Assembly Standing Committee on Insurance

Good morning. We are waiting for authors. We only have two presentations today, so we're waiting for Senator Padilla. And I know Senator Allen is chairing his own committee right now, but if they could find their way over here at some point, that would be great. Thank you.

Okay. I'm gonna give the authors till ten to ten. If they can't make it by then, could they please send another Senator to present their bills? Thank you.

Vice Chair... Oh, good morning. Assembly Insurance Committee is now officially gaveled down. Vice Chair, Members of the Committee, welcome to the Assembly Committee on Insurance. Today, we're gonna consider three bills. One bill is proposed consent. File item one, SB 536. Please note file item two, SB 555, and file item three, SB 795 were pulled at the request of the authors. At the appropriate time, we will establish a quorum, but we will start as a subcommittee. Now, we're just waiting for authors.

We have an author. Welcome, Senator Allen.

Thank you so much. And I'm especially impressed because I know you're chairing your own committee at the same time. So you get an A plus today, sir.

Based around

I know. I think I'm gonna see you in a few minutes over there. So go ahead and take a minute.

Collect your thoughts and whenever you're ready.

Yeah.

Well, thank you, first of all for giving me this opportunity to present SB 1301. This bill is all about reforming the process by which residential property insurers choose not to renew someone's property insurance policy, which is a non renewal. Folks here at this committee certainly know. I accept the committee's amendments. I thank the committee for its work.

So this bill is proposed to be amended as three things. It requires insurers to be more transparent on the specific reasons that a policyholder's policy is not being renewed in case of wildfire risk. The notice must include specific information on the community specific reasons, and that's a good thing for reasons I can I can get into.

Number two, it provides policyholders with the opportunity to mitigate the problems with their property identified by the insurer. If the policyholder conducts the mitigation and provides evidence and the insurer agrees that the mitigation work was done appropriately, then the policy would be renewed.

And then finally, it prohibits some unreasonable basis for a non renewal, including non renewals based solely on claims that are made below the policyholder's deductible, claims made that the insurer didn't pay for, claims that weren't covered by the policy, to name a few. We know, unfortunately, the California policyholders receive a non renewal notice from their insurers at the fourth highest rate in the nation.

By the way, it's no surprise that, the other, the three highest are all, you know, states that are facing a lot of climate related challenges risk Florida, Louisiana, North Carolina with all the hurricanes and floods and issues that they've been facing. But we're fourth in the nation with regards to non renewals. It's really becoming a major challenge for folks around the state, working people especially.

Ahead of the fires in Los Angeles, we all experienced this phenomenon, you know, particularly, you know, poignantly as the three largest companies announced their plans to dump nearly 50,000 policies. And more than a fifth of those non renewed policies, you know, took place in the areas that would soon burn. And then, of course, we've seen the insufficient coverage and it's really harmed the rebuild and the recovery of those communities.

And one of the problems we saw throughout this process with the non renewal notices that people receive are often really opaque and they they don't sufficiently specify why a policyholder is being dropped. And today, policyholders receive non renewal net letters from their property insurer containing all sorts of meaningless phrases like, oh, quote, the property doesn't meet underwriting standards.

You know, there's no documented issues, no proof, no criteria. I don't mean to say that's meaningless. I just mean that that's something that is so unactionable by a policy holder. There's nothing they can do with that to mitigate or fix their situation. It's very, very frustrating.

So they don't right now, they very rarely have the opportunity to fix the problem with their property before being dropped in order to maintain the coverage. This opaqueness makes compliance impossible for policyholders. It allows insurers to drop policies for safe homes without accountability.

And then it also in so doing, makes it harder for us to push our broader risk reduction agenda that we know is at the heart of our battle to ensure a proper solvent and successful and affordable insurance system for the state. Just give you one example.

There's a constituent of mine who lives in Rancho Palos Verdes, shared with me recently that their insurer required them to trim their trees near the roofs overhang and address apparently mold growth on the roof. Reasonable asks from a risk reduction perspective. But then despite complying with those requirements that cost thousands of dollars, by the way, and then providing proof, the insurer continue to make additional demands that they hadn't communicated before and made resolution impossible.

And ultimately, the non renewal proceeded despite the constituent's proactive actions to resolve the insurer's concerns. So this bill addresses these kinds of problems for consumers by ensuring that they receive more detailed and transparent notices.

They have an opportunity to mitigate. They're treated appropriately by prohibiting unfair basis for non renewals. It also balance the needs for insurers at the same time. Insurers only need to offer mitigation opportunity to policyholders whose homes can actually meet their underwriting guidelines. We don't wanna send people down, rabbit holes.

So if they adjust their underwriting guidelines such that they will no longer offer policies in a specific neighborhood to balance their risk exposure, if they're really displeased with the way that the community is handling its collective risk reduction, you know, the bill doesn't require them to offer policyholders a mitigation opportunity. And then but it's about transparency.

In the end of the day, the policyholder can then go to the community leadership and say, hey, we need to get together because we're getting dropped and the communities start to come together on risk reduction. Anyhow, with me to testify in support of the bill, we've got Magda Molina, whose consumer is speaking about her own experiences, and then Carmen Balber, who's, Executive Director of Consumer Watchdog.

Good morning, Chair and committee. My name is Magda Molina, and my husband and I live in Los Angeles where we own a 1924 home with two small rental units. We've owned and maintained this property for over twenty seven years, and it's a central part of our retirement. We have never filed a single insurance claim. In 2023, our insurer stopped writing landlord policies in California and dropped us.

We found a new insurer, and shortly after, they told us that we needed to address granular loss on our roof or face non renewal. Our roof is about fifteen years old, in good condition, and had never leaked. We worked through our broker, followed the insurer's instructions exactly, and spent $8,000 money we had to borrow to complete the work using, licensed contractor in full compliance with California code, which is among the strictest in the country.

Our insurer acknowledged reception of all of our documentation, but months later, we were told that it wasn't enough, and our policy would not was non renewed anyway. Only then were we told that they expected a full roof replacement, which would have cost over $30,000.

So we did everything we were told on a roof that was functioning properly, spent money we didn't have, and still lost our coverage. That kind of unpredictability is devastating not just financially, but for our sense of security as we approach retirement. That's why I'm here in support of SB 1301.

This bill would would require insurers to clearly state in writing what is needed to maintain coverage, give homeowners a real opportunity and time to comply, and prevent nonrenewals based solely on roof age if there's still useful life remaining. If those protections had been in place, we would likely still have our policy today.

I respectfully urge you to support SB 1301. Thank you so much.

Thank you, Chair and members. We wanna thank the Chair and your staff and the opposition and the senator's staff for the lengthy conversations about this bill. We are cosponsors of SB 1301 with every fire survivors network, and it grew out of the complaints both of our organizations were receiving from consumers across the state about fears of non renewal. SB 1301 will help Californians stay insured by giving families a better chance to act to prevent a non renewal.

While wildfire risk is the headline reason for non renewals, They're frequently happening because of things the Senator listed, short notice consumers receive, vague and even contradictory instructions from the insurance company, and the lack of guidance about how what the path might be to retain your coverage.

Consumers can't prevent those non renewals if they don't know the rules and if they and the insurance company and the broker are not on the same page. So SB 1301 cuts through that confusion. It would give consumers better notice, better disclosure of the reasons and evidence for a non renewal, and clear instructions if there's a fix, to help people get stay insured.

Insurance companies will still set the rules for who's eligible and disclose those rules to the Department of Insurance publicly, but those and this bill does not change that, but consumers have to know their insurance company's criteria for renewal to stay insured, and SB 1301 gives them that path where it's possible. As the Senator said, we've accepted amendments in the committee.

One of those is to significantly shorten the timelines in the bill. However, we're still talking about a 120 days notice for consumers if they're being non renewed and there's a path to fixing it, and we think that's a really important consumer protection.

So, I would just end with the fact that fire survivors and everyone across the state is really concerned about access to coverage both in the wake of the fires as they're rebuilding and also just is my home gonna be insured in next years. That's why this bill, gains 90% popularity when you pull it with the voters and why we urge your aye vote. Thank you.

Thank you. Thank you for coming up today and sharing your experience. Do we have any additional support in the room? Please come forward and state your name and affiliation.

Good morning, Chair. This is Marie Lopez with the California Nurses Association in support.

Peter Hansel here on behalf of AARP. AARP is in support.

Hi. Brooke Benetti with Kaiser Advocacy in support on behalf of the California Low Income Consumer Coalition.

Sarah Brennan with Weidemann Group and enthusiastic support on behalf of Extreme Weather Survivors, Shelltown Resilience, and San Diego flood survivors. Thank you.

My name is Darlene Green from the Altadena Town Council. I'm a fire survivor. I'm also here in support of Dino Rise Up, Pasadena Organizing for Progress, Altadena CoLab, Eden Fire Renters Coalition, and EFRU. I wanted to make a statement and say that I've gotten a chance to see firsthand how people in our community are devastated by cancellations by insurance companies. On a daily basis, we're getting letters from people and emails that are panicked because they don't know what they're gonna do.

They're gonna have to leave the homes that they've lived in for a long time because this bill is the answer to that problem. Thank you so much.

Thank you. And it's just name and affiliation, please. Thank you so much.

Madam Chair, Julian Devores on behalf of the League of California Cities in strong support.

Good morning. Chloe Shea on behalf of California Environmental Voters in strong support. Thank you.

Elaine Lee from San Diego. I support this bill along with the American Policyholder Association, Americans for Financial Reform, Consumer Attorneys of California, Consumer Federation of America, Affordable Homeownership Foundation Incorporated. Thank you.

Hello. My name is Kay Steinsappir. Thank you for having us here today. I am here representing Every Fire Survivors Network, a proud cosponsor of SB 1301 in strong support of the bill alongside various community organizations. I'm not here just for myself.

I'm here on behalf of thousands of Palisadians and California residents. That includes the Molly Stein Seapier Foundation, which is the organization that I founded and lead, Team Palisades, the Palisades Recovery Coalition, and the Pacific Palisades Community Council where I sit as a, as a member. Thank you for your time.

Hi. My name is Eliana Bernstein. I am here in support of SB 1301. I represent Courage California, Climate Hawks Vote, Center for Biological Diversity, Sunflower Alliance, three fifty Southland Legislative Alliance, and the Palisades Recovery Coalition. I work there.

I also represent the thousands of young voters who are relying on you because we wanna build a family in the Palisades, and we wanna feel good in doing so. So thank you.

Hello. Joel Laucher on behalf of United Policyholders. We strongly support this bill. Thank you.

Thank you very much. Kim Stone representing, interest and support for the Alliance of Californians for Community Empowerment and 350 South Bay of Los Angeles. Thank you.

Hi. I'm Nathan Prevost. I strongly support the bill. I also am in support for Green America, Climate Defenders, RISE economy, consumer action, and public citizen. Thank you.

I'm Barry Zetlin, a forty year resident of the Palisades, lost our home in the fire. I'm here in support of Leap of Faith, Family to Family Support, Food and Water Watch, Bay Area system change, not climate change. And I hope I will be able to afford to have insurance on our home, which is almost rebuilt. Thank you.

Good morning. Danny Kando Keiser on behalf of the California Low Income Consumer Coalition in support.

Good morning. Diego Samayoa, Policy Interim with Mesa Verde Group here on behalf of Consumer Federation of California in support.

Thank you. We're gonna take a a brief moment to establish a quorum. Secretary, please call the roll.

[quorum]

We're also gonna take up the consent calendar. Do we have a motion to thank you. Alright. Please call the roll.

This is on the consent calendar, which includes item number one, SB 536 by Senator Archuleta. The motion is do passed to the committee on appropriations.

[roll call]

Okay. Do we have any lead opposition in the room on this bill? Please come forward. You each have two minutes.

Good morning. Mark Setknan with American Property Casual Insurance Association. Before I start, I do wanna correct the perception. There seems to be a perception that insurance companies non renew policies just because insurance companies are in the business of selling policies. Non renewing policies is not good for business.

Remember, California, even with the latest rate increases, has had inadequate rates for over twenty years. We still rank 23d in the country even though the risk in California is the fourth largest. In a state where rates have to be approved, it can take years to get approved. The only option many companies have to meet their legal requirements in terms of capacity and reserves is to non renew policies. So I wanna be very clear that companies do not non renew policies because they want to.

They want to stay in California. We also need to remember the words of commissioner Lohr when he came here and spoke saying, you need to look at all of these bills in total to see what the impact is going to be on the insurance industry. Right now, we're kind of facing a kind of a thousand cuts with each of these bills, and I think we need to start looking at big picture where they all fit in.

Having said that, we've worked very well with the staff and the author's office and the sponsor, and we are neutral on the bill. We still have a couple of issues we need to deal with.

We're still trying to make sure that we protect proprietary information, but the information that consumers get is useful and not just a data dump, and that companies can still continue to participate in this market. Thank you.

Thank you, Madam Chair, members. Paul Ramey with the Personal Insurance Federation of California. This is a really big and complicated bill. We've come a very long way over the last four months of negotiation. As my colleague mentioned, there are still some significant implementation, language to sort out over the summer break.

But with the author's commitment that those concerns will continue to to be addressed, we are moving to a neutral position as we close with a big thank you to the Chair and the committee, and the author for all the hard work and progress to this point. I'm looking forward to continuing the work going forward.

Thank you. Any additional, opposition in the room? Please looking forward.

Good morning. Shari McHugh representing the Pacific Association of Domestic Insurance Companies. I would like to echo the comments of my colleagues, and we do look forward to working with the author and the staff and all of you on its a few additional tweaks to help protect the small to medium sized domestic California insurers. There aren't many of them left, and we really wanna do our best to make sure we keep our employers in California and our insurers in California.

And so we look forward to continuing to work on these bills. Thank you.

Thank you. Okay. Now I'll bring it back to the committee. Do you have any questions for Senator Allen? Thank you.

We have a second. Okay. Great. Secretary, please call the roll.

Oh, Senator, would you like to close? I'm so sorry.

Thank you. Thank you. Thank you, everybody for coming up, especially the folks that came all the way from Los Angeles. I know how you know, these are folks that lost their homes. It's their their lives are in disarray.

And to have them here and and the voices that they represent is really meaningful and powerful. And just appreciate all the hard work that's gone into to getting this built to this point. I appreciate I know this has not been easy for the opponents and you know, really appreciate you working with us and getting us to a place where we have a very meaningful bill that you're not opposed to.

And so thank you to our advocates and to the Chair and I respectfully ask an aye vote.

Thank you. And I also wanna thank the victims for coming forward, and for you for sharing your story and for everybody that came up to make sure your voices are heard. And if I know you've had such a horrific tragedy, and this you'll live with this forever. And so I really appreciate, you know, Senator Allen for bringing this bill forward and all the work that you've done on behalf of your constituents in Californians. At this time, we'll call the roll.

This is excuse me. This is item number five, SB 1301 by Senator Allen. The motion is do passed as amended to the committee on appropriations.

[Roll call]

Okay. That bill's on call. We'll leave the roll open. Thank you, Senator.

Perfect timing.

Welcome, Senator Padilla. Whenever you're ready, Sir.

Good morning.

Good morning, Madam Chair. Thanks for your indulgence. And Members, I'm pleased to present SB 876 and start by accepting the committee amendments and thanking you and your staff for your incredible work with our office and many stakeholders on this bill. As many of you know, this bill represents a broad measure that really seeks to take lessons learned from the challenges we experienced last year. More than 14 destructive fires that burned from January 7th to 31st of last year and wrought unparalleled destruction in our state.

Out of that pain and suffering thousands of people and the increasing propensity of severe wildfires, one thing's become clear, decades old insurance laws and practices that govern our claims process have not kept pace. A year later, wildfire survivors have continued to report ongoing problems with accessing their health insurance benefits with delays, denials, and miscommunication from insurance companies at the top of the list of consumers complaints filed with the department since that period of time.

SB 876 takes these lessons and experiences to reform the claims process by cutting red tape, improving payouts, and ending delays. It requires a creation of a disaster recovery plan, doubles penalties during a declared emergency for violations of insurance fair claims practices, requires insurance policies to pay restitution to policyholders, mandates offers of extended replacement costs and additional living expenses, among other provisions.

As the Chair of the Senate Insurance Committee, I'm committed, and I know you are as well, Madam Chair, to balancing the need for affordability and availability to ensure that policies keep pace with the needs of Californians while remaining accessible. This is why I've engaged a broad group of stakeholders and was sensitive to cost implications throughout the process to Californians. Along with amending the bill in the Senate, to address a number of concerns from trades, we most recently amended the bill further to address the following.

It strikes language requiring building code upgrade coverage at 20% during a state of emergency, added language to address insurer trade concerns that restitution be connected to direct financial loss, amended the 5 day time limit to provide a status report to the claimant when a new adjuster is assigned to the claim to 15 calendar days. Addresses insurer concerns that in cases where the home is not rebuilt for several years, the insurer will have no clear cut office to what building codes would apply to the claim by allowing a three year cutoff in their policy.

As a comprehensive piece of legislation, this bill fills critical gaps at the 2025 LA wildfires disaster exposed, protects homeowners at their most valuable moment, and I remain committed to addressing these gaps while protecting policy holders from increasing costs. Obviously, today, I'm joined by Josephine Figueroa with... Figueroa, excuse me, with the Department of Insurance, and Joel Laucher with United Policyholders. Sorry.

Good morning, Chair Calderon and Members of the Committee. Josephine Figueroa, Deputy Commissioner and Legislative Director for the Department of Insurance under the leadership of Insurance Commissioner Ricardo Lara. I want to thank Senator Padilla for authoring this important measure, which directly addresses the widespread under insurance, delays, and inconsistent claims handling that have harmed wildfire survivors and slowed community recovery across California.

Also, I want to thank the Chair of the committee, staff for their time and effort working with author's office, department, and all stakeholders. California is experiencing disasters of a scale and frequency we have never seen before. Wildfire seasons are longer, more destructive, and more expensive, and each year, thousands of families are forced from their homes. Too many of them have learned after losing everything that their insurance coverage is nowhere near enough to rebuild. Construction costs have surged, building codes have evolved, and the gap between policy limits and actual rebuilding costs have grown wider and more painful.

At the same time, survivors routinely face delays, inconsistent communications, and fragmented claim payments that prolong displacement and slow community recovery. Last year's fires in the Los Angeles, San Diego Counties illustrate the magnitude of the problem. 14 major fires swept through the region, with the Eaton Fire in Altadena and the Palisade Fire in Pacific Palisades causing the most severe destruction.

More than 12,000 homes were damaged or destroyed. Over a year later, many survivors are still struggling to access the benefits they pay for. Reporting delays, denials, and persistent miscommunications from insurers. These experiences make clear that our current laws, many written decades ago, are no longer adequate for the realities of today's climate driven disasters. SB 876 directly confronts these failures and is designed to break the cycle and restore confidence in the system that families depend on on their worst moments in their lives.

SB 876 does this by establishing the following. Accurate real world replacement cost estimates. Families should not discover after a total loss that they were massively underinsured. SB 876 requires insurers to provide updated estimates that reflect actual construction costs, not outdated numbers. Strong coverage option. SB 866 requires insurers to offer sufficient extended replacement costs.

It does not force anyone to buy this coverage. It simply ensures families have the option to protect themselves. Building code upgrade coverage. When building, homeowners must meet current safety codes, SB 876 strengthens coverage so families are not blindsided by out of pocket costs for mandatory upgrades. Ending adjuster roulette. SB 876 requires the state status report within 15 days of an adjuster change so survivors don't have to start over.

These reforms work together to reduce under insurers, speed up recovery, and help communities rebuild with greater stability and resilience. Californians deserve insurance coverage that functions when they need it most, not a system that leaves them under protected, delayed, and unable to return home. On behalf of Insurance Commissioner Ricardo Lara, I ask for your aye vote. With me today to help provide any technical assistance is Tony Cignarale, Deputy Commissioner for the Consumer and Services and Market Conduct Division. Thank you.

Thank you.

Thank you. My name is Joel Laucher. I'm here on behalf of United Policyholders. We'll keep it short. But, basically, we have an insurance system where often the amount of coverage on the dwelling would be inadequate to rebuild even in a single loss. When there is a catastrophic event and there is demand surge, those prices increase dramatically to build for labor, for materials. Just a lot of components of this bill help people when they need help the most in the rebuild process, the building code upgrades. And for that reason, we strongly support this bill.

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

Thank you. Kim Stone on behalf of Consumer Watchdog in support. Thank you.

Peter Hansel on behalf of AARP California. AARP supports the bill.

Madam Chair and Members. Andrew Antwih with Shaw Yoder Antwih Schmelzer and Lange here today on behalf of Los Angeles Mayor Karen Bass, on behalf of the residents of the Palisades, and all residents in the state. We'd thank the author for the bill and we support.

Chloe Hsieh with California Environmental Voters in strong support. Thank you.

Do we have any lead opposition on this bill? Please come forward.

Madam Chair. Armand Feliciano on behalf of California FAIR Plan. We wanna thank Senator Padilla and the CDI for working with us on the bill. At the moment, the FAIR Plan is reviewing the recent amendments, so they remain respectfully opposed at the moment. We'd like to continue to work with Senator Padilla and CDI on the issue. Thank you.

Thank you, Madam Chair and Members. Seren Taylor on behalf of the Personal Insurance Federation of California. And we are very appreciative of the author's amendments and the willingness to take the committee amendments, which do address several significant concerns that you just heard about.

The changes to the bill throughout this process are indicative of the hard work by all stakeholders, including the committee and the team at CDI. We appreciate everyone's time and energy in this. At this time, we think it's appropriate, the amendments are sufficient for us to remove our opposition, and we look forward to building on the early success of the sustainable insurance strategy. So thank you.

Thank you.

Good morning. Audrey Ratajczak on behalf of the California Building Industry Association. With the most recent amendments, we are now neutral as well and removed our opposition. Thank you.

Madam Chair, Members. Denni Ritter with the American Property Casualty Insurance Association. I would like to echo the comments made by my colleague. We greatly appreciate all of the work from the author, your staff, the sponsors, and the committee in addressing several of our major concerns with the piece of legislation. And so with those most recent amendments, we will be going neutral. Thank you.

Good morning. Shari McHugh representing the Pacific Association of Domestic Insurance Companies. I would like to echo the comments of my colleagues as well. Thank you to the author, committee staff, the sponsor of the bill. We are happy to go neutral today, but look forward to working on additional workability issues to help protect the small to medium sized domestics in California. Thank you.

Good morning. Jasmine Valle on behalf of Civil Justice Association of California in respectful opposition. Sorry. To the current language in print, but we appreciate the amendments and look forward to re-reviewing our position. Thank you.

Thank you. Okay. I'm gonna bring it back to the committee. Do you have any questions for Senator Padilla? Thank you. Okay. Senator, would you like to close?

As you are well aware, Madam Chair, first of all, thank you for your indulgence. And a minor apology to Mr. Cignarale today for filling note that he was here to answer tech questions. Didn't mean to be rude, but we rushed over. This has been a complex process, and the leadership from the CDI and the commissioner is very much appreciated.

Your collaboration, your amazing staff's collaboration is appreciated. I think this is, as you can see, been a hard endeavor, will continue to be. I'm very happy that we're able to present to you or committee a bill that is reaching a high degree of consensus, and I would respectfully ask for an aye vote.

Thank you. Secretary, please call the roll.

This is item number four, SB 876 by Senator Padilla. The motion is do pass as amended to the Committee on Judiciary. [Roll Call]

That bill is out, and we'll leave the roll open. Thank you, Senator.

Thank you, Madam Chair and Members.

Okay. We're gonna let members add on. Right now, secretary, please call the roll on the consent calendar.

[Roll call]

Let's call the roll on SB876.

Item number 4 SB 876. [Roll call]

Okay. Please call the roll on SB 1301.

Item number 5, SB 1301 by Senator Allen. [Roll call]

Okay. We're gonna leave the roll open for five minutes for missing committee members, then we're gonna close down. K. Secretary, please call the roll.

This is item number four, SB 876 by Senator Padilla. [Roll call] This is item number five, SB 1301 by Senator Allen. [Roll call]

Secretary, please call the roll.

On the consent calendar, Valencia, aye. That bill is out. Item number four, SB 876. Valencia? Yes.

Valencia, Aye. That bill is out. Item number five, SB 1301 by Senator Allen. Valencia? Yes. Valencia, Aye. That bill is out.

This concludes the Assembly Insurance Committee. Thank you.