Senate Standing Committee on Insurance

We will come to order, and I know we have an author, distinguished author, awaiting for us in the audience. Senator Calderon, welcome. Three file items, one, two, and three, AB 1669 1554, and 1680. Welcome and please proceed.

Good afternoon, Mister Chair and Senator. I would like to thank the Chair, his staff, and all the stakeholders for coming together, which resulted in the Opposition moving to neutral. AB 69 addresses the overarching goal of depopulating the Fair Plan through the Clearinghouse Programs while maintaining consumer choice.

This measure accomplishes the following, requires a fair plan to provide a separate and distinct notice to policy holders about their coverage options, requires a fair plan to report to the public and legislature quarterly on the clearinghouse programs, requires brokers and agents to take additional training and educate their customers on the clearinghouse programs.

And last but not least, AB 69 will allow the Fair Plan to provide relevant policyholder information to ensures it will allow them to provide an offer to a fair plan policyholder while providing the same offer to the agent or broker of record.

The bill in front of you is a product of the outcomes review hearing authorized by the speaker that focused on obstacles that hindered the success of the clearinghouse programs. AB 69 takes a simple and supported approach to address those obstacles highlighted at that hearing. With me today in support of the bill, I have Armand Feliciano from Public Policy Advocates representing the California Fair Plan. And for technical questions, I have Josine Figueroa from the Department of Insurance and Tony Signorelli.

Welcome. Please state your name again for the record. I do have four minutes.

Good afternoon. Armand Feliciano. Good Good afternoon, Mister Chair, members of the committee. Here for the fair plan, we support AB 69. It will help depopulate the fair plan, expand consumer choice, very consistent with the sustainable insurance strategy in depopulating the fair plan.

And as, Assemblymember Calderon mentioned, it will help track better data to see how the fair the the clearinghouse is working. We'd like to thank Assemblymember Calderon, her staff, and CDI for working with us, and we're your eyeball. Thank you.

Thank you for your testimony. Are there any other individuals who'd like to express support on this bill? Please step forward to the microphone, state your name and affiliation, position on the bill. So you know when we come forward, are there any prime Oh. Come on up to the mic, sir.

It's just your name and affiliation.

Hello. I'm Joel Lancer with the United Policyholders, and we support this bill. Thank you.

Chair for the end, members of the committee, Josephine Figueroa on behalf of the insurance commissioner Ricardo Lara in support of the bill.

Thank you very much. Are there any primary witnesses in opposition to this bill? Please approach.

Wherever you're comfortable. I'm fine here, Mister chairman and members. John Norwood on behalf of the Independent Insurance Agents and Brokers of California. We're not here in opposition. We want to thank the author, her staff, the Department of Insurance, your consultant, others involved that allowed us to come together and reach a compromise on this bill.

I truly believe this is a win win compromise. Consumers are going to be protected from inadequate insurance. Agents and brokers client list and work products are going to be protected from abuse I believe. The fair plan became depopulated when insurers left and people had nowhere else to go. It's going to become unpopulated as insurers come back to the state and fair plan rates get to the point where they exceed the private market.

Both of those things are starting to happen and we're very pleased to see that. So again, we appreciate the the the, the work together. Thank you very much. Thank you.

Good afternoon. Sherry McHugh representing the National Association of Insurance and Financial Advisors. Would also like to thank the author and her staff for working with us. We are very, happy to see this bill move forward today. Thank you.

Thank you. Any other individuals, organizations wanna register, support, or opposition on this bill, please come forward. Seeing none, come forward. I'll bring it back to committee of the vice Chair. Any questions or comments?

Alright. I'll offer you opportunity to close on this bill. And as you know, we'll hold it pending, a quorum.

Thank you, Mister Chair. I respectfully ask it for an aye vote at the appropriate time. Thank you. Thank you, Mr. Chair, members.

The intent of AB the intent of AB 1554 is to increase transparency. This measure makes clarifying changes by requiring the California Earthquake Authority to post the annual report on their website and also provide rel and also provide to relevant committees. AB 1554 also directs California's insurance commissioner to convene a working group by 01/01/2028 to incorporate hazard mitigation projects to its recommendation related to risk transfer market mechanisms.

This working group was established in 2018 via legislation to focus on the impacts of climate change. I respectfully request your aye vote at the appropriate time.

Thank you, Senator. Are there any individuals Or any primary witnesses in support of this measure? Any in opposition? Any individuals in support or opposition wanna register on the mic, please step forward. Seeing none, please proceed.

Mister vice Chair, do you have any questions?

Alright. Next bill. Thank you.

Thank you.

We'll hold that bill. Thank you.

Mr. Chair and Senator, AB 1680 strengthens accountability by requiring the fair plan to take corrective actions following operational violations found by the California Department of Insurance. This measure also allows the insurance commissioner to adjust policy limits to fit the needs of Californians. The California Fair Plan was established to step in when California faces a voluntary market failure. We depend on the Fair Plan to fill insurance gaps, but we also depend on the Fair Plan to be transparent, accountable, and responsive.

AB 1680 aims to improve upon all three. I have Josephine Figueroa, deputy commissioner of the California Department of Insurance, the sponsor of the bill, here today to testify and support. Recent amends take take and remove opposition from this bill.

Welcome. State your name again for the record. You have two minutes. Thank you.

Good afternoon, Chair. By the end, 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 Assemblymember Calderon for authoring this important bill, which brings long needed oversight accountability and consumer protections to the FAIR plan as this takes on a far larger role in today's wildfire driven insurance market. The FAIR plan was created as a safety net and insurer of last resort.

But in recent years, Wildfire risks, insurer withdrawals, and widespread non renewals have pushed enrollment to levels never seen before.

The FAIR plan is now functioning as a major insurer in high risk regions, yet its statutory structure still reflects a much smaller limited purpose program. That mismatch has created serious gaps in coverage, governance, and consumer protection. The department's recent report of examination the most comprehensive review of the fair plan in decades made this abundantly clear. The examination found systematic weaknesses left wildfire survivors facing delays, denials, and inconsistent claims decisions, particularly after the twenty twenty five Los Angeles wildfires, the largest urban wildfire disaster in state history.

The review assessed 32 areas of the fair plan's operations, financial conditions, and governance.

In more than half of these areas, the FAIRS plan has had has not begun to fully implement the department's recommendations. These findings show that the FAIRS plan current structure is not keeping pace with the needs of the of the Californians and the coverage that they need, and they depend on. At the same time, the FAIRS plan's exposure and policy count have grown dramatically, creating financial and operational risks that extend far beyond its original mission.

AB 1680 directly addresses these problems by requiring mandatory compliance with the department's examination findings. The department's report found that the fair plan has failed to comply with 17 critical administrative recommendation structural deficiencies that directly affect policyholders who rely on the fair plan when no other coverage is available.

Addressing increased workload and insufficient staffing. AB 1680 requires a fair plan to hire additional staff to meet its operational demands, ensuring that the fair plan has the capability and capacity to process claims, manage policies, and respond to consumers in a timely effective manner. And importantly, strengthen the clearing house program. AB 1680 requires a fair plan's responsibility to help policyholders transition back into the voluntary market when transitional insurance becomes unavailable or aim when it becomes available.

The bill requires improvements to the clearinghouse program so that the fair plan can actively identify opportunities for policyholders to return to the admitted market and facilitate those transitions effectively.

In short, AB 1680 brings the fair plan into alignment with the realities of today's insurance market and the needs of the cal Californians who rely on it. It strengthens accountability, improves consumer protections, and ensures that the fair plan can operate responsibly as the state's assure a last resort. On behalf of insurance commissioner, I ask for your aye vote. Thank you.

Thank you. The Chair has left to present a bill elsewhere and he has cast all caution to the wind and let me be in charge. Our meeting as a subcommittee seems to be dwindling but nonetheless we will press on. Are there other individuals here who wish to that's I think the only primary witness. Right?

Yes. So are there other individuals, here that wish to, express support for the bill? Come to the microphone, state your name, organization, and position.

Hello. I'm Joel Lautcher. I'm here representing United Policyholders and we are in favor of this bill. Thank you.

Thank you. Are there any other seeing no come no one come forward? Primary witnesses in opposition to the bill.

Mister Chair, Armand Luciana for the fair plan. We are now neutral with the recent amendments and we removed our opposition. Thank you, madam Chair.

Thank you. Are there other the are there others in the audience willing or that would like to express opposition to the bill? Seeing none come forward, we will bring it back to the committee. Does anybody have any questions or comments? My understanding is that the, the opposition came off because, the the fines are based upon not taking corrective action and then there's also ability to get an extended time period corrective action.

Do I understand that correctly?

I wanna defer to my witness.

Mister Chair, Tony Singarelli, deputy commissioner consumer services department of insurance. That's correct. Those two issues are the the main issues that we had the most recent discussions on and and we believe were addressed. Okay.

And I I have to suspect that part of the problem has to be that the FAIR plan is overwhelmed. Certainly, far more policy holders than they anticipated a couple of years ago probably hinders their ability to address these things. But based upon them coming off neutral now, I I gather they fully expect that they should be able to address the issues that you've brought before them. That's what I at least read between the lines. Would you have anything to add to that?

Yeah.

I I certainly think that's part of it. However, you know, from the department's point of view, we think that the fair plan, because it's growing at its rate, didn't progress and become more modern as other companies did, you know, as traditional companies did. And that that's one of the issues that we're trying to address.

Okay. Would you care to add anything to that or

I don't.

Okay. Thank you. So when we do achieve a quorum sometime before midnight, I'm sure. We will, I'm sure there'll be a motion and we'll take your bill up. You may close.

Yes. At the appropriate time, when you do the decorum, respectfully ask for an aye vote.

Thank you, Or Mister chairman.

Okay.

The file item nine, Assembly member Rodriguez is here and I presume ready. You may proceed.

Thank you, Mister Chair, for allowing me to rep to present this important legislation. Current law requires title insurers and underwritten title companies to file rate schedules with the insurance commissioner. For decades, practices have been clear. Title insurers file title rates while underwritten title companies file escrow rates. Underwritten title companies do not set title rates.

They act as agents of the insurers. Recently, confusion has arisen about whether underwritten title companies must also file title rates. This has been duplicative filing duplicative filings, delays, inconsistent practices, and operational challenges. It also creates confusion for consumers trying to understand rate information. AB 2198 codifies long standing practice and clarifies who is responsible for filing which rates.

This bill reduces duplication, improves efficiency, and provides regulatory clarity. It also modern modernizes transparency by requiring

rate schedules to be posted and readily available. Many conversations with the California Department of Insurance to understand and address their concerns, and this bill reflects our continued effort to provide clarity while maintaining transparency and consumer access to rate information. With me here to testify is Anthony Helton, executive vice president of California Land Title Association.

Thank you. Thank you, Mister Chair. Anthony Helton with CLTA. Appreciate Assemblymember Rodriguez for carrying this important bill, which would clarify existing law governing title insurance rate filings, which, as the Assemblymember said, has been in place for for a substantial amount of time.

Given the recent, sort of reinterpretation, that has been understood to mean that title companies, when filing their own rates, but also duplicatively refile other rates of their, UTCs or insurers, this bill would seek to, resolve that by clarifying, existing law more explicitly, to align with the long standing precedent, ensuring that each entity continues to file only its own rates.

Separately, the bill also requires the title companies make their rates available to consumers online and expands the commissioner's authority to review rate filings and preserves the long standing practice of allowing title advisory organizations like CLTA to file standardized policy forms on behalf of the industry. We are in ongoing discussions, as the Assembly member said, with the department, which is seeking to incorporate some revisions to the bill relating to title enforcement statutes.

Industry appreciates the department's engagement, and while we aren't more able to conclude those conversations prior to committee, we're absolutely committed to continuing the conversation and having met as recently as yesterday. Ultimately, we believe AB 2198 benefits the title industry and consumers alike via increased efficiency, oversight, and price transparency. Happy to answer any questions.

Thank you. Are there is there anyone else here that wishes to speak in favor of this bill? Seeing none come forward. Now to the opposition. Do we have a primary witness in opposition to the bill?

Are there any members of the audience who wish to speak in opposition to the bill? Seeing no one come forward for any of that. I don't have any questions and I don't see any other questions. So, you may close.

Well, thank you. At the appropriate time, I respectfully ask for an aye vote. Thank you.

Now we have, Assemblymember Gibson I think is the next step and Assemblymember Wilson is on deck unless Assembly member Mckinnor shows up.

I'm gonna try to keep the door shut.

You wanna send a a blocker out there? I might have to. It's not going to echo. Okay. You may proceed.

Thank you very much, Mister chairman and staff. Thank you very much for allowing me to present Assembly Bill 1795. I wanna thank the committee and the Chair and the committee staff. This has certainly been a long, arduous process, but I'm happy to present Assembly bill 1795 to establish a uniform statewide standard for the inspection of testing and remediation for residential property damage by smoke exposed of wildfire.

California has experienced a record breaking wildfire including devastating Eden And Palisades Fire which devastated and destroyed thousands of homes and left many contaminated by smoke and other hazardous substance.

Smoke damage is a is a crisis for thousands of wildfire survivors who are afraid to go home because of toxic contaminations. Right now, there are no consistent or enforceable standards, for how, smoke damage should be tested or cleared. As a result, many survivors, seen their insurance claims delayed, reduced, or denied altogether. After wildfires, recoveries should not depend on homeowners' ability to navigate complex insurance disputes while their lives are already turned upside down.

Insurance companies are required to restore homes to their pre loss conditions, but without clear rules, their process is inconsistent and often unfair.

Today, there are no minimum requirements for how homes are to be inspected, how smoke contaminations are tested, when a home is considered safe, or how or how or how or who are qualified, to work in those homes. With absence of these standards and inconsistent insurance practices, homeowners and tenants face uncertainties about whether they these homes are safe to reenter.

This bill would create a comprehensive statewide framework to ensure consistency, science based handling of smoke damage claims by one, establishing a science based health driven standards for inspection, testing, and restorations of smoke damage homes. Two, creating a uniform insurance claim handling practices and require restoration protocols. Developing a health based guidelines to determine when a home is safe for families to return back home.

Designating an appropriate state and local agency to implement and enforce these standards. Provide immediate relief by allowing survivors to rely on local health health public health standards for smoke testing and restorations while statewide standards are being finalized. California would be the first state to create standards base for public and science, science serving as a nation's model if this bill was to pass.

Assembly bill 1795 established a clear standards and rules so homeowners and are protected and survivors can safely move back into their homes and restore homes and restore homes knowing that they can feel safe and not put their put their homes or lives at risk. With me to provide supporting testimonies on this measure is deputy commissioner of consumer services with the Department of Insurance, both will self introduce, and, deputy commissioner with the Department of Insurance as well.

Both will self introduce. Thank you.

Good afternoon, Chair 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. Commissioner Lara is a proud sponsor of AB 1795, a bill that finally brings statewide clarity and consistency and accountability to the way smoke claim damages are inspected, tested, and remediated after a wildfire.

I want to thank Assemblymember Gibson on behalf of insurance commissioner for authoring this important bill, which finally establishes enforceable standards to smoke damage claims, protecting families who have been left navigating inconsistent and often inadequate insurance policies. California's wildfire reality is now year round.

Fires are larger, faster, and more destructive than ever. The Eaton Fire in Altadena and the Palisade Fire in Pacific Palisades alone destroyed or damaged more than 16,000 homes. These two fires were fundamentally different for what from what California has historically experienced. They were not remote wire forest fires. They were two of the largest, most destructive urban interface fires in our state's history.

The scale and proximities of these fires created indoor contamination that survivors, insurers, and even environmental health experts have struggled to assess, because no statewide standard exists. Today, California has no enforceable statewide standards for testing or remediation smoke damage. As a result, survivors face inconsistent claims handling denials and disputes over what must be tested, what levers are safe, and when a home is habitable.

To address this, Commissioner Lada convened a smoke claims and remediation task force last summer, bringing together consumer advocates, industrial hygienists, restoration expert, public health experts, and insurers. The task force identified significant gaps in science, testing protocols, and claims practices.

AB 1795 directly addresses these gaps by placing responsibility with the appropriate expert agencies. It creates the first statewide science based sampling and testing standards for smoke damage homes nationwide by requiring the Cal EPA, in coordination with others' agency, to issue guidance. AB 1795 empowers environmental agencies to use their expertise to establish enforceable protections by developing a comprehensive statewide approach. This ensures that survivors have real science based standards governing their claims.

The bill also ensures that wildfire specific public health or environmental guidance applies to all claims from that event within the design designated impact zone, ending ensure by ensure decision and discretion.

It also protects families from being forced back into unsaves home by prohibiting insurers from terminating consumers additional living expenses until until a home is declared habitable. Finally, AB 91795 requires appropriate agencies to develop training and certification programs for adjusters, public adjuster, industrial hygienists, restoration contractors, and lab and laboratories, ensuring qualified professionals are making the decisions about the safety of California's homes.

In closing, AB 1795 is about restoring certainty and safety for families who have already endured the trauma of wildfire. When thousands of Californians are still displaced by smoke contaminated homes, they should not be left navigating inconsistent insurer practices or paying out of pocket just to prove their homes are unsafe. This bill replaces confusion with enforceable standards, replaces delay with clear timelines, and replaces inconsistent claims handling with science based requirements that every insurer must follow.

AB 1795 ensures that when disaster strike, Californians carry on a fair process and a safe path home. On behalf of insurance commissioner Ricardo Lara, I ask for your eye vote. With me today also is Tony Signorelli, deputy commissioner for the consumer service in Mark and Carter to answer any technical questions you may have.

Thank you. Are there others who wish to speak in favor of this bill? If so, approach the mic. Seeing no one come forward. Now move to the opposition.

Principal witnesses opposed to the measure. You may proceed.

Thank you, Mister Chair, member of the committee. Allison Ady on the Actually, by the power that is invested in me, I appoint Senator Menjivar to be temporary vice Chair as long as I'm Chair.

I like this.

And all the rights and privileges that accompany it are yours, which by the way is not much. It's the wild west today.

Back to the meeting. You may proceed.

Allison Eady on behalf of the Personal Insurance Federation of California. AB 1795 is an enormous bill, one that tackles a very challenging and complex topic. We're currently in a post unless amended position while we continue to iron out operational issues with the bill, particularly around the potential cost and clarifying some legal standard issues. The industry agrees that greater clarity around remediation standards and expectations are needed in the smoke claims realm. It's an area that has ballooned in numerosity and severity in recent years.

That's why both PIF and APCIA participated in CDI smoke claims task force last year, understanding the importance of a thorough investigation for all aspects of this emerging problem. Based on those prior discussions and the continued collaboration around this bill, we believe there are real and achievable solutions to our continued concerns. We have not yet reached concrete solutions, but are hopeful that in the near future we will.

Should these not be resolved, however, it is essential to know that this bill has the potential to drastically increase the cost of insurance across the state for all policyholders. It is for that reason that we're grateful to the author and to CDI for their continued commitment to addressing this problem.

As I said, smoke is a complicated and technical issue, one that's inherently emotionally charged given the cat catastrophic events of last year's LA wildfires. However, solutions based in emotion do not result in thoughtful long term solutions. It's essential that the solution to this problem is not a response only to one unique situation of one fire, but consider the statewide impact and application in the future. The author has pulled together various stakeholders to engage a comprehensive conversation.

This is the only way we'll reach a meaningful and lasting solution.

Again, we appreciate the ongoing conversations with the author and the department and are hopeful that we can reach a resolution soon.

Thank you. Next.

Chair, vice Chair, and members of the committee, thank you. My name is Jane Lawton Potel with Eaton Fire Residents United representing more than 4,000 residents whose homes survived the Eaton and Palisades fires but were and continue to be contaminated by toxic debris. We all agree on what this bill should do, set science based, health based standards for when a home is safe to reoccupy after a wildland urban interface fire. Unfortunately, AB 1795 does not deliver on that promise.

Three weeks ago, on the Assembly floor, the author agreed to take amendments to address three issues, but we've seen no progress.

Outside of these three commitments, three other crucial issues continue to rely on specious and undeveloped trade and industry standards that are wholly insufficient. The bill still references industry standards for determining when a home is safe to inhabit. Standards the industry itself has told the legislature in a letter to Assembly on March 7 that they are still working on developing standards for WUI disasters. Second, this bill only protects survivors whose policies were issued, amended, or renewed on or after the bill's effective date.

Two neighbors with the identical coverage from the same fire could end up with two different protections based solely on paperwork timing and nothing to do with the fire or policy itself.

Third, training and certification requirements for adjusters and restoration professionals don't take effect until 2028, leaving years where insurers can send their own preferred contracted vendors with no disclosure requirement. Survivors have no way to know that the person cleaning their home for reentry may have a financial stake in that outcome. We've engaged at every stage of this bill in good faith. We are asking for the committee to hold AB 1795 until all amendments are reflected in the bill.

And we have recently learned that the uncompensated losses.

This is a direct violation of existing California law, which requires insurers to restore homes to pre loss condition and provide coverage for all loss by fire. Fire survivors deeply urge you to reject any such amendment offered at any time. Thank you.

Thank you. Are there others, who wish to testify in opposition, coming to the microphone, state your name, organization, and position?

Mark Segment, American Property Casual Insurance Association. I'd like to associate myself and my colleague from the insurance industry. We we need a comprehensive approach, and this bill is a step forward. Thank you.

Good afternoon. Sharon McHugh representing the Pacific Association of Domestic Insurance Companies. In respectful opposition to the bill, I look forward to continuing to work with the author and the sponsor of the bill. Thank you.

Kim Stone. I have a long list of opposition. I'm gonna go really quick.

301 Organics, 350 Conejo, 350 South Bay LA, 350 South Bay Southland Legislative Alliance, After the Fire, Altadena Arts, Altadena Collab, Alta Together, BANSUP, Biomax Environmental, California Community Foundation, Civic Sundays, Clergy Community Coalition, Consumer Attorneys of California, Consumer Watchdog, Dina Rise Up, Eaton Fire Collaborative, Eaton Fire Renters Coalition, Eaton Fire Residents United, End Child Poverty California, Glendale Environmental Coalition, Indivisible, ALSA Pasadena, Joan Collaborative, LA Voice, LA Standing Homes, Leap of Faith Family to Family Support, Long Beach Alliance for Clean Energy, Pacific Film Foundation, Pasadena's Organizing for Progress, Resilient Palisades, San Diego three fifty, and Sonoma County Climate Activist Network.

Thank you.

You were certainly correct at the beginning when you said you had a long list.

A short list is, Joel Lauter again for United Policyholders. We are also worried about future sub limits and agree with the, residents that smoke damage is fire damage and thus is subject to the full limits of fire coverage in the policy.

Thank you. Thank you. Any others in opposition? Seeing none come forward, we'll bring it back to the committee. Questions, comments?

Madam vice Chair. Thank you, Mister Chair.

We've run a good show here. I'll start with the sponsors as a member or I'll start with you as a member actually. I apologize, the author. Can you respond because I had a question on the lady, the second opposition spoke around potentially creating a difference of neighbors who have the same policy, but because one renewed after the operative date, they would have additional coverage because one has not reached their renewal date. It creates some discrepancies, if you could speak to that.

Yeah. I I won't I won't that doesn't speak to my bill, so I'll refer to the insurance commissioner or the It's not part of your bill?

Yeah. The I'll also have the other witness to it.

Yeah. Tony Signorelli, Department of Insurance. There's nothing in that bill that does that. But by the effect of most laws and including this law, it's not a retroactive bill. And therefore, it would only go into effect for claims that occur after the effective date of the bill.

Can we clarify? Because tell me if this is wrong from the bill language in the section twenty sixty point two j. It limits the bill to policies issued, amended, or renewed on or after the operative date. So if a policy is not renewed after a set date of this bill goes into effect and a fire happens at that moment, if I'm reading this correctly, they won't have the added protection that this bill has.

No. Okay.

That's not correct. I mean, that's standard language that's been in the that provision in the insurance code. Okay. And it just gets updated when new laws come into effect. But the the operative issue is any claims that occur after the effective date would apply to the Regardless if they renew their policy or

not. Okay.

Thank you. If we need to clarify that, we're happy to clarify that.

Clarification. I'd like to know from the trades what's what's left to land. And then on the second follow-up to that, can this bill potentially help with false claims if there's a certain threshold that now has to be met to be able to file claims for smoke damage.

So to the first question, there's still some ambiguity around the legal standard. So it talks about returning a home to its pre loss condition. An insurance contract has two components. There's the policyholder's obligation and there's the insurer's obligation. Returning it to the pre loss condition only speaks to the insurance side.

It doesn't include language about a compensable claim and making sure that it's something that's actually covered under the contract. So we've asked that that be included in the language so that it's clear that this isn't opening up new obligations that were not originally covered by the contract. The other pieces around cost and that is an ongoing more collaborative conversation. We haven't figured out the right way to address that. Testing for smoke and the various contaminants with it is incredibly expensive.

We have seen costs go up by 200% by some companies, 400 from other companies between 2018 to now in terms of the costs for smoke remediation. We have seen total losses based only on smoke multiple times over. So this is something that if it is not addressed and contained is going to mean that every policy holder statewide winds up paying more for insurance because we have to assume that a home could be a total loss without a single ember touching the house.

It undoes any benefit of wildfire mitigation. It makes companies reassess how they reenter the market and where they reenter the market.

The author and the department have been sensitive to those concerns, so we are talking about that and the right way to address it, but it is a very real concern. Okay.

Yeah. And I just make sure I understood it sounded like conversation is still happening And we're hopeful it's gonna land before the Senate floor. Yes, ma'am. Okay. And then, Assemblymember, can you address some of the other oppositions on three commitments that were given on the Assembly floor?

Clarify that for us, please.

Sure. So I was gonna make mention of that in my close, but I'll talk about it now. So we on the Assembly floor, I made a commitment to working with Assembly member Harabedian, and we're still working with and working through those commitments about lead and about asbestos. We also will talk about that in my close, which I'm as I'm doing it right now. And that is we have a coalition that the that the insurance commissioner had put together, and so we're working through that coalition.

We're working with the leadership in our house as well, putting that coalition together. And that coalition is is broad. Working with and adding and looking through with EPA, and I think miss Figueroa talked about that in her opening statements. And we're working through all those coalitions to put and insert all of that information that Mister Obedian talked about that he would like to see in the bill. So we're still on it's ongoing conversations.

So it sounds like you won't have a break during summer recess.

We will not have a break because this this bill is important that we get it right. Understand, this is not just for California, but this is for the entire country, and we wanna get it right. And I've said that time and time again. This is not something that's from the time that we presented this bill on the Assembly floor, it only been three weeks.

And for anyone to think that we can negotiate, three points in three weeks and it will be amended in three weeks, sadly mistaken.

Now I understand it is not lost on me that we can negotiate with insurancecom with the insurance industry as well as residents and put this and present those amendments and think that it's done, sadly mistaken. Because when we do this, we're setting standards not only for California but the rest of the country because there is no standards. And we wanna make sure that we move this forward and we do it right and methodically.

And so even through the summer, we're gonna be working on this through this entire summer because not only Eaton and Palisades, families and survivors' lives turned upside down, but other families in the future will be turned upside down, even though the structures may have not been damaged by fire. But I visited people's homes who structures are still intact, but they can no longer live in those homes because their homes have been damaged by smoke.

And to visit people's homes who can no longer go into those homes, who are living somewhere else, and they wish to go back to their homes, we wanna make sure that no one else have to go through what these individuals have gone through.

Okay. Thank you, Samara. Nothing further.

The good Senator asked questions that I was gonna ask so

you may close. That was my close. I respectfully ask but I vote.

When we reach a quorum, I'm sure there'll be a motion. We'll take a vote then. We now have more authors in the room than we have committee members.

Thank you.

And Assembly member Wilson, your lieutenant didn't do a very good job of blocking Assembly member Mckinner from getting in here. So next up is Assemblymember McKinner and Wilson on deck. And unless somebody else arrives then Bauer Kehan.

Mister Chair and missus vice Chair. I heard the news of your promotion. Mister Chair and miss vice Chair.

Excuse me. I was just getting some aside information from my consultant here. You may proceed.

Thank you. I would like to begin by giving my full commitment to work with the Department of Insurance on their proposed amendments that have been shared with me and this committee. I believe we are over 80% there on the amendments proposed by the department and will be working closely with this committee and the Senate Privacy, Digital Technology and Consumer Protection Committee to further the intent of prop 103, improve road safety and protect the privacy of California drivers.

Senators, AB 311 puts vehicle users in the driver's seat to improve safety on our roads and highways to create an optional and more accurate way to determining vehicle insurance rates through the use of telematics technology. This bill also contains nation leading driver data productions, prohibits, protections, prohibits driver data from being used for any other purpose other than for automobile insurance.

Telematics technology is not new. It is currently being used in 49 other states across the nation and in nations around the world. Telematics uses, use in private passenger vehicles is the integrated use of informatics and telecommunication technology to monitor, record, and transmit real time data on driving behavior and v hea vehicle health. Members, California's nearly 40 year old prop 103 has not reduced vehicle accidents and has not prevented unintended injuries or death on California roadways.

And I have some data to share with the committee.

According to the SAFE Transportation Research and Education Center at the University of California, Berkeley, there were 1303 people killed in speeding related traffic crashes in 2023. Including 299 traffic related fatalities and 1124 traffic related serious injuries in LA County alone. And a reported total amount of 315,000 police stops as of 12/31/2025 by the Los Angeles Police Department. I also reached out to the Los Angeles to be Police Department for some local, data.

In 2025 alone, the LAPD issued 22,531 speeding tickets in the city.

With 26 motorists ticketed, the drivers in excess of over a 100 miles per hour. So they're really driving fast in LA. And 86 tickets issued, for speeding on bridges or tunnels. Furthermore, the California Highway Patrol reported that from the years 2021 through 2025, there were 3,240,000 speeding citations issued in the state. California drivers may not change their, dangerous driving patterns on their own.

So AB 311 incentivize safer, good driving behavior through the use of telematics technology. People people often tell friends and loved ones to be safe on the road, given the many hazards and challenges of traveling, in an automobile. And I am I am so proud that I'm authoring AB 311 today because three close personal friends of mine died in vehicle accidents, just in the short short several years ago. John Vigna, and some of you guys may know these people.

John Vigna, Peggy Moore, and Hope Wood were killed.

All three killed by speeding wrong way drivers just a few years ago. And that's why I'm I'm I'm carrying this bill. People ask me, why are you carrying a bill like this well? My good friends, they died in car accidents, so they were very young. They were so vibrant in their thirties, starting their careers out.

Maybe John might have been in his forties. Peggy and her wife was in their thirties, in their forties. And, you know, they they were cut off. They're they're gone. And I'm in LA and they're they're driving really, really fast.

And this is a way that I really, really, really thought we can, slow traffic down. Their deaths are devastating and I committed then to work with other families who have lost loved ones in vehicle accidents to make our streets and roadways safer. Telematics is a tool to do just that. It is time for California to join 49 other states and give drivers the option.

So this is an this is an option, an option to use modern available technology to improve safety on the roadways and to save money on their vehicle insurance.

I respectfully ask for your aye vote. My witnesses today are Damian Kevitt, executive director of Streets, Streets Are For Everyone, and Kellie Montalvo, SAFE Inland Empire SoCal chapter. Thank you.

Chair Niello, congratulations, vice Chair. Congratulations on your promotion. My name is Damian Kevitt. I'm the executive director of Streets Are For Everyone. We are a nonprofit based in Southern California working on road safety issues across all of California.

We are one of the bill's two sponsors, the other being Streets for All, another road safety advocacy organization. I wanna make it clear. While we are here, appropriately so, as part of the Senate Insurance Committee, this is a bill about public safety, a bill that will save lives on California roads. You've heard a number of stats. I'm gonna quote another one.

40,000 people have died in California in the last decade due to traffic violence. Over two million seriously injured. Per the CDC, the most likely to die due to traffic collisions are youth and young adults ages 14 through 29. You're gonna get to hear today from some of the families from Kelly who have been impacted so deeply by traffic violence.

I was also impacted, was hit and underneath a car dragged nearly a quarter of a mile from the streets of Griffith Park onto and down the five freeway freeway speeds where I lost my leg.

This is personal. While we know that speeding is a single largest factor per report from CMT, 34% of all drivers were distracted in the minute before getting into a crash. Every year, California legislators propose new bills to increase penalties, enhance enforcement, automated enforcements. Sometimes these laws make a big difference. Sometimes they make little to no difference.

All of these penalties enforcement. But what about incentivizing people to simply drive safer? Essentially, paying them to be good drivers. That's telematics. That's AB 311.

Multiple studies have been released about the effectiveness of telematics programs across The US. Journal of American Medical Association found that telematics programs reduced handheld phone usage by 14 to 21%. A triple a foundation study found that the use of telematics reduced speeding 11 to 13 in 11 to 13% of drivers reduced hard braking and rapid acceleration by 16 to 25%. Look, I want to be honest. I am not a technical expert on insurance, Prop 103.

Ugh. I don't I don't know that stuff. I do know this. I am an expert on strategies and policies to help save lives on our roads. It is the reason why Streets are for Everyone and other advocates across the state have been working with Assemblymember McKinnor, privacy rights groups, the insurance industry, and CDI for the past several years to get to this point.

It's that important, and it's the reason why I'm asking for your aye vote today. Thank you.

Thank you. And next.

I'll make sure I turn that on. All those people might want to see that beautiful guy too so we'll just flash it around. Good afternoon, Chair and members of the committee. My name is Kellie Montalvo, and I am representing my son Benjamin Montalvo, as well as Streets Are For Everyone, Inland Empire, and other victims that are in this room today. I am speaking in support of AB 311.

On 06/12/2020, my just turned 21 year old son Benjamin was riding his bike with friends to go meet his brother for dinner. He was struck and killed in the city of Corona by a distracted driver named Naomi Velado, who left him to die in the street. Velado had exchanged 24 texts with her boyfriend in the six minutes surrounding the crash.

I have learned that according to NHTSA, texting and driving at a speed of 45 miles per hour, the speed that Velado was doing at the time of the crash, a car covers the length of a football field in just five seconds. This means that Velado drove completely blind for nearly the entire field of play.

This visual is especially disturbing to our family, as she killed Benjamin almost directly in front of his high school football field, where he and his brothers had spent many hours of practice and play. To think that he died in a place that he so loved, and spent so much time is devastating. This statistic is for just five seconds of distracted driving. Velado exchanged 24 texts within the six minutes around the crash. That is a lot of football fields. She chose to drive through the city virtually blind and with no regard for anyone on the road.

Benjamin's killer was young. She was just 27 years old. And yet, she already had a record of speeding tickets, prior crashes, and this was her fourth hit and run. She was in traffic school when she killed Benjamin. I spend many sleepless nights wondering if she had been stopped at any point prior to that horrific night with my beautiful son be here today.

AB 311 will improve road safety by reducing poor driving. My son's killer could have been and should have been a safer driver. It may be too late for Benjamin, but it is not too late for the next victim. Please advance this bill. We all deserve to be safe on our streets, and AB 311 will save lives.

Thank you for your time and attention today.

Thank you. Very sorry for your loss. Frankly, both of you. Unfortunate, horrible experience. I can't imagine that.

Others in support of the bill?

Good afternoon. Allison Adey here on behalf of the Personal Insurance Federation of California. We've been providing technical assistance, and I'm available for operational questions.

Thank you. And, state your name, organization, and position on the bill.

Good afternoon, Mister chairman and madam vice Chair. P. Anthony Thomas of The Thomas Advocacy Group on behalf of the Environmental Justice Coalition, African American Coalition, throughout the state of California. I'm sorry for your loss, ma'am, in support of the bill.

Danny Ritter with the American Property Casualty Insurance Association. Thank you all. We're here in support of the bill.

Mark Williams from Oakland, California. I'm sorry for your loss ma'am. Also, I was a friend to Peggy, so I appreciate you supporting this bill. I'm also in support of the bill, and, I'm in support with my good friend, P. Anthony Thomas. Thank you.

My name is Magali Velasco. I'm here with Streets Are For Everyone, and I am in support of AB 311.

This is Eva Leon, mother of Michael Leon, and she is in support of AB 311.

Good afternoon. My name is Tanya Leon, and I support AB 311.

Good afternoon, everybody. My name is Eddie Montalvo, and on behalf of my son, Benjamin Montalvo, I'm here to support AB 311. Thank you.

Hello. I'm Christian Antonio Nunez from Modesto, and I support AB three eleven.

Good afternoon. I'm Karl. I'm board member of Bike Long Beach, and I support 311 as one tool to reduce traffic violence.

My name is Jonathan Matz from SafeHouse Partnership supporting AB 311 as we've seen data like this, help target roadway safety improvements all across the country.

Hello, Chair, vice Chair. My name is Rodney Buckley. I'm from Sacramento, and I too support AB 311. And thank you, for putting this bill up. Rodney, thank you. I'm sorry for your loss.

Good afternoon. My name is Jordan Armstrong, and I am from Los Angeles, and I'm here to support AB 311.

Good afternoon, director and members. My name is Yvonne Ishman. I'm from Richmond, California, and I support the bill.

Hi. I'm Yesenia Cuarenta from Paramount Unified School District and the Happy and Healthy City Coalition in the City Of Paramount, and we support AB 311.

Good afternoon, Chair and other members of the committee. My name is Doug Blackshear, Oakland, Black Business Roundtable, U s black u s a.news. I am definitely in support of this bill. Thank you for bringing it up, and I apologize for your loss.

Good afternoon. Sherry McHugh representing the Pacific Association of Domestic Insurance Companies in support of the bill. Thank you.

Hi. Hello. This is Zachary. My name is Grandma Beverly, and I'm the cofounder of SoCal Families for Safe Streets. I'm in complete support of this bill. Every little bit helps.

Now to the opposition. Do we have primary witnesses, who are opposed to the bill?

Thank you, Chair and members, and thank you for sharing your story. I feel it myself because I was also hit and pinned by a car. Lucky to have my life. Unfortunately, dangerous drivers are not the drivers who are signing up to be tracked by this kind of technology. And the technology, has not been proven to accurately reflect risk.

In fact, no insurance company has done that with telematics in California or across the country, open their books. In fact, consumer reports found that insurance companies programs in other states were counting, for example, breaking speeds as dangerous when in fact consumer report test reports testing found that the same break breaking rates were safe and assign them an alert driver.

This bill remains hostile to and undermines Prop 103's core principles that auto insurance be based on a driver's actual driving history, not the unverified predictions, of AI about future driving. Insurance companies in California currently disclose specifically how driving safety record affects price, and that is impossible if a black box algorithm is setting prices.

The secrecy of AI also makes the most important element of a rate, your driving safety record, which we agree is critical, inaccessible to the commissioner and the public, and that violates Prop one zero three's mandate that all factors impacting a rate be subject to public scrutiny.

Another central protection of prop one zero three is the requirement that all good drivers be given the company's lowest rate and a 20% discount. That works because good driver is defined the same way across companies. AB 311 would allow each insurance company to create their own definition of good driver, authorizing dozens of different metrics across companies and multiple metrics at the same company. That means the discount and the mandate that good drivers get the lowest rate is, meaningless.

Prop one zero three requires that auto rating factors be publicly proven, as I said, and telematics has not been done either in other states and definitely not here.

The bill also explicitly authorizes the use of telematics in underwriting and claims handling and expansion from the prior version of this bill. And I wanna note that telematics is now voluntary because drivers are choosing privacy or the telematics discount. And for those drivers who choose the telematics discount, everyone else will be paying for that because insurance is in a zero sum equation. If one group gets a discount purely for signing up, everyone else pays for that.

If you could move to a conclusion.

Absolutely. Thank you, vice Chair. Finally, I would just say that Californians are currently protected from credit score impacting car insurance rates, but the loopholes in this bill's definitions will allow credit score to be incorporated into a telematics driving store as well. And for these reasons, I urge your no vote.

Thank you. Next witness.

Becca Kramer, as someone who was hit by a vehicle actually while walking home from this building previously with a distracted driver. Also on behalf of privacy rights clearing house in respectful but strong opposition. AB 311 would authorize an opaque surveillance pricing infrastructure for a product that Californians are legally required to purchase. Californians have a constitutional right to privacy and should not have to choose between exercising that right and affording a mandatory product.

Similar to other constitutional rights, such as the right to vote, our right to privacy is not a commodity that can be bought and sold.

Putting a price tag on privacy gives light to the idea that it is a right and preys on individuals at the economic margins. Telematics programs get marketed as voluntary discounts, but we do know that they systematically penalize lower income communities, communities of color, and immigrant communities. A consumer reports investigation found that telematics companies often score drivers on factors that correlate strongly with race and income.

Additionally, the sensitive data that AB 311 authorizes collecting will flow to data brokers, law enforcement, and other jurisdictions through channels that the bill cannot close. The bill's privacy protections are built on undefined terms and standards unlikely to be enforced, and the proprietary algorithmic systems that will score California drivers will operate without meaningful public oversight.

Additionally, the savings that AB 311 promises to California consumers have not materialized for consumers in other states, but complaints about the program have, such as consumer complaints about telematics related premium increases, making up 12.4% of consumer complaints to the Maryland Insurance Agency over an 18 period.

And while we appreciate the author's attempt to improve upon her previously introduced AB 1833, Most of the problems with telematics remain unaddressed, and three of the differences between this bill and the previous iteration actually make the bill significantly worse. For these reasons, we respectfully urge the committee to vote no.

Thank you. Are there others here who wish to speak, in opposition to the bill? Approach the microphone. State your name, organization, and position.

Good afternoon. Samantha Gordon with Tech Equity Action in opposition along with Privacy Defense Alliance. Thank you.

Good afternoon, Mister Chair, vice Chair, and members. Robert Hurel, executive director of the Consumer Federation of California, respectful opposition. Thank you.

Good afternoon, Chair members.

My name is Symphony Barbie on behalf of the ACLU Cal Action in respectful opposition.

Oh. Mister Shinkfigura, deputy commissioner, legislative director for the Department of Assurance. We haven't opposed a less amended position. Thank you. Thank you.

We will bring it back to the committee and I will at this point hand the gavel back over to the Chair. And unfortunately our temporary vice Chair. I become vice Chair now.

We'll do the motion. Sorry.

Alright. We'll bring it back to the committee then for comments or questions.

Yes. Vice

Chair Nelow followed by Senator Menjivar. Thank you.

The driving habits that I've observed on our roads, particularly since the pandemic, I have a theory that there are people who got used to driving on the roads with nobody there and they're still driving that way. And I have been appalled by the things that I've seen. And I've spoken to it many times and I've had bills trying to address this same thing. So I am deeply troubled by all of the things that the proponents have been talking about.

My concern about that unsafe those people driving a 100 miles an hour, they're not gonna choose to do this.

At least, it seems to me, I think they know what they're doing. Now maybe there are some because they figure they can get insurance and I think that's what you're probably what you're thinking is they may get a discount on their insurance. So that would motivate them to opt in for this. But I'm a little skeptical about that. So could you address that point?

So I'll just give an example. I have some relatives in Texas and Houston that have telemedics. And my my cousins, they talked about it, you know, because I asked around, like, is in other states, do you guys use telemedics? And they it one of them have a little bit of a heavy foot and but now she's struggling with economics, you know, with with with the recession and with her with money. And so she wants to save some money.

So what does she do? She pulls back and she drives better. And she got a discount on her insurance. So people actually do get a discount on it. And telematics is not AI.

Because AI is like some something that's not us. Like, AI is artificial intelligence. Telematics is not artificial intelligence. It actually is rating you as you drive, not like something that's made up or something that we're seeing in the future. And so my my thought is how are we gonna slow people down?

Well, we can incentivize them to slow down like my cousin who drives too fast, and now she slowed down because she'd like to save some money. So I know that back in the day, there were more, law enforcement officers on the street that could watch people driving fast. Like you would see more highway patrolmen. I rarely see a highway patrolmen on the highway when I'm on the highway, and people are driving in LA really fast.

And that would slow people down, and you get your $600 ticket, and your insurance goes up, and that would deter people from driving while we don't have that many law enforcement officers for the amount of people we have now in the state.

And so I'm thinking this is the way we incentivize people to slow slow them down.

Another question. The concern about this is an invasion of privacy as has been stated and that's a legitimate concern. A person with a perfect driving record who doesn't want to give up that privacy issue could end up paying more for their insurance than a person that might have some flaws on their driver record driving record, but they opt in for this option, which gives them a discount. I it it could be that the safer driver ends up paying more. How would you address that?

Because

I don't think so, but I'm gonna let.

Yeah. We've heard that concern raised before. And so the conversations that we have had across how it works in other states and what we would need to do in order to be compliant with prop one zero three is to ensure that there are two parallel tracks that are siloed. So the rating for those under the traditional rating factor stays the same. Your rate stays the same.

If you go into a telematics program, that first mandatory factor can be discounted or surcharge to ensure that the traditional rating factors don't have to subsidize the other pool. Okay.

Now, the other point is the conspiracy factor. And that is that there's potentially two things going on here. One is this will eventually be mandatory. The other is we're leading toward using this instead of paying gas tax. There's a lot of suspicion about that.

I understand. My question is well, the comment I'll make about that is that could be addressed if this had a sunset to sunset it and analyze what had happened. But and and I would suggest that you strongly consider that. But how would you address that conspiracy concern?

Well, I hadn't I didn't I didn't hear anything about the gas tax. So it for me, I don't know what the I

I hear you. It'll be if this bill passes, it will be out there. I I'm not saying that I think that. Okay. I'm just there's been

There's probably rumors out there. But for me, I I haven't heard anything about a gas tax or even it being mandatory but they opt in to to incentivize people to be safer. That is my top priority. Again, I lost some beautiful people that are close to me And, you know, I think about John Vigna and he would I could just hear him say telling me to keep fighting. I've been working on this for three years and my top priority is just to really keep people safe.

So I don't know about the gas tax thing.

If I may, on the mandatory opt in, this has been in other states since the nineteen nineties. This is not a new technology, and the national standard is still opt in.

Okay.

Yes. I know where you're getting or where the, the conspiracy here in terms of the gas tax is coming from. There is a separate program that's studying the actual amount that a person drives as using that to replace gas tax since you now have EVs and stuff like that. That is a completely separate program that is being studied. That doesn't affect telematics.

It doesn't even connect to telematics on that particular front there. So if one one could assume all the things that they want, but it is a separate program that's being run by the state right now. So just letting you know on that. And you are correct. This does not this is not likely to affect the top most dangerous drivers.

They're not gonna opt in to this particular program. That said, you and I both know, if we slow down only a percentage of the drivers, if we make those percentage of drivers safer, you are actually by that fact alone, despite the fact that they are taking up space on our roads, reducing the speed of other drivers. And that is that's known. That's that's just physics. They can't go faster.

So and this really does kick in on those drivers that think they're a good driver. Obviously, when you have a safe driver, you have a safe driver. But those that think they're a good driver. And then they realize, you know what? I'm actually not qualified for this program, and maybe I better become a good driver.

That's where you get your improvements. That's where you get the percentages that are coming up in the Journal of American Medical Association AAA study and things like that.

A very good point and it is exactly because of that study bill that I bring the issue up. Because if you paid any attention, to the reaction to that, there was scores of people who, opined that that was the true objective of that particular bill. I didn't say that nor do I even think it. It was a study bill nor do I think that this is any kind of a conspiracy toward that.

I'm just saying that there are some people out there that are going to think this and I think it's good to acknowledge it as just for for what it is.

But again, I suggest the sunset. Now the pushback on that is that it's existed elsewhere without a sunset and remaining opt in. That's that's good to know. So those are my questions and comment.

Thank you, Senator.

Thank you. I know there's concerns around privacy, but that's better situated in the next policy committee that is the expert on that. So I'll stick to more on the insurance questions and I know you'll the Chair over there will have his hand of flesh, I suppose. The opposition mentioned that the credit score is gonna be utilized. I just wanna know if there's is that correct?

It's illegal to use credit score in California. That's nowhere in this bill.

Right. Okay. Yeah. I did I I'll I'll give you opportunity where you think that was included.

The definitions in the bill are so vague in certain places, particularly in the definition of telematics data, that there's nothing in the bill that prohibits a telematics company from taking each of the various factors it might be tracking that have to do with driving and putting that into an algorithm that uses outside data to come up with a score. So there's a difference between you and I might all agree that if we're driving 10 miles over the speed limit, maybe our rate should go up.

But that's not what telematics does. Telematics takes all of the different factors it's tracking, mixes them up in a black box in a way that none of us will be able to see, combines it with other data that they've used to train that score, to determine what your ultimate rate might be out of that.

So that's how things like credit score and other things that insurance companies have historically tied to driving when most of us just intrinsically would understand that credit score has nothing to do with how we drive, but insurance companies in other states use it regularly.

That's how that would get inserted into this even though credit score is not gonna be listed because, of course, it's illegal in California as something that goes into your insurance. Right?

And is this a mandate? No. This is a mandate? It's an update.

So you'll get to choose if you want to do all of all of this?

Yes.

If I get

to choose where I save potentially save money on my car insurance if I'm a good driver?

If you're a good driver.

Okay. Yes. And then how would it determine if I'm using my phone?

So there are a few different ways that telematics programs can operate. There are some that are on your phone and it's app based. Some of them, it's a dongle that connects into your dash. Some of them, it's, a tile that gets connected to your windshield. The ones that are most effective are the ones that are apps on your phone because they can determine when you're interacting with your phone while driving.

Bill and I think we're seeing in California just an out of control bad behavior on the streets. And I recognize that perhaps the bad apples are not gonna opt into this. But sometimes it's in one incident who don't have a record of anything and then they go on to kill someone or hurt to some hurt someone. So even saving one individual is gonna be impactful.

So I I recognize that something needs to be done to address the reckless driving that continues to occur in California and if we can save some of those cases, I'm all in for that.

I recognize there is, like I mentioned, privacy concerns but I I hope that you can land some of those concerns in the in the next committee for that and if this is the ability to help save some dollars for good drivers, why not, allow that opportunity, for consumers. Thank you. Thank

Alright. Thank you, Senator Menjivar. Welcome. I think we do have a quorum, so let's go ahead and establish. Please call the roll.

[Roll Call]

We have a quorum. Thank you. Thank you very much. Any other questions or comments on this bill? Alright.

Now that we have a quorum, I'll entertain.

I'll move it.

Thank you. The bill's been moved. Please call the roll.

Motion is due passed to the committee on privacy, digital technologies, and consumer protection. [Roll Call]

Yeah. Ayes are 3. The Noes are 0. Place that item on call. Thank you, Senator.

Thank you so much.

Alright. Brings us to file item number six, AB1798, Assemblymember Wilson. Been very patient, back and forth. Welcome back.

Thank you. Thank you.

I'm assuming we have witnesses who can approach and make themselves comfortable.

We do. We do. I'll start talking as they make their way. Welcome.

Senate Member proceed when ready.

Thank you. Good afternoon, Chair, former Chair, now Vice Chair, and former, vice Chair. Today, more Californians than ever are turning to genetic testing to better understand their health. These tools allow individuals to detect risk early, pursue preventative care, and make informed medical decisions. This is exactly the kind of proactive, health conscious behavior we as a state should be encouraging.

Instead, our current system creates risks and uncertainty. That is why my bill, AB 1798, prohibits life and non health disability insurers from using non diagnostic genetic information to deny coverage or increase premiums. The bill also addresses the growing role of direct to consumer genetic testing, which is considered nonmedical and is not currently used in underwriting.

It prohibits insurers from seeking or using genetic information that individuals obtained on their own, ensuring that consumers remain in control of deeply personal data they choose to explore in their own health. At the same time, AB 1798 is carefully balanced and this type of policy is already being implemented in states like Florida.

It does not prevent insurers from accessing medical history or asking about family history. It simply makes clear that genetic data, whether obtained directly or indirectly, cannot be used to make underwriting decisions. In other words, insurance can or insurers can still evaluate risk, but they cannot rely on data that is uniquely sensitive, speculative in nature, and often uncertain. It is extremely important to note that genetic data is fundamentally different than traditional medical data.

As emphasized by the American Medical Association, it often reflects only a possibility, not a diagnosis.

Many genetic markers indicate risks that never materialize. And in many cases, the science is still evolving or correlational, not causational. I would like to thank both Chair Padilla and his incredible committee staff for their thoughtful collaboration on this bill. I am committed to taking the suggested committee suggested amends to ensure that as genetic testing advances into diagnostic capabilities, not simply predictions. Insurance may consider a diagnosis directly resulting from a genetic test as a part of a person's medical record noting that particular, amendment that's an analysis.

And I would also like to thank opposition for their continued engagement and address the concerns, that have been raised. And as I should note, we are still having conversations, and we will till this gets to the finish line. So first, the bill includes a 1,500,000 coverage threshold added through good faith negotiations with industry stakeholders in the Assembly Insurance Committee. This protects most Californias while Californias while addressing concerns about high value policies.

Second, this approach is a new and these protections have been implemented in countries like The UK, Australia, and Singapore and have adopted similar limits without disrupting insurance markets.

Finally, regarding information asymmetry, we already limit what insurance can use when fairness demands it. California law prohibits using characteristics like race or sexual orientation even if statistically relevant because civil rights outweigh purely actuarial considerations. If we agree that people should not pay more or be denied coverage because of who they are, then we must also agree that they should not be penalized for what's written in their DNA. Ultimately, this bill truly is about balance. It ensures that genetic testing leads to better health.

It protects privacy, promotes early detection, and reinforces trust in both our health care and insurance systems. I have, two witnesses available today, including one for technical, but I'll introduce those that will be speaking. Greg Moll, a scientist at UCSF working on gene editing therapies and a fellow with, Global Brain Health and then Josephine Figueroa, deputy commissioner for the California Department of Insurance.

Thank you, Assemblymember. Please state your name again for the record. You'll have two minutes. Welcome.

Good afternoon, Chair and committee Members. My name is Greg Moll. I am an Atlantic Fellow and postdoctoral scholar at the University of California, San Francisco. I work with Doctor. Claire Cloughlin to develop new gene editing therapies and at the Global Brain Health Institute to ensure equitable access to new technologies.

I'd like to thank Assemblymember Wilson for her leadership in authoring this critical bill to protect Californians from genetic discrimination. Sequencing and genetic testing are becoming a standard part of clinical care. Sequencing can be used for diagnosis, early cancer screening, and even to identify which medicines will work in a given disease. The NIH is also currently piloting using newborn whole genome sequencing to replace newborn screening. And just last year, a baby was healed with a personalized gene editing therapy for the first time.

Jena and CalGina allow life and disability insurers to use genetic information for underwriting, which disincentivizes patients to get life saving genetic testing. Genetic discrimination is a major barrier preventing people from getting genetic testing. A study from the MedSeq project found that twenty eight percent of people who actively decline sequencing cited genetic discrimination as their primary reason. I've spoken to gene carriers and their family members, many of whom refuse to participate in clinical research or get genetic testing due to these fears.

We can close the genetic discrimination loopholes while also maintaining robust insurance markets.

Florida, France, Canada, Australia, and other countries do not allow life and disability insurers to use genetic testing and underwriting. All of these countries and Florida have robust insurance markets that have not been destabilized or hurt by this policy. In several countries, insurers voluntary voluntarily imposed a moratorium on themselves. The opposition have said that AB 1798 will cause increased prices, market disruption, and information asymmetry that will undermine their ability to underwrite. These claims are exaggerated.

The data are clear. Family history is sufficient for insurers to price risk, and genetic data is probabilistic, not diagnostic, in the absence of symptoms. The amendments that the opposition have proposed leave existing insured practices unchanged and will not help patients and consumers. We need strong, clearly enforceable genetic discrimination protections to remove barriers for patients so they can access life saving care. There will be incredible benefits to patients.

For these reasons, I respectfully ask for your Aye vote. Thank you.

Good afternoon, Chair Padilla and Members of committee, Josephine Figueroa, Deputy Commissioner and Legislative Director for the Department of Insurance under the leadership of Insurance Commissioner Ricardo Lara. With me today is Beverly Brand, Assistant Chief Counsel for the Department's Policy and Regulation or Approval Bureau to help answer any technical questions you may have. As a proud sponsor of AB 1798, Commissioner Lara would like to thank Assemblymember Wilson for her leadership in authoring this important measure, which protects California's genetic information in life and disability insurance underwriting. California should never

have to fear that genetic test results will be used against them when applying for life and disability insurance. Instead, individuals should be encouraged to get tested early and take proactive steps to protect their health. Early testing not only helps people stay healthier, but also contributes to stronger, more stable risk pools of insurers. Federal law already prohibits genetic discrimination in health insurance and employment.

AB 1798 extends this same logic to genetic testing of any type that predict the potential for future disease when performed to the absence of symptoms or clinical diagnosis.

These are tests taken by healthy individuals and insurers will continue to have full access to all the other traditional underwriting tools. These productive genetic tests are uncommon and imprompt importantly are more reliable predictors of whether a disease will ever develop or when. For that reason, they should not be used to penalize individuals who are currently healthy. Genetic information is fundamentally different from traditional underwriting factors.

It is immutable, deeply personal, and often only dictates a remote or uncertain possibility of future disease rather than a reasonably anticipated risk.

California law already recognizes the need to protect certain genetic traits. Insurers are currently and appropriately prohibited from refusing to issue sell or renew life or disability insurance or from charging higher premiums for individuals who carry genetic traits associated with Tay Sachs sickle cell, Thalassemia, or X linked Hemophilia A. AB 1790 A bills on that foundation. It strengthens consumer privacy, promotes fairness, and supports genetic research, and empowers individuals to make informed medical decisions without putting their financial security at risk.

And importantly, there has been no disruption to insurance markets in other jurisdictions that developed or adopted similar protections.

Insurers remain fully capable of underwriting effectively without relying on predictive genetic testing results from healthy asymptomatic individuals. On behalf of insurance commissioner Latta, I ask for your Aye vote.

Thank you for your testimony. Are there any individuals, organizations like to register support for the bill, step forward, state your name and affiliation? Welcome.

Chris Khan representing the ALS network in support.

Mister Chair and Senators, Adam Kegelen on behalf of Netterra in support.

I'm Ed Ferguson. Just a family member affected by a genetic condition and in support of this.

My name is Anne Ferguson and I support this also.

Good afternoon. Scott Sadler on behalf of the ALS Association in support.

Terry Walter, a family of genetic, DCs and I totally and completely support this for the survival of genetic families. Thank you.

Anne Graef, California Leadership Council for the ALS Association and, former primary caregiver of an ALS patient. And I support this bill.

Lori Bonson, ALS volunteer and I support this bill.

Ann Blackwood, on behalf of Ansestry, in support of the bill.

Thank you. Any other individuals who'd like to register on themselves, be it on their own behalf or for an organization to support, please come forward seeing no one. We have principal witnesses in opposition. Please approach. Welcome.

Yeah. Yeah. We can have you sit next. Yeah. Yeah. Yeah. Yeah. Yeah.

Okay. Welcome. Station name again for the record. You have two minutes each.

Thank you very much, Mister Chair and members of the committee. Matt Powers with the Association of California Life and Health Insurance Companies or ACLIC. I'm here today in opposition to, 1798, but I wanna start by thanking you, Mister Chair, your staff, the author, and sponsors for their continued engagement on the proposal. The central question in this bill is how genetic testing should be treated in individual life and disability insurance.

These are optional products, and when they're medically underwritten, meaning the consumer has consented to the price being based on medical information, insurers need to evaluate material health information supported by medical evidence and correlated with illness.

Making decisions based on a full health picture, including information that predicts future illness, is not discrimination. It is the insurance product the consumer has chosen. Supporters argue that genetic testing is different because a person may never develop a disease based on genetics, But consider that doctors use genetic tests to make medical recommendations based on the risk of a disease manifesting. They know when a correlation is valid enough to warrant extra screening or lifestyle changes over the long term.

We look at an applicant's test in the same way, just through the lens of assessing insurance risk.

Also, the argument that this prediction is unfair or not actuarially sound breaks down because the bill still allows for underwriting based on genetic testing for policies above $1,500,000 This effectively concedes that genetic testing information is material to insurance. On the claim that insurance concerns are driving genetic testing behavior, the CDC survey cited in the analysis deserves more context.

The The same percentage of respondents who were concerned that genetic testing could affect their life insurance were also concerned that it could affect their health insurance, even though health insurance is no longer medically underwritten and genetic testing has no bearing on insurers, insurability. That suggests the problem is not simply insurer practices, but public misunderstanding. This bill may not eliminate that fear any more than the existing ban on medical underwriting and health insurance has eliminated confusion there.

Members, this bill is ultimately about helping a group of people access an important product. We're not insensitive to that, and we do underwrite people with genetic conditions. And there are also numerous options that are not medically underwritten. But medical underwriting is about assessing risk before a claim occurs. So the higher the likelihood a condition will manifest, the higher the price is likely to be.

That's why we encourage people to apply for insurance as young as possible. It's also why we've offered amendments to bring some balance back to the bill by taking consideration for research and direct consumer testing completely off the table. We hear the argument and we agree about the importance of clinical trials, So let's take them completely off the table for all face value amounts.

Then we propose to only allow consideration of a documented doctor ordered test when it is in the medical file, and our consideration is tied to the reason that that test was ordered. We think there was a reasonable guardrails and with that, I'll turn it over to my colleague, Doctor. May.

Doctor Brandon May, Chief Medical Officer at Northwestern Mutual Life Insurance Company. So good afternoon, Chairman and committee Members. As I said, I'm the Chief Medical Officer for Northwestern Mutual Life Insurance, and my background's in family medicine. I've been underwriting insurance for almost eight years.

Built into our name, Northwestern Mutual is a mutual company, which means we operate for the benefit of our policyowners, not shareholders. Our products are voluntary and designed to help, individuals achieve financial security with underwriting guided by appropriate use of medical information. Underwriting is the process insurers use to assess risk and price that coverage accordingly. It's what enables us to offer the most coverage to the most people at an affordable price, ultimately helping maximize the financial protection available to families and their loved ones.

But that balance falls apart when individuals at the highest risk for premature death or limitation are placed in the lowest risk pools.

Even a small number of cases can undermine the system and drive up costs for all insurance consumers. When we don't have access to the same information that an applicant has that could impact their longevity or morbidity, we cannot accurately assess risk. Over time, this mis misalignment could affect all policy owners as premiums may need to increase to cover the cost to meet our obligations to our policyholders. This industry is highly regulated with respect to an applicant's information.

We follow state and federal privacy laws and regulations, unfair discrimination laws, and other laws and regulations pertaining to how information is used in underwriting.

Furthermore, insurance companies do not access sensitive information without an applicant's consent. Insurers are committed to respecting and protecting the privacy or the private information of our policy owners and our applicants, and in that way, genetic information is no different than other medical information and medical record. We support the author's intention to encourage individuals to get genetic tests for medical purposes. In fact, in some cases, genetic testing results can provide an applicant with an even better and more affordable coverage.

Most importantly, when a physician determines a genetic test is necessary and becomes part of a medical record, we believe it should be considered as part of an applicant's overall health profile.

It is no different than a blood test, a cholesterol test, or your height and weight. If an insurance company does not have access to this information, including genetic tests, it must assume more risk, which results in all policy owners paying higher premiums. Conversely, access to more information will result in more affordable products.

Under its current form, this bill gives special status to a subset of consumers at the expense of others who may not have the discretionary income to afford the rising cost of food, housing, gas, and life and disability insurance, which would result in could result in squeezing more Californians out of the life insurance market. Our company believes in fairness and mutuality.

Underwriting is the cornerstone to fair and accurate pricing. It leads to our ability to provide the best coverage to the most people at the lowest cost. This bill, if not properly amended, undermines that. I respectfully ask that this bill be amended before passage.

Thank you for your testimony. Are there individuals or organizations wanting to register opposition to the bill? Please approach. State your name and affiliation. Welcome.

Thank you. Good afternoon. Sherry McCue representing the National Association of Insurance and Financial Advisors. We are opposed unless amended to the bill, but we look forward to continuing to work with the author and the sponsor and your committee as well to see if we can reach, compromise. Thank you.

Thank you, Mister Chair and Members. Megan Loper on behalf of the American Council of Life Insurers would echo Sherry's comments, but we are, at this time, opposed unless amended.

Patrick McNulty, Northwestern Mutual, similar to my colleagues here, oppose unless amended. Thank you.

Any other individuals, organizations wishing to register opposition to the bill? I see no one coming forward, bringing it to the committee. I'm just going to start by thanking the author and reflecting the testimony on both support and opposition about the efforts have been consistently underway for quite a few hours now and days to try to move to some sense of appropriate resolution here.

And I want to commend the author and your office, and I want to contend commend opposition department and everybody for trying to get there. And just before we get into Q and A, and I have a couple questions for one of the opposition witnesses, is this is a classic situation I think we're gonna continue to confront in society.

And certainly, as we look at policy making and legislation, and we look at the equities that we have to balance, through the lens of policy, We're gonna come up against increasing pressure to utilize new technology, new information that is collated, analyzed in a new and different way, and have the difficult conversations about what do we do with that tech or that capability, and how do we extrapolate or utilize that information, not just from a scientific standard or from a medical standard, but from a public policy and equity standard.

And sometimes those two things are gonna be completely in conflict with one another. And it is our role to try to, you know, balance that out against the backdrop of what our responsibility is, which isn't to just take a unilateral approach one direction or the other.

I think that's the rub and the difficulty here is we have a capability and a science, today that not long ago did not exist that can provide some indicative, determinative, perhaps, information and data in a medical chart in ways that we did not have the ability to do before. The question isn't whether that, you know, arguing over the degrees of accuracy or probability accuracy as a doctor will know.

The question is, what do we how do we allow the use of that data in today in an equitable and appropriate way for purposes of regulating insurers?

And so to that, I think where I have come down on this in terms of trying to guide this conversation is there's a distinction between, based on actuarial standards, looking at when an applicant makes a waiver and consent, to assess risk of that potential insured, that you look at, the chart, and you look at manifested present medical conditions or diagnoses. And we've also gone beyond just a diagnosed or present situation to look at what does that correlate to other risks. The easiest example is patient

who's been diagnosed with type two diabetes. That's manifested. It's diagnostic. It's in the chart. Person has diabetes.

But that correlates pretty clearly within standards to a higher risk for stroke, heart attack, other other conditions. And so we've always looked at drawing within guidelines a correlation of assessing risk based on manifested conditions. Here we have a new science capability that can look at data and information that would look at not just what is presented in a patient, what's been diagnosed in a patient, and what that present manifested condition might correlate to.

But now we can look and say, well, at some point in the future, this person might get x or y course of disease. The issue there is, for me at least, that's distinct and different and new.

And the question is, that data could suggest a risk maybe someone could arrive at that may never ever manifest, ever. And that's different and new, from how we've done this heretofore. And it presents a real question, is that appropriate? Right? Obviously, in an underwriting process, you wanna get as much data and information as you could possibly have because you wanna more, you know, clearly, you know, assign and and price risk.

But that's not the only consideration. Right? The consideration, what's appropriate for that the use of that data and where and what are we protecting? I think the parties have worked really hard to try to get to a place where we can sort of articulate what those boundaries are. They've gotten awfully close, but I don't think we're still there.

And I don't know whether they'll be able to get over that fundamental disagreement. Right? The underwriters want to look at if it's in the chart, we should be able to not just look at what's present in the applicant or the patient, but we can extrapolate risk based on that, on something that may or may not ever manifest. Obviously, you are seeking to prohibit and to curtail that under very, very distinct circumstances. I think that's wise.

Hence, the recommendation from the Chair to let this bill move, because I think it's trying to move in the right in the right direction. And with that, I would just say, so Doctor. Main does I mean, isn't there a distinction between how we've looked at diagnosed or present conditions in a patient and and correlating that to other risks that are yet undiagnosed or even not present yet. There's no there there there's no development or course of disease or or disorder manifested in the patient yet.

We have some genetic information that says, oh, there's some probability I might get it twenty years from now.

That's new and distinct, isn't it? How we've always sort of looked at conditions in a chart to extrapolate risk that is not yet diagnosed? I mean, isn't this different?

What I would say is that we are we are currently bound by when we're talking about actuarial principles, right, it has to correlate with the increased risk of, early mortality or if we're talking about DI for morbidity. So I'll give an example, for some for if someone who smokes, right, it is not a foregone conclusion necessarily that they would develop lung cancer or anything like that.

But we do know that there is a correlation based on clinical research studies that there is increased risk there, so we have to assess that, you know, with typically tobacco.

But you don't you don't get to assess an applicant's risk based on their smoking habit by getting access and a, you know, a HIPAA waiver and consent to look at their medical chart. I'm sorry? I mean, you don't need to go into a medical chart to assess if a potential applicant smokes or has a history of smoking. I mean, that you typically those are pre screening questions on every application for life insurance I've ever seen. Oh, sure.

Right? In other words, you don't have to go to a chart to find out that somebody smoked. Is correct?

Yeah. Like, if they disclose it or if it was is a part of a normal requirement Okay. Like for labs. Correct.

Alright. Thank you for that. Alright. With that, I'll bring it to the committee. Are there Members with questions or comments?

Senator Menjivar.

Thank you, Mister Chair. I think I appreciate you grounding us, because I think I kinda had some similar concerns. I think that's why the chairs, like, just continue working on it. We just heard a bill about, you know, to love. Telematics.

I heard that bill too.

Just a moment. Utilizing that to, you know, discount so forth. Are you, you know, you're a good driver, bad driver. I look at it kinda like the same way, allowing a extra tool to determine risk. Now, I am, sympathetic that we don't want to assume just because of why you're gonna get z and so forth.

But I do I think I heard a commitment, while the committee is not proposing an amendment, a commitment to look at what they are asking you to consider looking at some kind of balance there. I just wanted to see if you can explain a little bit more because I know it's not a committee proposed amendment.

Right. So we've been from the very beginning, upon introduction, been having conversations about this. And they noted the 1.5, I noted the 1.5. That came from, Chair Calderon in an effort to find a landing space because we couldn't find a landing space. So it was determined that policies over a certain amount maybe could get it and that's neither neither one of us like that, but we were in front of the Chair and the Chair was like, okay.

And so I wanna get out of committee, so accepted those amendments. And so today, as we progressed, they've updated the amendments that they're proposing. And and a lot of those were noted in their testimony. Those are the amendments that came to my committee today. I got I haven't got briefed on them yet for my staff, but got briefed while I was waiting, for Assembly member Gibson to finish his bill On what those are, and we will take those into considerations.

That was right before we came to committee. So we are still actively discussing on whether it's appropriate in terms of when something is medically underwritten. Right now, they were initially asking for everything. They're narrowing it now to medically underwritten. If there was another part of it, I don't remember at all.

But excluding research, making it specific to condition, one of the things that we were very much concerned about is take for instance, this is my phone and let's say you had permission to look at an email exchange between Senator Richardson and I, but then I gave you my phone.

You technically can look at everything. And so with genetic code, that is everything. That is not just one thing. I just gave you my whole entire makeup. And so making sure that there's not fishing in expeditions.

Right.

Right? We're like, oh, the doctor was looking at this, but since you got the genetic code, I see this risk over here. Now I'm factoring that in. Oh, making sure there's protection. Is that if my kid gets insurance from you, now you're saying, well, I got a 50% of their DNA, and this is the risk associated.

I mean, there's a this is there's, like, a lot of things associated with this that we wanna make sure we're curtailing. So definitely continuing those discussions, but we just wanna make sure it's tight, very tight. And we've been working with CDI. They're the original they're the not the original. They are the sponsors of the bill.

And so we've been really mindful of their technical expertise and what their role is in the insurance market and making sure we're being mindful that it matches what they already do and what they know that can be done.

Is that even possible to because it's a medical provider, right, that looks at their that's the medical underwriter. Right? So provider, the physician that looks at it? And

So the so when you so when they're talking about medically underwritten, that would be where the my doc let's say it's me. My doctor has ordered a genetic testing Sure. And that is now in my file.

For a specific yeah.

For what but for whatever rate. It could be I have symptoms or I don't have system. It just depends on what the doctor is trying to do. But the doctor notes it in the file. And so then it goes so somebody is getting insurance.

And if they're medically underwritten, they ask for the file and it is now a part of the file.

So that's what I'm saying. But is it possible to because we're talking about, hey, we just wanna look at one certain piece and not look at everything. Is that even possible if you're handing over the entire file? How how do you

Well, that's where there's stuff that's that they're not allowed to look at now, and that's up to Outlook to counsel to to do you wanna talk about, like

It's a platform. I'm sorry. There is already a foundation similar to that that

They can't look at things. Yeah. So it might be there. It might be, like, the phone is on the table, but you can't touch the phone. Right?

Like, so you cannot consider it in your analysis. So what we're saying is you're getting this medical file that you cannot consider the genetic testing, the genetic code of that individual in your in your actuarial, analysis is what we're we're currently saying, except we now, we have this little rule this little cap, 1,500,000 and above. But, unless it's above 1,500,000, but right that's the that's where the bill is as it stands today. And we have some additional language that we did accept. I'm looking through.

It's it's it's providing clarity about that file. So if a doctor notes it or, you know, it provides a little bit of clarity around what that looks like, and a comp a comply a pathway for them.

Assembly member, did you want one of your technical decisions

If they wanted to

Yes.

Sarah Menjiver.

Give insight into that.

Into how you would I mean, there can be things in

the file that you don't consider for underwriting. So we'll move you a set of underwriting guidelines and that's what you consider. So so you may see things in the file that you don't consider. Not everything in the medical file is even relevant to underwriting. There may be lots of things in there that you don't look at at all.

Things that are not actuarially sound. Also, there is a precedent for so we you can trust the company not to as they're sitting and filling out the underwriting guideline. Yes. There might be something in there that phone might be sitting there, but you would not look at it.

And in the past, for example, with HIV, there was with period of time where companies were instructed not to look at it or the testing that was in a file, testing had to be done a certain way in certain requests and that kind of thing, and companies did follow that.

Okay. And to the opposition, it's really a matter of either having utilizing all of the genetic testing versus utilizing a specific genetic testing that that is connected to a diagnosis?

Yes. Senator

For the rest of your day.

State your name before you answer.

Yes. Sorry. Matt Powers with ACLIC, Senator, and through the Chair. Our our proposal so under current law, we're allowed to look at an applicant's genetic test, and the doctor can speak to this better than I can. But, you know, typically, that's that's not the full genetic code.

That will be something specific. So if your doctor has ordered a a cancer screening panel, we would see that information. But, sure, there are potentials where there could be more information in there. And so what our proposal was that the assemblywoman alluded to is to try to limit our consideration to just tests that are ordered by the applicant's physician And we would only be able to base our underwriting, our pricing off of that test.

So if if your doctor ordered or my doctor ordered a cancer screening panel and somehow information popped up about a cognitive issue, that would be off the table.

It would only be for what the doctor exactly. And so we think that strikes the appropriate balance. And I think it goes back to the idea that, you know, there is predictive value in in that. And that's why the doctors are ordering the test. They are, recommending patients, take preventative screening measures, that they, do lifestyle behavior changes because they recognize that there can be correlations between your genetics and an eventual disease.

But we cannot if there's a ten percent chance of you developing cancer, we cannot treat that as if there's a hundred percent chance when we underwrite. We are bound by the law which requires us to price appropriately and be able to back that up through medical science. So I think that's why we think that's that's the appropriate balance.

Okay.

Okay. Well, thank you. I know you're still trying to land. I do, I do agree that there has to be some ability to look at that. I know you're trying to land it.

You're You're gonna continue working and I will be voting it out. But I do want to see that similar consideration, at least for me personally, for further consideration of supporting this bill. Thank you.

Thank you, Senator. Any other questions from Vice Chair Niello?

Clarification. That which, Mister Powers just articulated is the amendment that you and the opponents are deliberating at this point?

That was provided. What he's talking about was provided just hours ago today.

Yeah. Yeah. But that's that's what you're talking with them about.

Yes. So we're spending a lot of time talking about new things that we haven't had time to digest or consider or go with, like, I haven't even had time to talk with the sponsors about, like, so these are this is all very new that I said before I came in here, let me noodle it. So I'm still noodling.

Okay. Well, on the last bill, I laid off because I can see that bill changing. And same thing here, I can see this bill changing. And so, I'm gonna lay off, but I hope you can get to yes.

Cool beans. Thank you.

Any other questions or comments?

At the print, I don't think we have a set word as we don't have a quorum to take the vote because I think one of our members stepped out, But we will place that item on call, and we'll come back to it. And we'll note that Senator Richardson wants to move. Thank you so much for your patience, Senator, and for all your witness.

Can I have an opportunity to close real quick, if that's okay? Chair?

And we'll bring it back. Alright. Let's call the vote. Sorry. It's just been a long day.

Please do.

Okay. Thank you so much. I appreciate the discussion that was happening and the and the last amends, that the, opposition is, proposing. And and I would I just wanna call out one thing that they said in, part of the testimony is they said they even encourage folks to get it early, at a early age before you have an illness. But I wanna remind everyone, their DNA doesn't change.

Your genetic code does not change. So it doesn't matter if you get it early, get it late. Your DNA is the same. And so it's something that is definitely different than a blood test, a urine test, all those other tests. And so we have always, as California, has led the nation in recognizing that innovation must be matched with responsibility.

As genetic technology advances, so too must our safeguard. So we are standing at the intersection of innovation and policy, and the choices we make today will shape how California has experienced the future of medicine. And so this bill ensures that that future is one of trust, access, and protection, not fear.

I ask that you, vote I at the appropriate time if that's in a few minutes, and and we'll continue to work hard on the bill, and it may get to the floor just as it is, and it may have changes because I'm still noodling. Thank you.

I appreciate you noodling, Assemblymember, and the new let the noodling continue.

Thank you.

And we did establish a quorum earlier, so we can call for the vote. The bill's been moved by Senator Richton. Please call.

Motion is due passed to the committee on privacy, digital technologies, and consumer protection. [Roll Call]

Thank you. We'll keep that item on call. I think I saw Assemblymember Papan here being very patient in the front row. With respect to file item number seven, AB 1931; welcome. Witnesses present, please approach.

Good afternoon, Chair and members. Delighted to be with you here today to present AB 1931. So, this helps homeowners. You've all heard about those warranties that you can buy if your your HVAC goes out or your your sewer line goes out, those sorts of things.

And, this creates, an optional limited lines license for utilities to offer these home, warranty products. Home protection contracts can help them homeowners avoid, you know, unexpected, very expensive, repairs. If a cover system fails, like I mentioned, HVAC, etcetera, a home protection company can send a licensed professional to repair or replace components. However, California law is unclear about how you get these warranties. Utilities may facilitate offering their customers home protection contracts, but they're - it's very limited.

They're allowed to announce the availability of these utility related products. The line between, however, announcing and soliciting remains rather vague and a little bit risky, if you will, which can expose utilities to significant penalties. So, the purpose of this bill is to allow for a limited lines insurance license, so that those folks can then offer you these products. Much like when you go to rent a car and they say, do you want the additional insurance?

Those are limited lines and and people that proffer those are licensed by the state of California.

So, AB 1931 does offer this limited lines license, for utility-related home protection products. This limited lines license allows utilities to market and collect fees for utility-related home protection contracts. Simultaneously, the bill ensures robust consumer protections through the Department of Insurance oversight. Making home protection contracts more accessible will make it easier for homeowners to manage the cost of expensive repairs.

With me today to testify is Kristin Olson on behalf of HomeServe, and Scott Paris is with her today to answer any technical questions should the need arise.

Welcome to both of you. State your name, you'll each have two minutes.

Thank you, and good afternoon, Chair and committee members. My name is Kristen Olson-Kate and I represent HomeServe, a longstanding home protection contract administrator that serves customers in California and across the nation. I'm here with Scott Paris, HomeServe Senior Director and Counsel for Government and Regulatory Affairs, who's available to answer any questions today.

We want to start by thanking Assemblymember Papan for carrying this important bill that will allow home protection companies and utilities to continue serving customers who rely on our services to repair major appliances and utility service lines at an affordable cost. When a utility partners with a home protection company to deliver those repair plans, the transactions fall under the insurance code.

And under current law, that would require the utility to obtain a full property and casualty license. AB 1931 creates a better path forward by establishing a limited lines license tailored to this specific activity. AB 1931 is the product of months of genuine ongoing collaboration between HomeServe and the California Department of Insurance. That shared commitment is reflected in the bill's design. It maintains clear regulatory guardrails while creating a more workable framework for utilities and the customers they serve.

It also strengthens consumer protections for utility customers by adding utility specific to closure disclosures, a thirty day free look period, expanded oversight, and CDI authority to act swiftly if concerns arise. We respectfully ask for your aye vote on this bill. And as I said, Scott and I are happy to answer any questions you may have.

Thank you very much for your testimony. Are there any individuals, organizations wishing to register support for this bill? Please approach. Seeing no one come forward, or are there any principal witnesses in opposition to the bill, Or individuals organizations wanting to register opposition to the bill? Seeing no one. We will bring it back to the committee.

Vice Chair Niello?

First of all, that would be former Assemblymember and minority leader, Kristen Olson. My question is the fees. $10,000 upfront and $5,000 a year: what is the justification for that? You need to have a license?

I'll let you guys answer.

Yeah. I believe it's the implementation cost divided by the number of potential participants. But a company could choose to either secure the property - I'm sorry, secure the limited lines license, alternatively get a full property and casualty agent license.

I'm sorry. Run that by me again.

Forgive me. It it's just the implementation cost on what was anticipated on how much it would cost CDI to create the new license divided by the number of companies that we anticipate we'll sign up for it. So, there wouldn't be costing CDI any or California taxpayers any amount of money for actually creating a license.

So, you would anticipate that to come down subsequently?

Perhaps over time. It was really to address the fact that the state is in a difficult and challenging budget situation. And so - no. Yes.

Really? Nobody told me that.

Right? Shocking. And so, in talking with all of the industry partners, HomeServe as well as other companies in this space and industry partners, that was a number that they were comfortable with because this is such an important program to be able to offer these services to customers. It was a cost that they felt they could absorb while at the same time ensuring that we're not putting undue costs and burdens on the department.

Okay. Thank you.

Thank you, Vice Chair. Any other questions or comments? With that, I'll bring it back to the author, if you wanna close.

Sure. I appreciate that we're a we're a pay as you go kind of bill, Senator Niello. You're welcome on that one.

I just we're supposed to request an aye vote. This is something that I think in the end run really does protect folks that have this big endeavor, big expense, which is a home. And, I mentioned this in the last committee here. You know, I'll mention it again. I mentioned about getting a limited lines license for rental cars.

And in 1999, that became law, and it was carried by Lou Papan. So, here we are twenty seven years later, another limited license bill and I'm hopeful we can get it done by requesting an aye vote.

Alright. Thank you. Full circle. Bill's been moved by Senator Richardson. Please call the roll.

Motion is do passed to Appropriations Committee. [Roll Call].

We'll place that on call.

[Roll Call].

Senator Becker votes aye. We'll keep that on call. Thank you. Thank you. Assemblymember. Thank you for your patience.

Alright. Assemblymember Pacheco, you've been very patient; with respect to file item 10, AB 2361.

Alright. Assemblymember Pacheco, you've been very patient with respect to file item 10 AB 2361.

Welcome. Proceed when ready.

Thank you, and, good afternoon, Mister Chair and senators. I am here to present AB 2361. I wanna start by thanking the committee staff for all their hard work on this bill. AB 2361 modernizes treatment of vicarious liability for peer to peer vehicle vehicle sharing platforms, also known as PVSPs, by aligning liability with fault while preserving strong protections for consumers and injured parties. California is currently the only state that subjects personal vehicle sharing platforms to uncapped vicarious liability.

Under existing law, a PVSP must assume a vehicle owner's legal responsibility for claims arising during a vehicle sharing transaction with no limit on liability exposure even when the platform complied with all legal requirements, acted in good faith, and had no ability to prevent the acts the incident. AB 23 preserves consumer protections while addressing this unique and inequitable liability structure. The bill maintains existing insurance requirements and ensures that minimum insurance coverage remains available including access to additional coverage where applicable.

At the same time, it establishes a reasonable limits on a platform's vicarious liability exposure and clarifies that a PBSP is responsible only for owner liabilities arising from the sharing of the vehicle. As amended the bill reflects a compromised reach with stakeholders.

Specifically the bill clarifies that a PVSP must assume owner liability only for bodily injury and property damage resulting from the vehicle sharing transaction, eliminating ambiguity that could otherwise expose platforms to liability unrelated to car sharing. Establishes re reasonable limits on the vicarious liability of a PVSP. Must assume on behalf of an at fault vehicle owner. 250,000 for bodily injury or death of one person. 500,000 for bodily injury or death of all persons, and 100,000 for property damage.

Importantly, AB 2361 does not reduce the total damages recoverable from at Fault Party, does not limit a p v PVSP's liability for its own negligent or wrongful conduct, and does not reduce existing insurance requirements which remain higher than those applicable to traditional rental vehicles or personal automobiles. California is home to innovative transportation businesses that provide consumers with affordable mobility options while creating jobs and economic opportunity.

AB 2361 preserves these benefits while ensuring that liability remains tied to fault and that strong consumer protections remain in place. And with me today to testify in support and to answer any technical questions is Larissa Cespedes on behalf of Turo, and I will hand it over to my witness.

Well, welcome, state. Your name again. You have up to four minutes.

Thank you very much, Chair, vice Chair, and members. Larissa Cespedes here on behalf of Turo, which is a California company. Hundreds of employees based here in San Francisco. About 15,000, Californians put their cars on the Turo platform for, folks, to use. We are incredibly grateful to the Chair, committee staff, the staff at the Department of Insurance, staff at Judiciary Committee, and, importantly, the Consumer Attorneys, Association for the compromise that we were able to reach on this bill.

While these incidents are very occur very infrequently, the fact that California had an uncapped liability for these instances was incredibly problematic. This bill brings California in line with the 30 other states where we have legislation that allow for the safe and, use of vehicles, through, platforms like Turo. For these reasons, we respectfully ask for your aye vote, and I'm happy to answer any questions.

Alright. Are there any individuals who would like to register for themselves or on behalf of an organization to support the bill? Please approach. State your name and affiliation.

Thank you, Mister Chair and members. Annalee Augustine with the Civil Justice Association of California. Pleased to support. Thank you.

Any others? Seeing no one come forward, any principal witnesses in opposition to the bill? Please approach.

Removal of opposition. Neutral. Sure. Sabina Tacker with the Consumer Attorneys of California. I echo the comments of Larissa.

We were pleased to work with the committee, the sponsor, the department, judiciary, the author, and really appreciate the compromise that we've reached on this bill. We think the new language makes more sense. It deletes this provision that we thought was an absolute labor responsibility. It enacts some reasonable insurance limits to the points already made. Other rental car companies do have the unlimited liability, but they actually own the cars.

So we think this is a proper compromise to make sure that there's protections in the rare event that injuries do occur and also to ensure that we have safe vehicles on the platform. So we thank you for all of your work and are now neutral.

Alright. Thank you. Any other individuals, organizations wanting to register opposition to the bill, please approach. Seeing no one come forward, bring it back to the committee. Senator Becker?

I'll move it back.

Senator Becker moves the bill. Any other discussion, please call the roll. Oh, of course. It's it's been one of those days. I apologize, Assemblymember.

You've been very patient.