both sides. And I make excuse me. I did not ask. I thought that you were the proponents of the bill.

And if you don't have the

We've gotten surrounded.

No. You they they decide

they they decide Oh, I'm sorry. There you are.

I'm like, where are the prep points? I think they're

Oh, I'm sorry. There you are.

gonna My apologies. Both sides. So

Robert Harrell, executive director of the I

don't know why I was thinking you were so I'm sorry. I meant to That's fine. Hear both sides. I wanna hear your thoughts.

Senator, good afternoon. Robert Hurrell, executive director of the Consumer Federation of California in support of the bill. And as I noted in my original testimony, was at the department when SBA 24 by then Senator Lara was drafted. It was a bill sponsored in 2018 by the Department of Insurance and the then insurance commissioner, and the team there was part of a sort of 10 bill package to deal with, as you all probably recall, the significant fires in 2017.

And as Senator Jones pointed out, there had been earlier waves of fires, And my answer to your question relates to that, which is that what we had seen at the time, if I recall, and I don't have the data in front of me, but what we had seen was, there's different ways that you can measure this.

Right? You can look at census tract, zip code, there's other measurements. But zip code was what we kinda landed on. What we had seen was that from previous fires, adjacent zip codes had been overly negatively impacted by cancellations and more likely non renewals. And so the reason to hit not just a directly impacted zip code, but to also hit adjacent zip codes was to try to buffer that in many cases.

Now, I would just note that, in some cases, there's a debate you know, you guys are dealing with smoke claims and other issues just because of fire you are living a zip code adjacent to fires that the homes that burned down, doesn't mean you might not have damage, and there's there's been some historically some issues there that continue.

So but that's the short version, Senator, as to why the notion of not just the impacted zip code directly, but also the adjacent zip codes were included in the ultimate, and the author pointed out correctly, compromise solution between the industry, the department, and then Senator Lara.

Well, to that, I would say that, you know, I was here twenty eighteen, twenty, when the fire started. And, at the time, it made sense. I remember that was the deadliest fire. It had cost the most lives at the time. So we were entering into this territory that was sort of unknown and we had so many people impacted.

So at the time, it was almost I don't wanna say isolated, but it was the beginning of what has now become a consistent pattern of fires based on climate changes, wind patterns. It's just we're not in 2018 when that was just the the one. I don't want to say one off, but it certainly was the biggest, and that's when we we lost Paradise and other, fires that came around. But since then, I mean, if you look at the number of of fires, it keeps happening.

The reason I want to say that because at the time it made sense, right, zip codes.

But you said that those are the ones that have been negatively impacted. But if you look at our FAIR plan, now it's the entire state of California that has been negatively impacted by all the collective fires. And so people are being dropped everywhere, not just one place. And I'm not saying it's good or bad. I'm just saying that now we're picking that zip code versus all these other people that would love to also get off the fair plan and get insurance.

And so I just still think that we're disadvantaging other people that are also struggling with affordability and availability. And I I just don't think picking an adjacent zip code makes sense in my head, just considering that I know people are coming to us constantly trying to find insurance and they can. Because the risk is and I'm not trying to vilify the industry or or anyone else, but the risk has become such that it's almost no one's fault. It is what it is. Right?

The climate conditions that we find ourselves in is creating this circumstance where the fires are just going to continue. So I again, I feel really strongly that we're gonna disadvantage other people that can't get off their fair plan. They're having a hard time because the risk is not concentrated in the zip codes that we're dictating versus just letting the insurers sort of assess the risk and try to ensure equitably.

But anyhow, this is, again, what I'm having to grapple with because I want it to be fair for everyone across California. But I'm sorry, I'll just I'll leave it at that.

I am having a hard time including a zip code and not just generally allowing the insurers to assess the risk and try to make sure that everyone is, you know, that has that affordability factor and availability factor. But I'll just leave it there. And I did express that to the author and I'm and I'm sorry, but if that's included, I'm just going to have to lay off. Thank you.

Thank you, Senator Rubio. Senator Richardson?

Thank you, Mr. Chairman. I'll, do my comments brief because they're actually building a lot on Senator, Rubio's comments and I have spoken to the author. I am going to vote for the bill today because I think there's a need to make sure people do have, insurance that it's affordable and accessible. However, I do believe it's very problematic, your definition of zip code areas which I shared with you.

I think one of the differences between 2018 and the Paradise Fire and now what we had in Palisades in, Altadena was that you you have to also look at proximity. So in Paradise, you know, it was a broader area of, you know, some of it was kind of rural and so on. But in Altadena, you had home after home after home, block after block after block.

And it's very common in my district, for example, that a zip code will cover more than one city, more than one community. And I think that's a little bit different than the footprint of Paradise.

So what I'm willing to do is actually support the bill today. However, if a change is not made to adjust regarding the zip code I don't believe that I'll probably support it on the floor because I do think you need to go back. Just because we did something in 2018 doesn't make it right today in 2026. We're redoing bills and amending. That's what we do all day.

So just because someone did it in 2018 I think it's very fair to say that people who can demonstrate to their insurer that they had damage in some way. I don't know if you wanna create, you know, a maybe a small buffer zone within that, you know, certainly admittedly people maybe their house didn't have smoke damage, maybe it didn't have fire, but there are other ramifications impacting, you know, their ability to have insurance.

So maybe you create a reasonable buffer zone but to say any given zip code knowing in Los Angeles that that would far exceed probably in most cases, the areas that are impacted, I think is is a leap too far. And then I also wanna say for the record that I brought to the author's attention being a person who's worked on construction, Not all insurers actually provide insurance for a vacant lot or also for a property that is vacant.

In fact, when I was looking to do that and doing improvements on homes, I could only find one insurance company in my whole area in Southern California and I think the state that actually provided that type of insurance is very unique because you don't have the protections that someone's physically gonna be present on the property.

You have people who are doing work where sparks can fly, tools can be stolen, someone can get hurt. There's any number of reasons why all insurance providers don't necessarily provide insurance for this situation. So to say you're gonna require that for three years and require it for people who may not have even been potentially impacted, I think is is a little too far of a leap.

So I hope that I'm going to support it based upon my knowledge of the author and the seriousness in which you approach your legislation that you'll seriously look at that and hopefully those that you're working with will consider that, in the legislation. Thank you.

Thank you.

Mister Senator, you respond to it now or in your close?

Up to you, Mr. Chair.

you, mister chair. It's your discretion.

It's your discretion.

I would just very quickly say I appreciate the

the

comments, pre appreciate the conversation. I think the two senators might have come in, as this conversation was going on. I'm waiting for the next round of amendments from our friends. We're very smart, very handsome, very committed to to getting this right. I will just say this.

I am not defending, as you guys know, I didn't draw up the original bill with the zip code so that it's not my definition. And I have been the first to say that if there is a better outcome or a better definition or better way of coming about it, we should do it. Still haven't seen it. And I think that one thing, to note is the reason why I haven't seen it is because the perimeters as defined have actually worked. Paradise is one example.

Santa Rosa is another example. The Santa Rosa fire was much like Altadena, was much like, the Palisades. The moratorium actually worked in that case. We saw that But for the moratorium, there would have been, a much broader insurance crisis there. And I think that is something to note.

And I've always said to anyone who's opposed to this bill, if you bring me evidence of a better solution, I'm all ears. So if before we get to the Senate floor, if we're able to advance that far, I have an amendment, based on evidence, based on all the fires that we have seen that approaches this situation in a different better way. I'm all yours. I'm not here to defend anyone's bill that I didn't craft, that I didn't vote on.

I'm just trying to help my district, future districts that go through this.

Frankly, this bill will benefit all of your districts more than mine. By the time this comes into play, many of my constituents and many of the neighboring constituents were will have already been non renewed. Let's let's be very clear. And so, this is actually a bill that pays it forward and will protect, I think, the entire state, sadly more so than the Eden and the Palisades fire victims. But I give you my commitment to continue to work on it.

The ball's literally not in my court at this point. And so, I can't wait for that ball to be back and and I'll continue to play.

Mr. Chair, how many homes were, destroyed in Santa Rosa fire?

Where's Senator McGuire when you need him?

It wasn't I can answer it. It wasn't Yeah. 16,000. So, again, I think we have to compare apples to apples. And so, when you're going to compare, for example, Paradise and Santa Rosa and again, Santa Rosa zip codes, number of, you know, homes per block and so on, I don't believe that you'll find that it's a comparative example.

So, I hope that, the industry will take you up on it. We I'm asking the industry to work to come

up on it. We I'm asking the industry to work to come

up with a better definition, to come up with a better definition, that does protect people who rightfully should but does not, you know, create something that I don't think is actually intended potentially in 2018 when we first did this. Yeah. Thank you.

Thank you.

Thank you, Senator Richardson. Senator Jones followed by Senator Rubio.

Thank you. I just wanted to clarify my concern on this, in light of the conversation is I am not as concerned about the zip code issue, if being the standard, if that's what's working now. But if you come up with a different solution, that's fine too. My concern about this is I again, and and and I'm not attacking the industry here.

But in some cases, I believe the industry has overreacted in some of these non renewals in these areas that have already burned, by non renewing people.

And it's impacting my constituents or has impacted my constituents. So, again, I'm hoping that we can get to a solution on this. I hope that the industry, can figure out a way to, and and I get all the every arguments of everything else you guys have to deal with here in California. I get that. But we're dealing with this bill today on this particular issue.

So thank you.

Thank you, Senator Jones. Senator Rubio?

Yeah. Thank you. And as you can tell, we're all very passionate about this. And and I know I think the insurance commissioner is part of the the proponents of the bill. But, and one of the the, concerns I have just in addition because I know that, you know, I think we all have the same goal.

We all want everyone to be insured and protected, but, you know, I've been part of the conversations with the insurance commissioner, and I was hoping that he would be here so we can have a discussion about it. I've been in the room where so many of the, the crafting of the new regulations have happened and implementation, timelines. And right now, I think, you know, and that's where I wanna give the insurance commissioner credit, and I've said it publicly, so I'll say it again.

I do believe he has been really strategic and very thorough in in trying to solve a really big crisis that seems to be unsolvable. And that is why in the, I think, eight years that he's been in office, he's been working on the sustainable insurance strategy.

I think to me, this is my personal opinion, that I think that's the most comprehensive approach to solving the crisis to make sure that our constituents and all of Californians have insurance that's available, that's affordable. And so I do think that we haven't quite given that strategy a chance to work. And I also said it in a different, committee hearing. See, we're tackling your bill right now, but I said it before, but that's after voting for, like, seven, eight more bills from other members. Right?

And and so attacking the insurance industry by piece by piece to me now, it requires a lot more comprehensive approach to solving it. And I thought, again, to give, the insurance commissioner credit, his sustainable insurance strategy, to me, is the most comprehensive way of solving an issue, but he's not here. Because I wanted to know where is that? Where are we? Is, you know, when are we going to see it Yeah.

Work out for people? And and so to me, it's all the pieces, small pieces that are may conflict with one another that I'm having an issue with. Because we know that it's gonna work. In my personal opinion, I know that it's comprehensive, but then we keep trying to change little pieces here and there. I'd rather see a much bigger piece so that we're not here next year with another big fire and another non renewal marathon, I would say.

But I'm really committed to to making sure that people have insurance, that it's sustainable and affordable. But I don't wanna get ahead of all the policies that we've implemented. So that's my hesitation. So I just wanna be clear. It's not your bill per se In my mind.

Because I know I'm your neighbor. You know that. Right? We're neighbors. I'm right next to where the Eaton fire occurred.

And so I wanna see relief for for those folks, but I do struggle because I've also seen in the last eight years what it's hap what happens to everyone that's not in these affected areas. The risk has to shift so other people are dropped in other areas because, you know, we cannot deny that the risk is getting bigger and bigger.

So I just wanna make sure, you know, it's not the bill per se, but I just want wish I have the insurance commissioner to explain where are we with that big comprehensive package. And I would rather go that route because we're in a crisis and we need to solve it. So I'm sorry, but Aye, you know, I don't have them to answer the question and I don't necessarily think you could answer it for me.

I want people to understand that I think we're all moving in the same direction in terms of taking care of them. It's just that we're all trying to get to it in a different way. So I'll leave it at that. Thank you.

Thank you, Senator. Any other questions or comments from the committee members? If not, Assembly Member, feel free to close.

Thank you. Mr. Chair, thank you to all the members for the robust conversation, the great questions. And and I do think to pivot off Senator Rubio's last point, I think what we need is more time. I think the sustainable insurance plan is is something that will help us and hopefully sooner rather than later. But what we have, to grapple with is it needs time to take effect.

That's what this bill does. It effectively is just asking for more time for people that, have been affected by any disaster, including wildfires. And at the right time respectfully ask for an Aye vote.

Alright. Thank you. Alright. Chair will entertain.

Thank you. Senator Richardson moves the bill. Any further discussion? Hearing none, please call the roll.

Move the bill.

Motion is due passed to the Appropriations Committee. [Roll Call]

Becker?

Aye.

Becker, Aye. Jones? Menjivar? Aye. Menjivar, Aye.

Richardson? Aye. Richardson, Aye. Rubio?

Ayes are 4, Noes are 0. That bill is out. Thank you, Assemblymember, for your patience. This time, we'll lift the call with respect to file items one and three, which compose the consent items items, excuse me, not enough caffeine. Chair will entertain.

Thank you, Senator Jones. Moves to consent items. Please call the roll.

[Roll Call]

Aye.

Becker, Aye, Jones?

Aye.

Jones, Aye. Menjivar? Aye. Mentivar, aye. Richardson?

Aye. Richardson, aye. Rubio?

Aye.

Rubio, aye.

Aye's are 6. Noes are 0. Those items are respect to file item number two AB 1559, Calderon. Thank you. Senator Menjivar moves the bill.

Please call the roll.

Motion is due passed to the privacy committee. [Roll Call]

Aye.

Becker, aye, Jones?

Jones, aye. Menjivar? Aye. Mangivar, aye. Richardson?

Aye.

Aye.

Richardson, aye. Rubio?

Rubio, aye.

Aye.

Thank you. The Ayes are 6, the Noes are 0. And that bill is out. Thanks to everyone for your patience and your work. Committee is adjourned.