SEVEN. OKAY. THE INSURANCE
COMMITTEE WILL NOW COME TO
ORDER. GOOD AFTERNOON EVERYONE.
THANK YOU FOR BEING HERE, WE'RE
HOLDING THIS COMMITTEE HEARING
IN THE Þ STREET BUILDING. SO I'M
GOING TO ASK ALL MEMBERS,
LISTENING TO. PLEASE COME TO
ROOM 2100 SO WE CAN ESTABLISH A
QUORUM AND BEGIN OUR HEARING.
BUT I LOOK AROUND, WE DON'T HAVE
A QUORUM, AND I DON'T WANT TO
DELAY EVERYONE. SO WE WILL START
AS A AS A SUBCOMMITTEE AND
ESTABLISH A QUORUM AS PEOPLE
COME IN. AND SO WITH THAT SAID,
TODAY WE HAVE FOUR BILLS ON
CALENDAR. ONE OF THOSE BILLS, SB
1217, IS ON CONSENT, AND BEFORE
WE HEAR ANY PRESENTATION, AGAIN,
I, WE'RE GOING TO HAVE TO WAIT
FOR THE QUORUM. SO AT THIS
POINT, WE'RE GOING TO MOVE
FORWARD AS A SUBCOMMITTEE, SO WE
ARE GOING TO START WITH THE
FOLLOWING BILLS. AND WE'LL WAIT
FOR CONSENT CALENDAR UNTIL WE
ESTABLISH THAT WE HAVE ENOUGH
PRESENT, WE'LL HEAR FROM THE
FIRST AUTHOR. IS SENATOR NGUYEN
HERE WITH US? SHE'S STILL NOT
PRESENT, SO WE WILL MOVE ON. I
SEE SENATOR BECKER, WHO IS
PRESENT, SENATOR BECKER. SENATOR
BECKER WILL BE PRESENTING SB
1060. ARE YOUR WITNESSES
PRESENT? YES. OKAY, SO I WANT TO
TELL YOU, YOU KNOW, SO WHEN
YOU'RE READY, YOU MAY BEGIN.
THANK YOU. THANK YOU. CHAIR.
YEAH. WE'RE JUST TAKING FOR
SENATOR DODD, WHO'S A COAUTHOR.
SO HOPEFULLY HE'LL BE ABLE TO
MAKE IT FOR THE DISCUSSION HERE.
HAS A GREAT, INSIGHT. BUT FIRST
OF ALL, THANK WANT TO THANK YOU,
CHAIR. AND YOUR TEAM, FOR
WORKING HARD WITH US THIS IS A
COMPLICATED, AREA AND A
COMPLICATED, SPACE AT A
COMPLICATED TIME, AS WE ALL
KNOW, THE INDUSTRY HAS BEEN,
GOING THROUGH, A LOT. AND YOU'RE
WORKING VERY COMPREHENSIVELY TO
TRY TO ADDRESS THAT. AND AND I
THINK THAT'S REALLY OUR MESSAGE
HERE WITH THIS BILL IS THAT, WE
BELIEVE AND HOPE TO SHOW THAT
THIS IS A VERY COMPLEMENTARY TO
THOSE OTHER EFFORTS THAT ARE
GOING ON AT THIS TIME, AND THIS
IS VERY, VERY MUCH MEANT, TO BE
A COLLABORATIVE EFFORT
ULTIMATELY WITH INDUSTRY TO SAY,
HEY, WE'RE DOING THE WORK AS A
STATE. WE WANT TO MAKE SURE
THAT'S RECOGNIZED. YOU TELL US
IF IT IS OR IF IT'S HELPING OR
NOT HELPING. BUT, AGAIN, WE'RE
DOING THAT IN THE CONTEXT OF A
TIME THAT I KNOW HAS BEEN
PRECARIOUS. AND WE HAVE
OBVIOUSLY HAD COMPANIES LEAVE
THE STATE. SO THIS IS REALLY
MEANT TO BE AN EFFORT TO SAY,
HEY, HERE'S WHAT WE'RE TRYING TO
DO, AND HOPEFULLY THIS IS
HELPFUL TO THE OVERALL EFFORT.
TELL US IF IT IS OR NOT. WITH
THAT, LET ME GO INTO SOME OF THE
DETAILS, WE ALL KNOW THE STORY
ABOUT, DEVASTATING IMPACTS OF
INCREASINGLY FREQUENT AND SEVERE
WILDFIRES AND MORE AND MORE
PEOPLE HAVING INSURANCE
UNAVAILABLE, IN AN EFFORT TO
SAVE LIVES, PROTECT PROPERTY,
AND ADDRESS THE INSURANCE
CRISIS, CALIFORNIA HAS
PRIORITIZED EFFORTS TO PREVENT
WILDFIRES AND TO REDUCE THEIR
SEVERITY. STATE, LOCAL
GOVERNMENTS AND INDIVIDUAL
PROPERTY OWNERS HAVE SPENT
BILLIONS OF DOLLARS ON HAZARDOUS
FUEL REDUCTION, HOME HARDENING
AND CREATING DEFENSIBLE SPACE
ALL RECOGNIZED APPROACHES FOR
REDUCING THE SEVERITY OF
WILDFIRES. AND THIS IS SO I SEE
THIS INVESTMENT IN BUDGET SUB
TWO, WHICH IS THE BUDGET
SUBCOMMITTEE THAT I OVERSEE ON
QUÊ, BUDGET SUB TWO ON CLIMATE
AND, RISK SOURCES AND
ENVIRONMENT. AND WHAT I'VE SEEN
THERE IS THAT WE'VE APPROPRIATED
$3.7 BILLION, AND I SHOULDN'T
REPEAT THAT. WE'VE APPROPRIATED
$3.7 BILLION FOR FOREST
TREATMENT AND HAZARDOUS FUEL
REDUCTION JUST SINCE 2017.
HOWEVER, DESPITE ALL THIS EFFORT
TO REDUCE WILDFIRE RISKS, THE
UNDERWRITING MODELS USED BY
INSURERS TO DECIDE WHETHER TO
RENEW POLICIES OR OFFER NEW
POLICIES USUALLY DO NOT TAKE
INTO ACCOUNT THE RISK REDUCTION
FROM THESE ACTIVITIES. AND THAT
MEANS THAT, OF COURSE, THEN
COMMUNITIES THEN ARE NOT SEEING
THE BENEFITS OF THE EFFORTS
REFLECTED IN THE AVAILABILITY OF
INSURANCE. AND WE WANT TO KNOW
AS A STATE, AGAIN, WE ARE
SPENDING THIS MONEY. WE'RE
SPENDING THE TAXPAYERS MONEY,
$3.7 BILLION OF IT AND MORE
EVERY DAY. AS I SEE IT IN MY
SUBCOMMITTEE, WE WANT TO KNOW
FROM THEM, IS THIS HELPING TO
REDUCE RISK OR NOT? RIGHT WE ALL
SAW THIS WITH THIS BILL IS DOING
ASKING THEM TO TAKE IT ACCOUNT
IN THEIR MODELS. SO THIS BILL
WILL DIRECT PROPERTY INSURERS TO
INCORPORATE WILDFIRE RISK
ASSOCIATED WITH HAZARDOUS FUEL
REDUCTION, HOME HARDENING AND
DEFENSIBLE SPACE INTO THE
UNDERWRITING MODELS, WHICH THEY
USE TO EVALUATE RISKS AND DECIDE
WHETHER TO OFFER COVERAGE AND I
WANT TO SAY BE VERY CLEAR,
BECAUSE I KNOW WE'RE HAVING GOOD
CONVERSATIONS WITH THE INSURANCE
INDUSTRY. I KNOW THE INDUSTRY
WAS INITIALLY VERY CONCERNED
ABOUT THIS BILL, AND THEY
THOUGHT WE WERE TRYING TO
MANDATE THAT THEY OFFER COVERAGE
OR WE'RE TRYING TO CONTROL THEIR
UNDERWRITING. AND WE'RE HERE TO
SAY VERY CLEARLY, THIS BILL IS
NOT ABOUT THAT IN ANY WAY. AND
WE'VE TAKEN A LOT OF STEPS
WORKING WITH YOU, CHAIR, TO
REALLY CLARIFY THAT, THAT WAS
NEVER THE INTENT OF THIS BILL.
AND WE MADE SOME AMENDMENTS TO
CLARIFY THIS BILL IS ONLY ABOUT
TAKING THOSE RISK REDUCTION
EFFORTS INTO ACCOUNT. THAT'S
WHERE I'M ASKING, TAKING THOSE
INTO ACCOUNT IN THEIR
UNDERWRITING MODELS SO THAT FIRE
RISK CAN BE MORE ACCURATELY
MEASURED. I WILL BE ACCEPTING
THE COMMITTEE'S AMENDMENTS, AS
SHOWN ON PAGES THREE AND FOUR OF
THE ANALYSIS, WHICH FURTHER
CLARIFIES THE DEPARTMENT'S
AUTHORITY TO ENSURE COMPLIANCE
FOR ALL THESE COMMUNITIES WHO
ARE MAKING THESE INVESTMENTS.
IT'S ONLY FAIR THAT THOSE
EFFORTS ARE INCLUDED. AND AGAIN,
WE FEEL THIS IS A VERY
COMPLEMENTARY EFFORT TO ALL THE
OTHER WORK THAT'S GOING ON
AROUND FORWARD LOOKING MODELS.
AND YOU KNOW, COVERAGE RATIOS
AND ALL THAT SORT OF STUFF. WE
THINK THIS IS VERY COMPLEMENTARY
TO THAT. AND, YOU KNOW, TO SAY
AGAIN, TO THOSE INSURANCE
COMPANIES, TAKE THIS INTO YOUR
MODELS, IF YOU FIND IT'S
HELPFUL, GREAT. IF IT'S NOT,
TELL US WE SHOULD BE SPENDING
THE MONEY DIFFERENTLY, WITH
THAT, I RESPECTFULLY ASK FOR AYE
VOTE. AND I HAVE TWO WITNESSES,
DAVE JONES, WHO'S A FORMER
INSURANCE COMMISSIONER, AND ANNE
COTTRELL, NAPA, NAPA COUNTY
SUPERVISOR, SPEAKING FOR THE
RURAL COUNTY REPRESENTATIVES OF
CALIFORNIA. THANK YOU, SENATOR
BECKER. AND YOU MAY PROCEED TO
THE FRONT. AND AS THEY'RE COMING
FORWARD, I'M GOING TO TAKE A
PAUSE TO ESTABLISH A QUORUM.
MADAM SECRETARY, CAN YOU PLEASE
CALL THE ROLL AND YOU MAY RUBIO
PRESENT. PRESENT. MILO. MILO.
PRESENT. ALVARADO. GIL CABALLERO
. CABRERA. HERE. CORTEZ DODD.
DODD. HERE. OKUBO HERE. OKOBOJI.
PRESENT. OKAY. NOW THAT WE HAVE
ESTABLISHED A QUORUM, WE'LL
PROCEED WITH, TESTIMONY AND
SUPPORT OF SENATOR BECKER'S
BILL, AND YOU MAY PROCEED WHEN
YOU'RE READY. THANK YOU. THANK
YOU VERY MUCH, MADAM CHAIR.
SENATORS, MY NAME IS DAVE JONES,
AND I'M SUPPORTING THE NATURE
CONSERVANCY IN THEIR SPONSORSHIP
OF SENATE BILL 1060. AND I ALSO
HAD THE PRIVILEGE OF SERVING AS
THE STATE'S INSURANCE
COMMISSIONER FROM 2011 TO 2019.
AS SENATOR BECKER SAID IN ORDER
TO REDUCE THE RISK OF SEVERE
WILDFIRE, THE STATE OF
CALIFORNIA HAS APPROPRIATED $3.7
BILLION FOR FOREST TREATMENT,
INCLUDING PRESCRIBED FIRE AND
THINNING. BUT IN ADDITION TO
THAT, LOCAL AGENCIES INCLUDING
COUNTIES, CITIES, TOWNS, FIRE
PROTECTION DISTRICTS, COMMUNITY
SERVICE DISTRICTS AND OTHERS ARE
ALSO SPENDING TENS IF NOT
HUNDREDS OF MILLIONS OF DOLLARS
ON WILDFIRE MITIGATION. AND THEN
ON TOP OF THAT, HOMEOWNERS
ASSOCIATIONS AND INDIVIDUAL
HOMEOWNERS ARE UNDERTAKING HOME
HARDENING, DEFENSIBLE SPACE AND
HAZARDOUS FUELS REDUCTION. SB
1060 SIMPLY AND NARROWLY MAKES
SURE THAT IF PROPERTY INSURANCE
COMPANIES USE RISK MODELS TO
DECIDE WHETHER TO WRITE OR RENEW
INSURANCE, IF DOESN'T REQUIRE
THEM TO USE IT, THAT THESE RISK
MODELS ACCOUNT FOR THE BILLIONS
BEING SPENT BY THE FEDERAL
GOVERNMENT, THE STATE LOCAL
GOVERNMENTS, AND HOMEOWNERS AND
HOMEOWNERS ASSOCIATIONS
ASSOCIATED WITH WILDFIRE
MITIGATION ACTIONS. NOW, WILLIS
TOWERS WATSON, THE GLOBAL
REINSURANCE BROKER AND THE
NATURE CONSERVANCY, DEMONSTRATED
IN A JOINTLY PUBLISHED TECHNICAL
PAPER IN 2021 THAT THE RISK
MODELS CURRENTLY USED BY
INSURERS CAN BE ADJUSTED TO
ACCOUNT FOR THE RISK REDUCTION
ASSOCIATED WITH LANDSCAPE LEVEL
WILDFIRE MITIGATION, AND THOSE
RESULTS WERE ACTUALLY REPLICATED
ABOUT A YEAR LATER IN A PAPER.
SEPARATELY FUNDED AND PUBLISHED
BY MOODY'S, MS. AND THE AMERICAN
FORESTRY ASSOCIATION, SB 1060 IS
CONSISTENT WITH INSURANCE
COMMISSIONER RICARDO LARA
SUSTAINABLE INSURANCE STRATEGY,
WHICH, AS PROPOSED, WILL ALLOW
INSURERS TO USE CATASTROPHE
MODELS FOR RATING AND REQUIRES
THOSE MODELS USED FOR RATING TO
ACCOUNT FOR LANDSCAPE, COMMUNITY
AND PROPERTY LEVEL MITIGATION.
BUT HERE'S THE THING HOMEOWNERS
WON'T GET THE BENEFIT OF A RATE
THAT REFLECTS THESE INVESTMENTS
IF THEY DON'T HAVE A FIGHTING
CHANCE TO GET THEIR INSURANCE
RENEWED, AND THE INSURANCE
COMMISSIONER'S AUTHORITY IS
GENERALLY LIMITED TO REGULATING
RATES AND MODELS USED, I'M SORRY
IS GENERALLY LIMITED TO
REGULATING RATES AND MODELS USED
TO SET RATES. ONLY THE
LEGISLATURE CAN MAKE SURE THAT
THE RISK MODELS USED FOR
UNDERWRITING, THAT IS, THE
MODELS THAT ARE USED TO HELP
INSURERS TO DECIDE WHETHER TO
WRITE OR RENEW INSURANCE ACCOUNT
FOR ALL OF THESE VARIOUS LEVELS
OF WILDFIRE MITIGATION. SB 1060
DOES NOT INTRUDE ON INSURERS
UNDERWRITING DISCRETION. THEY
RETAIN FULL DISCRETION TO DECIDE
WHETHER TO WRITE OR RENEW
INSURANCE. THE NATURE
CONSERVANCY AND SENATOR BECCA'S
OFFICE MET WITH THE PERSONAL
INSURANCE FEDERATION, AND HAVE
TAKEN AMENDMENTS TO CLARIFY THAT
THE BILL IS LIMITED SOLELY TO
THE MODELS USED FOR
UNDERWRITING, AND INSURERS
RETAIN THEIR DISCRETION ON
UNDERWRITING DECISIONS, AND THE
AUTHOR IS TAKING AMENDMENTS
THOUGHTFULLY PROPOSED BY THIS
COMMITTEE THAT MAKE SURE THAT
WE'RE NOT EXPANDING THE
INSURANCE COMMISSIONER HIS
AUTHORITY INTO UNDERWRITING. SO
SB 1060 AND SOME ENCOURAGES MORE
INVESTMENT BY STATE AND LOCAL
GOVERNMENTS, HOAS AND
HOMEOWNERS, AND HOME HARDENING,
DEFENSIBLE SPACE COMMUNITY
LANDSCAPE SCALE, HAZARDOUS FUELS
REDUCTION BECAUSE THOSE
INVESTMENTS WILL THEN BE
ACCOUNTED FOR IN THE MODELS USED
FOR UNDERWRITING, USED BY
INSURERS TO DECIDE WHETHER TO
RENEW A RIGHT INSURANCE. THESE
INVESTMENTS IN MITIGATION NEED
TO BE ACCOUNTED FOR IN THE
MODELS BECAUSE WE KNOW THAT
MITIGATION WORKS TO REDUCE
WILDFIRE RISK. THE NATURE
CONSERVANCY AND I URGE YOUR AYE
VOTE ON SB 1060. THANK YOU VERY
MUCH. THANK YOU FOR THAT SECOND
PERSON. YOU MAY PROCEED WHEN
YOU'RE READY. THANK YOU. THANK
YOU. GOOD AFTERNOON, CHAIR RUBIO
AND MEMBERS OF THE COMMITTEE,
THANK YOU FOR THE OPPORTUNITY TO
PRESENT FROM A LOCAL AND A
GROUND LEVEL PERSPECTIVE ON SB
1060. I'M SUPERVISOR ANN
COTTRELL FROM NAPA COUNTY, AND
I'M HERE TODAY REPRESENTING THE
RURAL COUNTY REPRESENTATIVES OF
CALIFORNIA. YOUR COMMITTEE
ALREADY KNOWS ABOUT CALIFORNIA'S
WILDFIRES, RATE HIKES AND
NON-RENEWALS. WHAT I WANT TO
SHARE TODAY IS HOW EFFECTIVELY
OUR RESIDENTS AND COMMUNITIES
HAVE TAKEN ACTION TO REDUCE
THEIR WILDFIRE RISK. NAPA COUNTY
AND OUR PARTNER NAPA FIREWISE
HAVE INVESTED MILLIONS OF
DOLLARS IN WILDFIRE MITIGATION
EFFORTS. I HAVE SEEN MILES OF
UPGRADED DOZER LINES HIKED
THROUGH HUNDREDS OF ACRES OF
SHADED FUEL BREAKS, AND WATCHED
AS OUR CHIPPING PROGRAM TURNED
WOULD BE FUEL INTO MULCH FOR
BACKYARDS AND FOREST FLOORS. OUR
COST SHARING PROGRAM FOR HOME
HARDENING IS ALSO A SUCCESS.
RESIDENTS HAVE INVESTED $2 OF
THEIR OWN MONEY FOR EVERY DOLLAR
THEY RECEIVED THROUGH THE
PROGRAM. NEIGHBORHOODS ARE
WORKING TOGETHER TO LEVERAGE
EACH OTHER'S SAFETY MEASURES. WE
ARE COLLECTING DATA AND BUILDING
DASHBOARDS TO SHOW THE IMPACT
THAT THESE PROJECTS HAVE ON OUR
LANDSCAPE. NAPA COUNTY IS NOW
SAFER AND MORE RESILIENT, AND
THIS WORK IS HAPPENING ALL OVER
THE STATE AS COMMUNITIES AND
COUNTIES FROM MODOC TO MARIPOSA
AND FROM THE SIERRA MOUNTAINS TO
THE SAN GABRIEL MOUNTAINS, WORK
TOGETHER TO BECOME MORE FIRE
SAFE. SO HOW SHOULD INSURERS
VALUE THIS WORK? OUR CRC HAS
ENGAGED WITH COMMISSIONER LARA
REGARDING HIS SUSTAINABLE
INSURANCE STRATEGY. THAT
STRATEGY ALLOWS FOR CATASTROPHIC
MODELS FOR RATING AND REQUIRES
THOSE MODELS TO TAKE ALL THIS
MITIGATION WORK INTO ACCOUNT. SB
1060 IS CONSISTENT WITH AND
COMPLEMENTARY TO THAT STRATEGY.
BY MAKING SURE THAT INSURERS
CONSIDER MITIGATION WORK IN
THEIR RISK MODELS FOR
UNDERWRITING, AS WELL. THIS IS
CRITICAL TO ENSURE THAT
INSURANCE COMPANIES VALUE THIS
WORK. AS SENATOR BECKER SAID, TO
TAKE IT INTO ACCOUNT IN MAKING
THEIR DECISION TO PROVIDE
COVERAGE IN THE FIRST PLACE. OUR
RESIDENTS AND VULNERABLE
COMMUNITIES ARE DOING THE RIGHT
THINGS TO REDUCE WILDFIRE RISK,
AND THEY NEED YOUR ENCOURAGEMENT
AND YOUR LEGISLATIVE SUPPORT FOR
THEIR INVESTMENTS IN WILDFIRE
MITIGATION. ON BEHALF OF OUR
CRC, I URGE YOUR AYE VOTE ON SB
1060, AND THANK YOU FOR YOUR
TIME. THANK YOU FOR THAT
TESTIMONY. NOW I WILL TURN IT
OVER TO THOSE. AND HERE IN THE
ROOM IN SUPPORT OF ADVOCACY ON
BEHALF OF CONSUMER WATCHDOG, IN
SUPPORT. THANK YOU, DYLAN
ELLIOTT, ON BEHALF OF THE
COUNTIES OF NAPA, NEVADA AND
MARIN COUNTIES, ALL IN SUPPORT.
THANK YOU. SANTIAGO RODRIGUEZ
WITH CALIFORNIA ENVIRONMENTAL
VOTERS IN SUPPORT. ADA WELDER
WITH THE CALIFORNIA STATE
ASSOCIATION OF COUNTIES IN
SUPPORT. CARLIN SHELBY ON BEHALF
OF THE CITIES OF OAKLAND,
BERKELEY AND SANTA BARBARA IN
STRONG SUPPORT. THANK YOU. ZACH
FLUTE, THE LEAGUE OF CALIFORNIA
CITIES AND SUPPORT. THANK YOU.
THANK YOU, SEEING NO OTHER,
WITNESS AND SUPPORT. NOW, I WILL
TURN IT OVER TO THE WITNESSES IN
OPPOSITION, IF YOU DON'T MIND,
THEY WILL TAKE THE TABLE NOW.
WELCOME. AND WHEN YOU'RE READY,
YOU MAY PROCEED. SO STARTING,
YOU WILL START. GO AHEAD. GOOD
AFTERNOON, MADAM CHAIR AND
MEMBERS. SARAH AND TAYLOR, ON
BEHALF OF THE PERSONAL INSURANCE
FEDERATION OF CALIFORNIA. AND WE
GREATLY APPRECIATE THE EFFORTS
OF THE AUTHOR AND THE COMMITTEE
TO REFINE THE BILL. BUT
UNFORTUNATELY, WE STILL HAVE
VERY SERIOUS CONCERNS, SB 1060
REQUIRES AN INSURER THAT USES
RISK MODELS FOR UNDERWRITING TO
ACCOUNT FOR A SET OF BROADLY
DEFINED WILDFIRE RISK REDUCTION
ACTIVITIES. HOWEVER, THESE
CRITERIA CONFLICT WITH THE
MITIGATION FACTORS REQUIRED FOR
THE WILDFIRE RISK MODELS IN THE
CDI. SAFER FROM WILDFIRE
REGULATIONS, AND THE NEWLY
PROPOSED CDI CATASTROPHE MODEL
REGULATIONS. WE THINK IT'S
REASONABLE TO EXPECT THE STATE
WOULD HAVE WON SCIENCE BASED
MITIGATION STANDARD FOR
COMPLIANCE, IMPOSING A NEW AND
DIFFERENT UNDERWRITING STANDARD
CREATES CONFUSION AND IS NOT
CONSISTENT WITH THE SUSTAINABLE
INSURANCE STRATEGY INTRODUCED BY
THE COMMISSIONER AND SUPPORTED
BY THE GOVERNOR TO ADDRESS THE
INSURANCE AVAILABILITY CRISIS.
IN A THOUGHTFUL AND
COMPREHENSIVE MANNER. AT BEST,
THIS BILL IS PREMATURE UNTIL WE
ALL UNDERSTAND WHAT THE NEW CDI
REGULATIONS WILL ULTIMATELY
REQUIRE. ADDITIONALLY, EVEN WITH
THE COMMITTEE AMENDMENTS, WHICH
WE APPRECIATE, SB 1060 STILL
ASSERTS NEW POWERS OVER INSURER
UNDERWRITING AND PROVIDES
AUTHORITY FOR CDI TO DEMAND
UNLIMITED INFORMATION TO ENSURE
COMPLIANCE. WHILE THIS MAY NOT
BE THE AUTHOR'S INTENT, IT IS
WHAT THE TEXT OF THE BILL ALLOWS
AND IT WILL FURTHER DESTABILIZE
CALIFORNIA'S FRAGILE INSURANCE
MARKET. IF THE GOAL OF SB 1060
IS TO HELP POLICY MAKERS AND
CONSUMERS BETTER UNDERSTAND
WHICH MITIGATIONS ARE CONSIDERED
EFFECTIVE, THE SAFER FROM
WILDFIRE REGULATIONS ALREADY
REQUIRE MITIGATIONS TO BE GIVEN
A SPECIFIC VALUE THAT IS CLEARLY
EXPLAINED TO CONSUMERS. IN
SHORT, WE BELIEVE THIS BILL IS
BOTH PREMATURE AND HARMFUL TO
THE COLLABORATIVE EFFORTS. AND I
KNOW FOLKS KEPT REFERRING TO THE
IDEA THAT THIS IS COMPLEMENTARY
Kò. WE DON'T BELIEVE THIS IS
COMPLEMENTARY. WE BELIEVE THIS
IS CONTRARY TO THE WORK THAT'S
BEING DONE TO RESTORE INSURANCE
AVAILABILITY AND RELIABILITY.
AND THEREFORE WE RESPECTFULLY
REQUEST YOUR NØ VOTE. THANK YOU.
WE'LL PROCEED WITH THE AMERICAN
PROPERTY CASUALTY INSURANCE
ASSOCIATION ALSO, RESPECTFULLY,
IN OPPOSITION TO SB 1067, DID A
GOOD JOB OF WALKING THROUGH WHAT
WE THINK ARE SOME OF THE
CONFLICTS WITH THE PROGRAMS
CURRENTLY GOING ON. IF THIS BILL
WAS TO PASS, INSURERS WOULD BE
KIND OF IN AN INTERESTING SPOT
BECAUSE THEY, IN ESSENCE, HAVE
TO APPLY, POSSIBLY WITH TWO
DIFFERENT SLIGHTLY DIFFERENT BUT
DIFFERENT NONETHELESS MODELS.
THIS BILL ALSO CONSTITUTES A
CHANGE TO PROP 103, BY GRANTING
THE DEPARTMENT THE AUTHORITY TO
REVIEW AND QUOTE UNQUOTE CONFIRM
INSURERS GUIDELINES. CONFIRM IS
JUST ANOTHER WORD FOR APPROVE.
PROP 103 DOES NOT ALLOW THE
DEPARTMENT TO REVIEW
UNDERWRITING GUIDELINES FOR
HOMEOWNERS INSURANCE, AND THIS
HAS BEEN UPHELD IN COURT. IT IS
ALSO VERY IMPORTANT TO
UNDERSTAND THAT MITIGATION ALONE
WILL NOT RESTORE THE INSURANCE
MARKET. FOREST LEVEL MITIGATION.
COMMUNITY MITIGATION AND PARTIAL
LEVEL MITIGATION IS VITALLY
IMPORTANT FOR ALL CALIFORNIANS
TO PROTECT OUR CITIZENS, OUR
INFRASTRUCTURE AND OUR PROPERTY.
HOWEVER THE INSURANCE CRISIS IS
LARGELY DRIVEN BY INADEQUATE
RATES IN ADDITION TO THE
INCREASED RISK POSED BY
WILDFIRES. UNDOUBTEDLY, THE COST
OF INSURANCE IS GOING UP DUE TO
THE EFFECTS OF CLIMATE CHANGE,
HIGH INFLATION AND LAWSUIT
ABUSE. BUT IT IS AN ANTIQUATED
REGULATORY SYSTEM, AND
INADEQUATE RATES ARE LARGELY
CONTRIBUTING TO INSURERS
DECISIONS TO LIMIT NEW POLICIES
OR LEAVE THE STATE ALTOGETHER.
THESE MORE SYSTEMATIC ISSUES ARE
WHY SOME INSURERS ARE NOT ONLY
NOT WRITING NEW POLICIES IN
WILDFIRES, BUT NOT WRITING ANY
POLICIES IN THE STATE. RATE
INADEQUACY IN THE USE OF
IMPORTANT TOOLS LIKE CAP MODELS
WILL ALLOW INSURERS TO PRICE THE
RISK WE FACE IN CALIFORNIA,
EFFORTS TO ENCOURAGE COMMUNITY
AND PROPERTY LEVEL MITIGATION
WILL HOPEFULLY RESULT IN LESS
LOSSES IN THE COMING YEARS,
WHICH WILL EVENTUALLY BE
RECOGNIZED IN THE PREMIUMS
CONSUMERS PAY WITH ADEQUATE
RATES. INSURERS ARE LIKELY TO
WRITE MORE INSURANCE, AND THE
NATURAL PLACE TO WRITE MORE
INSURANCE WOULD BE IN AREAS
WHERE COMMUNITY MITIGATION IS
DONE USING SCIENCE BASED SCIENCE
BASED STANDARDS DESIGNED TO
REDUCE THE RISK OF WILDFIRE.
THANK YOU, THANK YOU, WE WILL
NOW TURN IT OVER TO THOSE IN
OPPOSITION HERE IN THIS ROOM.
GOOD AFTERNOON, SHERRY MCHUGH,
REPRESENTING THE PACIFIC
ASSOCIATION OF DOMESTIC
INSURANCE COMPANIES, IN
OPPOSITION TO THE BILL. THANK
YOU. GOOD AFTERNOON. JOHN
NORWOOD, ON BEHALF OF THE
INDEPENDENT INSURANCE AGENTS OF
CALIFORNIA, ALSO IN OPPOSITION.
THANK YOU. THANK YOU. ANYONE
ELSE WISHING TO STATE THEIR
OPPOSITION? SEEING NONE, I WILL
TAKE IT NOW TO THE MEMBERS,
WISHING TO SPEAK. WE'LL START
WITH SENATOR DODD. THANK YOU
VERY MUCH, MADAM CHAIR, FIRST I
WANT TO THANK SENATOR BECKER,
HIS STAFF AND TNC FOR WORKING
WITH MY CONSTITUENTS FROM NAPA
COUNTY TO INCORPORATE THEIR
IDEAS ABOUT WILDFIRE RISK
REDUCTION AND INSURANCE INTO HIS
BILL. I'M PLEASED TO COAUTHOR
THIS MEASURE. SINCE THE
CATASTROPHIC FIRES OF 17, 18 AND
20 STRUCK MY DISTRICT BY COUNTY
CITIES, FIRE SERVICE AGENCIES
AND FIRE SAFE COUNCILS HAVE BEEN
MAKING SIGNIFICANT INVESTMENTS
OF TIME AND MONEY TO IMPLEMENT
COMMUNITY WILDFIRE PREVENTION
PLANS. MY FRIENDS, NEIGHBORS,
AND HOMEOWNERS THROUGHOUT MY
SENATE DISTRICT HAVE ALSO BEEN
INVESTING SIGNIFICANT AMOUNT
AMOUNTS OF MONEY OF THEIR OWN
MONEY, TO HARDEN THEIR HOMES AND
TO FURTHER REDUCE THE RISK OF
WILDFIRE DAMAGE. IT'S NOW HIGH
TIME TO ENSURE THAT PROPERTY
CASUALTY INSURERS ACCOUNT FOR
THOSE WILDFIRE PREVENTION
ACTIONS IN THEIR DECISIONS TO
COVER AND PRICE PROPERTY
INSURANCE. AND I SAY COVER. I
THINK I'M MORE WORRIED ABOUT
COVERAGE THAN I AM PRICE,
BECAUSE I'M YOU KNOW, IN THE
PAST WE'VE HAD Þ. IF WE DO THIS,
WE WANT DISCOUNTS, WE WANT MORE
DISCOUNTS. CHRIST, WE DON'T WANT
DISCOUNTS, WE WANT INSURANCE.
AND SO THE DISCOUNT STUFF IS A
MYTH IN MY VIEW. WE NEED TO HAVE
COVERAGE OF, YOU KNOW, FOR OUR
COMMUNITIES AS, COMMISSIONER
LARA SAFER FROM WILD WILDFIRES,
SUSTAINED AND SUSTAINABLE
INSURANCE STRATEGY REGULATIONS
IMPORTANTLY ADDRESS THE MEANS
AND METHODS OF THAT PRICING OF
INSURANCE. THAT'S TRUE. BUT THE
FACT OF THE MATTER IS INSURERS
HAVE TO DECIDE TO WRITE
INSURANCE IN THE FIRST PLACE.
AND SB 1060 TAKES AN IMPORTANT
STEP TO HAVE INSURERS ACCOUNT
FOR ALL THE RISK REDUCTION WORK
THAT HAS TAKEN PLACE WHEN MAKING
THE DECISION TO PROVIDE COVERAGE
IN THE FIRST PLACE, I THOSE WERE
PREPARED REMARKS. I'VE JUST OFF
THE CUFF LISTENING TO WHAT WHAT
I HEARD TODAY, YOU KNOW, THE
LAST SPEAKER SAID, YOU KNOW,
YOU'RE YOU'RE MORE WORRIED
ABOUT, YOU KNOW, INADEQUATE
RATES AND THE RISK OF WILDFIRES.
WELL I GET THAT. SO ARE WE. AND
SO TO LESSEN THE RISK OF
WILDFIRES, WE'RE DOING FIRE
MITIGATION EVERYWHERE. AND THE
IDEA THAT THE INSURANCE
COMPANIES AREN'T PAYING
ATTENTION TO THAT, EVEN ON YOUR
OWN, I CAN'T I HONESTLY DO NOT
EVEN BELIEVE. I MEAN, I'VE GOT
PEOPLE IN MY DISTRICT THAT ARE
GETTING INSURED, CANCELED, FOR
HEAVEN'S SAKES, IN AMERICAN
CANYON IN VALLEJO, FAR AWAY FROM
THE WILDFIRE AREAS. THEY'RE JUST
SEEMS TO BE NO RHYME OR NO
REASON TO. WHAT'S GOING ON
THERE? BUT I'M GOING TO STEP
BACK. I TOTALLY GET THE FACT
THAT WE DO NOT HAVE A STABLE
INSURANCE MARKET. I TOTALLY
UNDERSTAND THAT. AND I AGREE
THAT WE DON'T. AND THERE'S A LOT
OF REASONS FOR THAT. THIS IS ONE
OF THOSE REASONS. HOWEVER, WITH
WHAT THE INSURANCE COMMISSIONER
IS DOING, THESE WERE THE FACTORS
THAT YOU ALL WERE TELLING US A
YEAR AGO. TWO YEARS AGO, OF WHAT
WAS REALLY NEEDED TO CREATE, TO
CREATE A STABLE INSURANCE MARKET
. AND I THINK THIS BILL, YOU
KNOW, I'M JUST SAYING, SENATOR
BECKER, IT COULD BE A YEAR
PREMATURE, BUT I THINK GETTING
IT ON THE BOOKS AND GETTING THE
INSURANCE COMPANIES, YOU KNOW,
ON BOARD AND GETTING USED TO
THIS BECAUSE I WON'T BE HERE
NEXT YEAR. AND I'M TELLING YOU
THAT IF THE INSURANCE
COMMISSIONER GIVES YOU WHAT YOU
WANTED AND THE ABILITY TO GET
RATES AND RATES THERE QUICKER
AND REINSURANCE AND CATASTROPHIC
MODELING AND THE COMMUNITIES ARE
DOING THE WORK THAT WE'RE ALL
DOING THROUGHOUT OUR COMMUNITIES
AND OUR FILE FIRE WISE. AND THE
INSURANCE COMPANY. YOU BETTER BE
TELLING YOUR BOSSES BACK AT THE
HOME OFFICE THAT YOU'RE GOING TO
GET A LOT MORE BILLS. THIS IS
NOTHING. THIS BILL HERE IS
REALLY A NOTHING BURGER IN MY
MIND. I THINK IT'S A GREAT FIRST
STEP JUST TO GET RECOGNITION OF
WHAT'S GOING ON IN THE, YOU
KNOW, IN THE MARKETPLACES ON
THINGS THAT YOUR COMPANIES
SHOULD BE MONITORING IN THE
FIRST PLACE. BUT SHORT OF THAT,
IF THERE'S I JUST REALLY BELIEVE
THAT YOU NEED TO BE
COMMUNICATING WITH YOUR HOME
OFFICES ON WHAT'S GOING TO
HAPPEN IN THIS INSTITUTION, A
YEAR FROM NOW, A YEAR IN 18
MONTHS FROM NOW, IF THERE'S NO
ACTION ON THE PART OF THE
INSURANCE COMPANIES. THANK YOU,
MR. DODD. I'LL TURN IT OVER TO
SENATOR NILO. THANK YOU, MADAM
CHAIR, SENATOR BECKER, YOU
MENTIONED THE 3.7 BILLION THAT'S
BEEN ALLOCATED FOR FOREST
MANAGEMENT BY THE STATE. HOW
MUCH OF THAT HAS BEEN SPENT? MY
BELIEF IS THAT THAT HAS ALL BEEN
SPENT, ACTUALLY, I DON'T KNOW IF
ANYONE CAN VERIFY THAT, BUT, I
CAN GET BACK TO YOU ON THE
SPECIFICS. I DON'T KNOW THE
PRECISE NUMBER, BUT MY
UNDERSTANDING IS NOT ALL BEEN
SPENT. BUT ONE OF US IS RIGHT,
AND WE'LL FIND THAT OUT LATER,
BUT FOR THE I WILL SAY, CAN I
SAY ONE PIECE? IS THAT IS THAT I
KNOW WE DO HAVE A GOAL OF 1
MILLION ACRES TREATED A YEAR,
AND WE'RE WORKING UP TO THAT.
WE'RE NOT AT THAT GOAL YET, BUT
I KNOW WE'RE WORKING UP TO THAT.
AND THAT MONEY IS ALSO PART OF
IT. YEAH. AND IT IS A VERY
IMPORTANT PART OF OUR CHALLENGE.
QUESTION FOR THE INSURANCE, THE
WITNESSES FROM THE INSURANCE
INDUSTRY, CAN I ASK TO JOIN US
UP HERE SO YOU CAN ANSWER
QUESTIONS IN CASE WE HAVE ANY?
THANK YOU. I WAS LOOKING AT
THOSE BUDGET NUMBERS YESTERDAY.
IF YOU WANT TO TALK ABOUT THEM,
MR. SEGMENT, YOU WANT TO JOIN IN
CASE YOU YOU HAVE SOMETHING TO
ADD. DO YOU HAVE ANYTHING TO ADD
TO THE QUESTION THAT I JUST
ASKED? WELL, SURE, I WOULD
ACTUALLY. SO I WAS LOOKING AT
THE MOST RECENT LAO REPORTS.
OBVIOUSLY THE BUDGET PROPOSED
THIS YEAR ALREADY HAS REDUCED
THE FUNDING BY $100 MILLION. THE
LAST LAO REPORT THAT LOOKED AT
AND WE TALK ABOUT IN THE BUDGET,
WHAT'S APPROPRIATED VERSUS
WHAT'S ACTUALLY LIQUIDATED OR
SPENT AND THEY DON'T HAVE THE UP
TO DATE NUMBERS. NO ONE HAS
THEM. LIKE WHAT'S BEEN ACTUALLY
SPENT. BUT THE LAST REPORT THEY
HAD, LESS THAN HALF OF IT WAS
ACTUALLY SPENT. SO THERE'S MUCH
THAT'S BEEN PROGRAMED THAT'S
INTENDED TO BE SPENT, BUT
REALLY, OUT OF THE 2.7 BILLION
OVER THE LAST FOUR YEARS, THE
LAST DATA, WE HAVE LESS THAN
HALF OF IT'S BEEN ACTUALLY
SPENT. AND WHEN YOU TALK ABOUT
$3.7 BILLION SINCE 2017, THAT'S
$500 MILLION A YEAR STATEWIDE
FOR THE ENTIRE STATE OF
CALIFORNIA. AND, YOU KNOW, I
THINK A MUCH WORSE, A MUCH MORE
WORTHWHILE CONVERSATION WOULD BE
BE TALKING ABOUT, CAN WE DO AN
ANALYSIS OF HOW MUCH THE STATE
NEEDS TO SPEND TO GET A
MEANINGFUL REDUCTION IN RISK, AN
ANNUAL COMMITMENT? AND THEN WHAT
DOES IT TAKE TO MAINTAIN THAT?
BECAUSE REMEMBER, EVEN IF YOU
SPEND $500 MILLION A YEAR
STATEWIDE, ALL THAT GROWS BACK
IN A YEAR. SO YOU HAVE TO STAY
ON TOP OF IT. SO YOU KNOW THIS
IDEA I THINK THAT $3.7 BILLION
ON A STATEWIDE BASIS. WELL, IT
MIGHT BE MEANINGFUL IN CERTAIN
COMMUNITIES, IS GOING TO HAVE A
STATEWIDE IMPACT THAT'S GOING TO
CHANGE THE OUTCOME OF AN
INSURANCE ANALYSIS, I THINK IS A
LITTLE, YOU KNOW, WISHFUL
THINKING, SO FOR THE QUESTION
THAT I WANTED TO ASK, SENATOR
DODD, MY FRIEND AND COLLEAGUE,
INDICATED THAT IT APPEARS TO HIM
THAT YOU'RE NOT PAYING ATTENTION
TO THE ISSUE OF THE MITIGATION,
PARTICULARLY DONE BY INDIVIDUAL
HOMEOWNERS. AND I COULD SEE AN
INDIVIDUAL HOMEOWNER SAYING,
WELL, I'M I'M HARDENING MY
PROPERTY TO PROTECT AGAINST, A
FIRE THAT MIGHT COME THROUGH
THIS AREA. AND YOU'RE REFUSING
TO TAKE THAT INTO ACCOUNT IN
ASSESSING WHETHER OR NOT YOU
SHOULD ENSURE ME. AND IF YOU DO,
HOW MUCH YOU'RE GOING TO CHARGE
ME. RIGHT. SO YES, I MEAN, THIS
IS A DIFFICULT ONE BECAUSE, YOU
KNOW, I THINK WE UNDERSTAND ON
AN INTUITIVE LEVEL WHY EVERYONE,
YOU KNOW, PEOPLE, LEGISLATORS,
EVERYONE WANTS TO FOCUS ON THIS
MITIGATION ISSUE BECAUSE IT'S
SOMETHING THAT PEOPLE CAN
CONTROL AND THEY FEEL THEY'VE
DONE THE RIGHT THING AND THEY
SHOULD BE REWARDED FOR THAT. AND
THAT IS ABSOLUTELY A FAIR AND
NATURAL INSTINCT. BUT WHAT MOST
PEOPLE DON'T UNDERSTAND, AND NOR
WOULD THEY, UNLESS THEY'RE SORT
OF IN THE WEEDS OF INSURANCE.
BUT THE MITIGATION THAT ONE DOES
ON THEIR HOME IS, IS BUT A SMALL
COMPONENT OF THE OVERALL
DECISION. AND SO, FOR EXAMPLE, A
PERFECT EXAMPLE IS IF YOU LOOK
AT STATE FARM WHO'S RECENTLY
SAID THEY'RE NOT WRITING
ANYWHERE IN THE STATE, IT'S
BECAUSE AS AN INSURER, YOU HAVE
TO HAVE A CERTAIN AMOUNT OF
CAPITAL TO WRITE POLICIES. YOU
CAN'T JUST WRITE POLICIES
BECAUSE YOU FEEL LIKE IT. YOU
HAVE TO HAVE CAPITAL TO BACK UP
AND PAY THOSE CLAIMS. THEY CALL
IT SURPLUS OR CLAIMS PAYING
RESERVE. AND WHEN YOU DON'T HAVE
THAT CAPITAL, YOU CAN'T WRITE A
POLICY. SO IT DOESN'T MATTER IF
YOU CAN HAVE A CONCRETE BUNKER
WITH A STEEL ROOF. IF YOU LOOK
AT STATE FARM, WHERE THEIR
CLAIMS PAYING RESERVE, THEY'VE
LOST SO MUCH MONEY, THEY'VE LOST
75% OF THEIR CLAIMS PAYING
RESERVE. SO THEY'RE FROZEN. HIGH
RISK AREAS, MODERATE RISK AREAS,
LOW RISK URBAN AREAS. THEY'RE
NOT WRITING ANYWHERE. THEY DON'T
HAVE ANY RESERVE CAPITAL TO GO
DO THAT. SO THIS FOCUS ON THIS
IDEA THAT YOU MITIGATE AND
YOU'RE NOT GETTING THE RESULT
YOU WANT IS, I THINK INTUITIVELY
UNDERSTANDABLE, BUT IT'S NOT
ACTUALLY CONNECTED TO REALLY THE
REGULATORY AND THE FINANCIAL
SOLVENCY CRITERIA OR
CONCENTRATION RISK OR MYRIAD
OTHER COMPONENTS. YEAH, YEAH,
CERTAINLY. BUT MYRIAD OTHER
COMPONENTS THAT GO INTO THIS
DECISION. AND SO, WE COULD TALK
MORE, BUT I'LL FREEZE THERE.
THANK YOU. THANK YOU. IN OTHER
WORDS, AS SENATOR BECKER SAID,
IT'S COMPLEX FOR SURE, AND, AND
CERTAINLY IT IS. AND WE, WE
CERTAINLY WANT TO ENCOURAGE
PEOPLE TO HARDEN THEIR HOMES,
CERTAINLY, AT LEAST NOT
DISCOURAGE THEM, AND IN, IN
FOREST AREAS WHERE YOU'RE
SURROUNDED BY, TREES AND A LOT
OF FOREST, YOU CAN HARDEN YOUR
HOME AS MUCH AS YOU WANT. AND IF
A WILDFIRE COMES THROUGH,
UNFORTUNATELY IT'S PROBABLY NOT
GOING TO HELP. NOW THAT SOUNDS
LIKE I'M SAYING, YOU KNOW, DON'T
WORRY ABOUT IT IF YOU'RE IN
THERE, UNLESS THEY'RE GOING TO
FIX EVERYTHING ELSE. AND I DON'T
WANT TO LEAVE THAT MESSAGE, BUT
I JUST WANT TO EXPLAIN THAT THAT
IS THE NATURE OF THE RISK THAT
INSURANCE COMPANIES HAVE TO
RECOGNIZE, ON TOP OF THE RATHER
SEVERE FINANCIAL RISKS THAT THEY
HAVE. AND SENATOR DODD ALSO SAID
, YOU KNOW, WE'D LOVE TO HAVE,
PRICE REYES LIKE WE HAVE HAD,
BUT IT REALLY DOESN'T MAKE ANY
DIFFERENCE IF WE DON'T HAVE THE
INSURANCE ITSELF. AND WHAT WE'RE
FACED WITH RIGHT NOW, MORE
IMPORTANT THAN COMPLEXITY IS AN
EXTREMELY UNSTABLE, UNSETTLED,
AND UNSTABLE INSURANCE MARKET.
IT IS COMPLEX, BUT MORE
IMPORTANTLY, THE INSTABILITY AND
UNSETTLED NATURE OF THIS MARKET
IS REALLY THE SEVERE CHALLENGE
THAT WE'RE DEALING WITH. AND IT
DOESN'T SEEM WISE TO ME FOR THE
LEGISLATURE TO INJECT ADDITIONAL
VARIABLES INTO THE MIX RIGHT
NOW, AS I'M I AM HOPING I'VE NOT
BEEN TERRIBLY ENTHUSED ABOUT THE
ACTION OF THE INSURANCE
COMMISSIONER. SO FAR, BUT HE'S
SAYING THE RIGHT THINGS. AND
THAT IS THE AVENUE THROUGH WHICH
THIS IS EVENTUALLY, GOING TO BE
SOLVED. MAYBE THE LEGISLATURE
CAN MAKE A DIFFERENCE AT THE
MARGIN, BUT LET'S NOT MAKE LET'S
NOT HAVE THAT MARGIN BE ONE THAT
INJECTS ADDITIONAL INSTABILITY,
AND UNSETTLEDNESS OF THE MARKET
BY VIRTUE OF OUR ACTIONS. AND
I'M CONCERNED THAT THAT IS
INDEED WHAT THIS MIGHT BE DOING.
THANK YOU. SO, GO AHEAD. YOU
WANTED TO RESPOND TO THAT? YEAH,
I JUST WILL SAY A FEW THINGS,
AND I APPRECIATE YOU SAID IT IS
A COMPLEX AND WE SPOKE A LITTLE
BIT EARLIER. I'LL JUST SAY A FEW
THINGS NOW AND THEN THERE WILL
BE SOME MORE, YOU KNOW,
DISCUSSION AND, YOU KNOW, THERE
MAY BE A CHANCE TO HAVE OUR
WITNESSES RESPOND JUST
PARTICULARLY ON THAT, ON THAT
CONFLICT ISSUE THAT WAS RAISED.
I'LL JUST SAY A COUPLE OF
THINGS. ONE IS THAT, YOU KNOW,
THE, THE, THE, THE DEPARTMENT OF
INSURANCE AUTHORITY IS MOSTLY
LIMITED TO REGULATION OF RATES,
NOT OF MODELS. SO JUST TO BE
REALLY CLEAR ON THAT. SO WE
DON'T WE CAN'T DETERMINE RATES.
WE'RE NOT TRYING TO IN THIS
BILL. THE LEGISLATURE CAN'T DO
THAT. THAT'S THE POWER OF THE
INSURANCE COMMISSIONER HAS AND
THAT'S GREAT. BUT WHAT WE CAN DO
IS HAVE SOME AUTHORITY ON THE
UNDERWRITING MODEL. SO JUST TO
BE CLEAR ON THAT. SO THERE'S
SEPARATE AUTHORITY THERE. AND SO
I THINK WE'RE DOING WHAT WE CAN
DO HERE, AND THIS IN RESPONSE TO
THE INVESTMENT PIECE, YOU KNOW,
THE BUDGET WAS APPROPRIATED LAST
YEAR. AND THANKS FOR CLARIFYING
THAT. BUT I GUESS THE POINT HERE
IS THAT IT'S ALSO A STATE AND
LOCAL AND COUNTY. I DON'T KNOW
IF YOU WANT TO ESTIMATE YOU SAID
MILLIONS, JUST IN NAPA ALONE. I
THINK THAT'S WHY WE HAVE THE
LEAGUE OF CITIES AND THE
COUNTIES HERE TO DO THAT. YEAH.
THANK YOU, SENATOR BECKER, FOR
THE CHANCE. RIGHT. IN OUR COUNTY
OVER THE PAST THREE YEARS, WE AS
A COUNTY HAVE SPENT OVER $15
MILLION. AND JUST TO THAT POINT,
WE'RE ALSO THE RECIPIENT. WE'VE
HAD PRIVATE DONATIONS AT A MUCH
SMALLER LEVEL. BUT WE'VE ALSO
LIKE MANY OTHER COUNTIES IN THE
STATE, ARE THE RECIPIENT OF FEMA
DOLLARS TOWARD THIS. OUR COUNTY
WILL BE GETTING $37.5 MILLION
FROM FEMA AND OVER HALF A DOZEN
OTHER COUNTIES ARE RECEIVING
SIMILAR SIZED FEMA GRANTS. SO
IT'S NOT JUST THE STATE DOLLARS
COMING IN. IT'S FEDERAL DOLLARS
AND OTHER, OTHER AVENUES OF
FUNDING FOR THIS KIND OF WORK AS
WELL. GREAT. THANK YOU. SO NOW I
WANT TO TURN IT OVER TO, SENATOR
CAVALLERO, WHO ALSO WANTED TO
MAKE SOME COMMENTS. SHE SAID SHE
WOULD YIELD TO ME SINCE MY NAME
WAS INVOKED A COUPLE OF TIMES
HERE. GO AHEAD. BY THE GOOD
SENATOR NILO, OF COURSE, OF
COURSE. ALWAYS NOTED, FIRST OF
ALL, FOR THE DISCUSSION. THÀNH I
TALKED TO CHIEF TYLER A COUPLE
OF WEEKS AGO, AND THE MONEY IS
PROGRAMED, SO IT MAY HAVE BEEN
SLOW GETTING OUT THE DOOR, BUT
THE MONEY IS BEING SPENT, PERIOD
. AND NOBODY HERE IS TALKING
ABOUT, ONE OFF SOMEBODY
MITIGATING THE FIRE ON THEIR
HOME IN A COMMUNITY. VÆ WHAT
WE'RE TALKING ABOUT HERE IS
COMMUNITY WIDE MITIGATION, AND
IT'S REALLY CLEAR THAT WE GET
THAT ACROSS COMMUNITY WIDE
MITIGATION. AND THAT'S ALL.
THANK YOU. SENATOR CABALLERO.
THANK YOU VERY MUCH, MADAM
CHAIR. I APPRECIATE THE
OPPORTUNITY TO MAKE SOME
COMMENTS, AND I AGREE WITH A LOT
OF WHAT MY COLLEAGUES HAVE BEEN
SAYING, LET ME JUST START OFF BY
SAYING MY FRUSTRATION IS THAT WE
DON'T ACT IN A COORDINATED,
COORDINATED, COORDINATED FASHION
TO ADDRESS ISSUES THAT WE KNOW
ARE GOING TO BE VERY, VERY
SERIOUS IN 2016, WHEN I CAME
BACK TO THE LEGISLATURE, I HAD
JUST SEEN MAPS THAT INDICATED WE
HAD 144 MILLION DEAD OR DYING
TREES UP IN THE SIERRAS. AND,
AND I ASKED A NUMBER OF THE,
ENVIRONMENTAL ORGANIZATIONS THAT
CAME IN TO SEE ME, WHAT ARE WE
GOING TO DO ABOUT THESE TREES?
THEY ARE FUEL. THEY'RE
DANGEROUS. WE NEED TO GET THEM
OUT. WE NEED TO REPLACE THEM.
AND I WAS TOLD, LEAVE THEM. AND
THIS WAS BEFORE THE BIG
WILDFIRES HIT AND I LOST MY. I
HAVE FAMILY THAT LOST THEIR
HOMES, TWO OF WHO WERE
FIREFIGHTERS IN PARADISE. SO I'M
INTIMATELY RELATED TO THE,
DEVASTATION THAT THESE FIRES
HAVE HAVE WRECKED. BUT WE STILL
HAVEN'T GOTTEN OFF THE DIME TO
ALLOW ALLOW BIOMASS, STATIONS TO
OPEN UP AND TO START PULLING
DOWN THESE, THESE DEAD AND DYING
TREES. THEY'RE THEY'RE STILL AND
IN THE AREAS THAT ARE BURNED,
THE TREES ARE STILL THERE. AND
SO IT IT IS, PART OF THE
CHALLENGE THAT I HAVE WITH THE
BILL, QUITE FRANKLY, IS ONE IS
THAT I DO THINK THE, THE
INDUSTRY IS TOTALLY DISABLED,
DESTABILIZED, DESTABILIZED BY
THE BY THE FIRES THAT WE'VE HAD
AND THE LOSSES HAVE BEEN
TREMENDOUS. AND WHAT WE WANT
THEM TO DO IS TO COME IN TO END
TO REINSURE. AND, THE MORE
PRESSURE WE PUT ON THEM TO DO
THINGS THAT ARE, IS, IS THAT ARE
NEW AND INNOVATIVE AND, THAT
COST MONEY THE LEAST LIKELY WE
ARE TO GET THEM REOPENED AGAIN,
WHEN I LOOK AT THE, AT THE
LANGUAGE OF THE BILL AND I ALSO
LOOKED AT THE, AT THE EDITS AS
WELL, ALTHOUGH IT, IT APPEARS AS
IF IT'S A KIND AND GENTLE WAY OF
SAYING, GEE, WE'D LIKE YOU TO,
TAKE THIS INTO CONSIDERATION.
THE MONEY THAT WE'RE SPENDING ON
ALL OF THESE, THESE, PROJECTS TO
ENSURE SAFETY IN THE COMMUNITY.
THE BILL SAYS SHALL AND IT SAYS
TO, TO ENSURE COMPLIANCE. AND SO
AT SOME POINT, I MEAN, SHELL
MEANS SHELL AND IT'S NOT MAY AND
ENSURE COMPLIANCE MEANS THAT AT
SOME POINT THERE'S GOING TO BE
AN OBLIGATION THÀNH TO SHOW SOME
KIND OF PROOF OF HOW YOU'VE
TAKEN THIS, PUT, PUT, PUT THIS
WITHIN YOUR MODEL AND THAT. AND
IF YOU HAVEN'T DONE IT, THAT
THERE'S A CONSEQUENCE FOR IT. SO
I, I HAVE SOME I, I THINK THIS
IS, I THINK IT'S A GREAT IDEA
BEFORE ITS TIME. I GUESS IS
WHERE I'M, I'M COMING FROM AND,
AND I THINK WE NEED TO,
STABILIZE THE HOME OWNERSHIP
INSURANCE MARKET AND, AND WE
IT'S NOT OUR JOB, BUT WE NEED TO
UNDERSTAND THAT IT'S THE JOB OF
THE INSURER TO PROTECT THEIR
FINANCIAL SOLVENCY. AND THOSE
ARE REALLY IMPORTANT TO ME. SO I
HAVE REAL, ISSUES WITH DOING
ANYTHING MORE THAN IT THAT FLIES
IN THE FACE OF WHAT, THE
INSURANCE COMMISSIONER IS DOING
RIGHT NOW, AS WELL AS THE
GOVERNOR. SO IT'S MY POSITION,
CAN I? OKAY RESPOND TO THAT? AND
THEN WOULD YOU LIKE TO CLOSE ANY
OTHER. I'M SORRY, ANY OTHER
COMMENTS UP HERE? NO. GO AHEAD.
WELL SO WE'RE GOING TO GET MY
WITNESS A CHANCE, BUT I JUST
WANT TO JUST ADDRESS A COUPLE OF
THOSE THINGS THAT SENATOR
CABALLERO, THIS BILL IS ABOUT
COORDINATION. THAT IS WHAT THIS
BILL IS ABOUT. THE BILL IS ABOUT
WE WANT INCENT EVERYONE TO DO
THE RIGHT THINGS. SO WE WANT TO
INCENT, YOU KNOW, IF WE DON'T
PASS THIS BILL, WE'RE SAYING
THIS $15 MILLION YOU'RE
SPENDING. YEAH DON'T SPEND IT.
MAYBE IT'S NOT HELPING YOU. I
DON'T KNOW IF THEY'RE TAKING
INTO ACCOUNT, LIKE WE'RE SAYING,
YOU KNOW, ALL THE ALL THE WORK
THAT ALL THE HOMEOWNERS ARE
DOING AND THE $15 MILLION, THE
COUNTY, EVERYTHING YOU HEARD OF
THAT MULTIPLY, IT WILL COST ALL
THESE REGIONAL COUNTIES AND THE
37 MILLION THEY'RE GOING TO GET
TO FEMA. WE'RE SAYING, YEAH,
DON'T DO IT. WE DON'T KNOW IF IT
HELPS OR NOT. DON'T DO IT. THIS
IS ALL ABOUT COORDINATION. WE'RE
JUST TRYING TO INCENT THE RIGHT
BEHAVIOR. AND WE'RE SAYING, HEY,
AND I AGREE WITH YOU, BY THE
WAY. WE DIDN'T ALWAYS HAVE THE
RIGHT POLICIES. I THINK ACTUALLY
NOW WE DO HAVE, I THINK WITH ALL
THE AERIAL RESOURCES AND THE
TECH AND INCREASING CAL FIRE, I
THINK EVERYTHING THAT WE'RE
DOING, ACTUALLY WE DO HAVE A,
FIRST TIME THAT I'VE SEEN A
REALLY COORDINATED STRATEGY. BUT
I AGREE WITH YOU. I THINK THAT
WE DIDN'T AND THIS IS SAYING,
WAIT, WE WANT TO SET THAT
BEHAVIOR. WE WANT TO INCENT THE
STATE TO DO THAT WORK. YOU'RE
TALKING ABOUT, YOU KNOW, AGAIN,
MY SUBCOMMITTEE, I SEE THE
CLIMATE CATALYST FUND THAT'S
TRYING TO SPIN UP NEW BIOMASS
BUSINESSES TO DO EXACTLY WHAT
YOU'RE TALKING ABOUT, AND WE'RE
SAYING WE WANT TO ENCOURAGE ALL
THAT. RIGHT? AND IF PEOPLE DO
THAT WORK, THEN THEY SHOULD GET
THE CREDIT AND THE CHAU. IT'S A
REALLY IMPORTANT POINT. BUT
AGAIN, IT SHALL TAKE IT INTO
ACCOUNT. IT DOESN'T SAY I DON'T
COMPLETELY AGREE WITH THE
SENATOR DODD'S CHARACTERIZATION
OF THE OF THE LATENESS OF THE
BILL. BUT BUT CERTAINLY WE COULD
BE MUCH MORE HEAVY HANDED. WE
COULD BE MUCH MORE HEAVY HANDED.
THE BILL IS SAYING YOU SHALL
TAKE INTO ACCOUNT DOESN'T SAY
YOU HAVE TO WRITE MORE POLICIES.
IT DOESN'T SAY YOU HAVE TO DO
THIS. IT DOESN'T SAY YOU HAVE
TO. YOU KNOW, HAVE CERTAINLY IT
DOESN'T SAY YOU HAVE TO HAVE AN
IMPACT ON RATES AT ALL, IT'S
JUST SAYING YOU SHALL TAKE IT
INTO ACCOUNT IN YOUR MODEL. AND
I THINK THAT IS A GENTLE AND
APPROPRIATE WAY TO DO IT. I DO
WANT OF MY WITNESS, MR. JONES
JUST ADDRESSED THAT, THAT THAT
COORDINATION ISSUE WITH THE
DEPARTMENT OF INSURANCE BECAUSE
THAT IT WAS RAISED THAT MAYBE
SOME OF THIS IS CONTRADICTORY.
IS THAT OKAY, CHAIR? ABSOLUTELY.
WE JUST NEED TO KEEP IT BRIEF.
THANK YOU. MADAM CHAIR. AND IT'S
A TREAT TO GET TO APPEAR BEFORE
MY COLLEAGUES, MR. DODD AND MISS
CABALLERO AND MISS RUBIO AND MR.
NILO, WITH WHOM I SERVED ON A
NUMBER OF JOINT POWERS ENTITIES
BACK IN THE DAY IN SACRAMENTO.
SO I TAKE YOUR POINT, SENATOR
CABALLERO. THE WORD SHALL IS IN
SECTION 3001, BUT IT'S THE MODEL
SHALL ACCOUNT AND FRANKLY, WE
COULDN'T COME UP WITH ANY OTHER
WAY TO MAKE SURE THAT THE MODELS
ACCOUNT WITHOUT INCLUDING THE
WORD SHELL. BUT IF THERE'S IF
THE BILL COULD BE PERMITTED TO
MOVE ALONG, AND IF THERE'S OTHER
VERBIAGE THAT THE AUTHOR COULD
WORK WITH THE CHAIR AND THE
MEMBER ON TO REDUCE THE
APPREHENSION ABOUT THAT. BUT
IT'S JUST THE MODEL SHELL
ACCOUNT. THE INSURERS RETAIN
TOTAL DISCRETION IN TERMS OF
THEIR RESERVING THEIR PRICING.
THEY'RE GOING TO GET A LOT MORE
PRICE UNDER COMMISSIONER LARA'S
PROPOSAL, AND THEY'VE MADE A
SOLID CASE FOR THAT, AND THEY
RETAIN TOTAL DISCRETION WITH
REGARD TO DECIDING WHETHER TO
WRITE OR RENEW INSURANCE, YES.
IT'S LIKE A LAYER CAKE. THERE'S
PROPERTY LEVEL MITIGATION. HOME
HARDENING, DEFENSIBLE SPACE,
COMMUNITY MITIGATION, LANDSCAPE
SCALE MITIGATION, THIS JUST SAYS
THE MODELS NEED TO ACCOUNT FOR
THAT IN SOME CASES, IF IT'S JUST
THE HOME HARDENING, IT'S NOT
GOING TO BE ENOUGH. AS SENATOR
NHIÀU HAS SAID. BUT IF HOME
HARDENING IS OCCURRING WHERE
THERE'S OTHER THINGS OCCURRING,
IT WOULD BE GREAT IF THE MODELS
WOULD ACCOUNT FOR IT SO THAT THE
HOMEOWNER WOULD HAVE A FIGHTING
CHANCE. THEN TO GET A RISK SCORE
THAT THE INSURER COULD CONSIDER.
ULTIMATELY, THE INSURER DECIDES
WHAT THEY WANT TO DO. SO WE'RE
NOT FORCING THEM TO DO ANYTHING
AND THEN JUST TO CLOSE, MADAM
CHAIR, I APPRECIATE YOUR
INDULGENCE. THIS LANGUAGE WITH,
WITH REGARD TO WHAT THE MODELS
HAVE TO ACCOUNT FOR IS THE SAME
LANGUAGE, ESSENTIALLY THE SAME
LANGUAGE AS IN COMMISSIONER
LARA'S PROPOSED REGULATION ON
WHAT THE MODELS HAVE TO ACCOUNT
FOR IN RATING. SO HE'S DEALING
WITH RATING. HE WANTS TO MAKE
SURE THE MODELS ACCOUNT FOR
THESE THINGS. ONLY YOU CAN
DECIDE WHETHER THE MODELS FOR
UNDERWRITING ACCOUNT FOR THIS.
THEY SHOULD. BUT THE INSURERS
RETAIN ULTIMATE DISCRETION WITH
REGARD TO WHETHER TO WRITE,
WHETHER TO RENEW, HOW TO RESERVE
ALL THOSE THINGS ARE NOT TOUCHED
UPON BY THIS BILL. SO WE WOULD
RESPECTFULLY ASK FOR YOUR VOTE.
THANK YOU SO, SEE NO MORE
COMMENTS FROM MY COLLEAGUES. I
WANT TO ADD MY VOICE TO THIS,
AND, YOU KNOW, AND I SAT DOWN
QUITE A BIT WITH WHAT THE AUTHOR
ON THIS BILL AND, AND I WANTED
TO GIVE MY COLLEAGUE THE
OPPORTUNITY TO, TO WORK THE
BILL, BUT YOU KNOW, I'LL STATE
IT. FOR THE RECORD, I HAD
HESITATIONS BECAUSE I THINK NO
ONE HAS THE BACKGROUND KNOWLEDGE
THAT I DO AS IT PERTAINS TO HOW
HARD WE WORK. LAST YEAR, GIVING
UP HOLIDAYS, WEEKENDS, HOURS AND
HOURS ON END, TRYING TO COME TO
A, AN AGREEMENT. AND SO I KNOW
THAT YOU KNOW, I WILL
RESPECTFULLY DISAGREE WITH MY
COLLEAGUE. DODD THAT THE
INDUSTRY IS NOT PAYING ATTENTION
TO SOME OF THESE ISSUES BECAUSE
WE SPEND MONTHS AND MONTHS
TRYING TO COME UP WITH THE
SOLUTION. AND IN MY PERSONAL
OPINION, IT'S THE FIRST TIME
THAT I SAW CONSUMER ADVOCATES
JOIN WITH THE INSURANCE
COMMISSIONER, JOIN WITH THE
INDUSTRY, IT WAS LENGTHY, IT WAS
TEDIOUS. AND THE REASON I WANT
TO STATE THAT, BECAUSE, YOU
KNOW, IT WAS IT WOULD HAVE BEEN
MY PREFERENCE TO HAVE A BILL
LAST YEAR THAT WOULD HAVE
HIGHLIGHTED EVERYTHING WE WORKED
ON, BECAUSE AS IT STANDS, WE'RE
NOT SEEING IT. SO WE'RE ALL SORT
OF GUESSING AS TO WHAT'S
HAPPENING. AND I WANTED TO HAVE
A BILL IN PLACE THAT WOULD
HIGHLIGHT EVERYTHING WE WORKED
ON. IT WAS A LOT, WHICH INCLUDED
EVERYTHING THAT WE'VE BEEN
TALKING HERE ABOUT. AND I THINK
I HAVE TO AGREE WITH EVERYONE.
EVERYONE HAS A LITTLE BIT OF
TRUTH HERE, AS IT PERTAINS TO
MAKING SURE THAT THOSE AT HOME
HARDEN GET CREDIT FOR IT, WE
ALSO HAD IN THE DISCUSSION WE
TALKED ABOUT THE RIGHT OF FIRST
EXIT TO THOSE THAT HAVE HOME
HARDENED TO EXIT OUT OF THE FAIR
PLAN. WE WANTED TO DEPOPULATE
THE FAIR PLAN, SO A LOT OF WORK
WENT INTO TALKING ABOUT SOME OF
THE CREDITS, WHAT WE CAN DO, HOW
DO WE COLLABORATE. AND SO I WANT
TO GIVE CREDIT WHERE CREDIT IS
DUE. AND EVERYONE CAME TO THE
TABLE. NO ONE WAS HAPPY. AND I
THINK THAT'S JUST PROBABLY AN
INDICATION THAT IT WAS A GOOD
MIDDLE GROUND BECAUSE EVERYONE
WAS KICKING AND SCREAMING. BUT
BUT EVERYONE CAME TO THE TABLE
AND EVERYONE AGREED FOR THE SAKE
OF MAKING SURE THAT OUR
CONSUMERS WERE AT THE HEART OF
THE DISCUSSION, THAT THERE WAS
AVAILABILITY, AVAILABILITY,
AFFORDABILITY, AND THAT WE KEEP
A HEALTHY MARKET HERE IN THE
STATE OF CALIFORNIA, WHICH WHICH
IS A REALLY BIG STRUGGLE. AND I
DO UNDERSTAND THAT WE KEPT
SAYING, WHY DON'T THE INSURANCE,
YOU KNOW, THE INSURERS DO THIS
OR DO THAT, BUT, YOU KNOW, I
WANT TO REMIND US THAT WHEN THE
PARADISE FIRE OCCURRED, WE HAD
THE MERCED MUTUAL GO UNDER. THEY
WEREN'T PREPARED FOR SUCH A BIG
CATASTROPHE. AND IT'S NOT JUST
KEEP WRITING, KEEP WRITING. I
ALSO THINK THAT THE INSURANCE
COMPANIES HAVE A RESPONSIBILITY
TO STAY SOLVENT, TO MAKE SURE
THAT WHEN, OUR CONSUMERS NEED
THE PAYOUT, THEY'RE THERE TO DO
SO, SO I WANTED TO GIVE THE, THE
AUTHOR THE OPPORTUNITY TO
CONTINUE TO WORK THE BILL. I'M
VERY THANKFUL THAT WE HAD THESE
CONVERSATIONS AND IT WAS MADE
CLEAR BY THE AUTHOR, BY, OUR
FORMER INSURANCE COMMISSIONER
HERE THAT THIS IS THE INTENT IS
NOT TO EXPAND THE AUTHORITY OF
THE INSURANCE COMMISSIONER.
CLEARLY NOT. WE DON'T WANT TO DO
THAT. BUT THE AUTHOR DID AGREE
TO CONTINUE TO WORK THE BILL AND
MAKE SURE THAT SOME OF THE
LANGUAGE THAT'S PROBLEMATIC WITH
SOME OF THE INDUSTRY AND, YOU
KNOW, GETS TO WHERE HE NEEDS TO
BE. BUT IN A WAY THAT, AGAIN,
DOESN'T EXPAND THE AUTHORITY OF
THE INSURANCE COMMISSIONER AND
THAT WE GET TO WHERE HE NEEDS TO
GET. BUT WE DID WORK ON KNIT
WITH THE INSURANCE COMMISSIONER.
THERE'S A LOT OF THINGS THAT
WE'VE BEEN DISCUSSING HERE THAT
HAVE NOT HAPPENED, BUT THEY'RE
UNDERWAY, AGAIN, IT WOULD HAVE
BEEN MY PREFERENCE THAT WE PUT
IT IN WRITING LAST YEAR, BUT THE
SENATE WAS READY. WE COULDN'T
GET OUR COLLEAGUES IN THE
ASSEMBLY TO GET THERE. BUT
EVERYTHING THAT WE'VE TALKED
ABOUT IS IMPORTANT. EVERYTHING
THAT WE'VE TALKED ABOUT, IT WAS
DISCUSSED. EVERYONE DID COME TO
THE TABLE. I DID FEEL IT WAS A
LITTLE BIT PREMATURE AND I
EXPRESSED IT TO THE AUTHOR. BUT
AGAIN, I WANTED TO MAKE SURE
THAT MY COLLEAGUE HAD EVERY
OPPORTUNITY TO WORK A BILL THAT,
THAT, THAT HE CAN MOVE FORWARD.
AND THE COMMITMENT WAS THAT HE
WOULD CONTINUE TO TALK TO
EVERYONE TO GET TO A GOOD PLACE.
SO I WILL NOT BELABOR THE POINT.
INSURANCE IS COMPLICATED.
THERE'S A LOT OF MOVING PIECES
AND A LOT OF THINGS THAT WE
DON'T GET TO SEE THAT ARE
HAPPENING AS WE SPEAK, I
CONSTANTLY SPEAK TO THE
INSURANCE COMMISSIONER, AND HE
IS MOVING FORWARD WITH SOME OF
THOSE COMMITMENTS THAT WE AGREED
TO LAST YEAR, IN COLLABORATION
WITH EVERYONE, CONSUMER
ADVOCATES, AND EVERYONE ELSE,
THEY CAME TO THE TABLE. SO I
WILL, MOVE THE BILL FORWARD. AS
I STATED HERE TODAY, I WANT TO
GIVE MY COLLEAGUE THAT
OPPORTUNITY, BUT I DO EXPECT
THAT THERE WILL BE MORE
CONVERSATIONS ABOUT THIS BILL.
AND WITH THAT, I WANT TO WANT TO
MAKE A MOTION, MOTION BY MR.
DODD. OH, I'M SO SORRY. WOULD
YOU LIKE TO CLOSE? SURE I KNOW
IT'S BEEN A LONG DISCUSSION. I
JUST WANT TO SAY, FIRST OF ALL,
I APPRECIATE THE INDUSTRY, I
THINK THERE MIGHT BE SOME,
BECAUSE I'M NOT ONE OF THEM WHO
THOUGHT MAYBE, MAYBE THERE WAS
SOME POSTURING, YOU KNOW,
POSTURING OR, YOU KNOW, HEY,
THEY WERE JUST TRYING TO GET
MORE MONEY. I THINK WITH ALL THE
EXITS WE'VE SEEN, LIKE, THERE
WAS REAL, REAL, REAL QUESTIONS
IN THE MARKET AND, AND SO MY
SECOND POINT IS TO THANK YOU,
CHAIR AND THE INSURANCE AND OUR
INSURANCE COMMISSIONER, MR.
LARA. FOR REALLY WORKING ON THIS
COMPREHENSIVE APPROACH THAT WE
KNOW THAT WE NEED. AND I THINK
WE'RE DOING THE STEPS THAT WE
NEED AND, AND AGAIN, THAT'S OUR
BELIEF IS THAT THIS IS WE'RE
DOING THIS AS COMPLEMENTARY VÆ
IF THEY'RE ALREADY DOING THIS,
GREAT, YOU KNOW, SHOULDN'T
OPPOSE TO THIS BILL, IF THEY'RE
NOT DOING IT, GREAT. WE JUST
WILL MAKE SURE THAT'S TAKEN INTO
ACCOUNT. AND I CERTAINLY HAVE MY
COMMITMENT TO KEEP WORKING, WITH
THE INDUSTRY ON THIS, WE ALREADY
MADE A LOT OF CHANGES JUST EVEN
THIS WEEK. AND I THINK THEY'RE
PROBABLY PROBABLY DIGESTING
THOSE CHANGES. BUT YOU CERTAINLY
HAVE MY COMMITMENT TO WORK. KEEP
WORKING GOING FORWARD, IF THIS
BILL MOVES FORWARD, I ASK FOR
THE CHANCE TO DO THAT. I
RESPECTFULLY ASK FOR AN AYE
VOTE. THANK YOU. IT'S BEEN MOVED
BY MR. DODD. MADAM SECRETARY,
PLEASE CALL THE ROLL FILE. ITEM
B THREE SB 1060 BY BECKER.
MOTION IS DUE. PASS AS AMENDED
TO APPROPRIATIONS. RUBIO I,
RUBIO I NILO NØ. NILO NÓ.
ALVARADO. GIL. CABALLERO CORTEZ,
I CORTEZ Â I DODD I DODD I
OCHOA. THREE ONE. WELL, THE BILL
HAS THREE ONE. AND WE WILL LEAVE
IT OPEN FOR THOSE ABSENT
MEMBERS. THANK YOU SO VERY MUCH.
AND THANK YOU FOR YOUR
TESTIMONY, NEXT WE WILL CALL UP,
SENATOR NGUYEN, WHO I SEE IN THE
AUDIENCE, WE'RE GOING TO HEAR SB
1229 BY SENATOR NGUYEN AND WE,
CAN WE HAVE THOSE TESTIFYING AND
SUPPORT COME JOIN US? I DON'T
THINK WE HAVE ANY. THANK YOU,
MADAM CHAIR. DO YOU WANT ME TO
START NOW? OKAY. ARE WE READY?
YOU MAY PROCEED. THANK YOU,
MADAM CHAIR. I'VE INTRODUCED SB
1229 JUST TO SIMPLY LET
CONSUMERS KNOW WHEN THEIR HOME
AND AUTO INSURANCE ARE USING I
TO PROCESS THEIR APPLICATION FOR
COVERAGE OR FILING CLAIMS FOR
LOSSES. I WANT TO THANK THE
COMMITTEE FOR YOUR WORK, AND I
WANT TO THANK THE CHAIR FOR YOUR
HELP AS WELL. AND I AND I ALSO
WILL ACCEPT THE COMMITTEE'S
AMENDMENTS. AS WE'VE ALL NOW
SEEN, I ARTIFICIAL INTELLIGENCE
IS A FAIRLY NEW AND RAPIDLY
DEVELOPING TECHNOLOGY THAT MANY
CONSUMERS ARE UNAWARE OF. THE
POTENTIAL IMPACTS UPON DECISIONS
AFFECTING THEIR EVERYDAY LIVES
AND PURCHASING DECISIONS. BUT TO
THE EXTENT CUSTOMERS, CONSUMERS
ARE AWARE OF AI, A RECENT PEW
RESEARCH CENTER SURVEY SHOWS
THAT 52% OF AMERICANS ARE MORE
CONCERNED AND EXCITED ABOUT THE
INCREASING USE OF AI IN THEIR
DAILY LIVES, AND THOSE WHO HAVE
HEARD A LOT ABOUT AI ARE 16%
MORE LIKELY NOW THAN THEY WERE
IN DECEMBER 2022. TO EXPRESS
GREATER CONCERN THAN EXCITEMENT
ABOUT IT, THE RESEARCH SURVEY.
PREVIOUS ANALYSIS HAVE FOUND
THAT AMERICANS CONCERNED ABOUT
AI INCLUDE A DESIRE TO MAINTAIN
HUMAN CONTROL OVER THESE
TECHNOLOGIES, DOUBT THAT AI WILL
IMPROVE THE WAY THINGS ARE NOW,
AND CAUTION OVER THE PACE OF AI
ADOPTION, AND FEELS LIKE HEALTH
AND MEDICINE. OVERALL, 53% OF
AMERICANS SAY AI IS DUE MORE TO
HURT THAN HELP PEOPLE KEEP THEIR
PERSONAL INFORMATION PRIVATE.
CALIFORNIA HAS A LONG HISTORY OF
SUPPORTING DISCLOSURES OF
INFORMATION THAT IMPACT
CONSUMERS, AND WHY THIS BILL
DOES NOT TELL INSURANCE IF THEY
CAN USE AI OR NOT, OR HOW THEY
CAN USE AI. IT FOLLOWS
CALIFORNIA'S WELL-ESTABLISHED
PATH OF PROVIDING DISCLOSURES TO
CONSUMERS, BUT ONLY IF INSURERS
USE THIS AI TO PROCESS THEIR
APPLICATION FOR COVERAGE OR
FILING CLAIMS FOR LOSSES. IN
SHORT, THIS BILL IS ABOUT
IMPROVING CONSUMERS AWARENESS
AND TRANSPARENCY. WE ALL KNOW
TECHNOLOGY ADVANCES MUCH FASTER
THAN REGULATIONS, AND STATES ARE
SCRAMBLING TO GET AHEAD OF THE
USE OF AI IN AI INDUSTRY,
INCLUDING INSURANCE. WHILE AI
HOLDS GREAT PROMISE AND MY BILL
DOES NOTHING TO SLOW THIS
DEVELOPMENT OF AI OR EVEN
REGULATE HOW INSURERS CAN USE
IT, IT'S JUST CONSUMERS ARE
CONCERNS CANNOT BE DISMISSED OR
IGNORED. THE NATIONAL
ASSOCIATION OF INSURANCE
COMMISSIONERS, THE NAIC, HAS
RESPONDED TO THIS NEED BY
DEVELOPING THE NAIC MODEL
BULLETIN ON USE OF AI BY
INSURERS LAST DECEMBER. SINCE
THEN, EIGHT STATES HAVE ALREADY
ADOPTED THIS MODEL. FINALLY
CALIFORNIA, BECAUSE CALIFORNIA
ISN'T READY YET TO ADOPT, OTHER
MEASURES RELATING HOW INSURERS
USE AI IN DEALING WITH CONSUMERS
APPLICATION CLAIMS. MY BILL DOES
HAVE A SUNSET DATE OF JANUARY
FIRST, 2030. IN ANTICIPATION OF
A LARGER AND MORE ROBUST
CONVERSATION THAT WE CAN
CONTINUE TO HAVE WITH AI. WITH
THAT, I RESPECTFULLY ASK FOR
YOUR VOTE. THANK YOU. DO WE HAVE
ANY WITNESSES IN SUPPORT? SO
NONE ANY WITNESSES IN OPPOSITION
?
THANK YOU. GOOD AFTERNOON. GOOD
AFTERNOON, MADAM CHAIR AND
COMMITTEE MEMBERS, I'M ALISON,
ADI, ON BEHALF OF THE PERSONAL
INSURANCE FEDERATION OF
CALIFORNIA AND THE NATIONAL
ASSOCIATION OF MUTUAL INSURANCE
COMPANIES. WE ARE HERE IN
REGRETFUL OPPOSITION TO SB 1229.
WHILE APPEARING VERY BENIGN,
THIS BILL HAS POTENTIALLY FAR
REACHING IMPLICATIONS FOR AN
ALREADY STRUGGLING INDUSTRY. THE
INDUSTRY HAS BEEN A PROPONENT OF
INSURING DISCLOSURES ARE CLEAR
AND MEANINGFUL WHEN THEY DO GO
OUT. LAST YEAR, WE PARTNERED
WITH SENATOR GLASER ON SB 793,
WHICH STREAMLINED PRIVACY
NOTIFICATIONS TO ENSURE THAT
WHAT CONSUMERS RECEIVED WAS
ACTUALLY SOMETHING THAT WOULD BE
READ WITH THE UNCERTAIN
LANDSCAPE THAT BUSINESSES ARE
FACING RELATING TO ARTIFICIAL
INTELLIGENCE AND AUTOMATED
DECISION MAKING, WE MUST FIND
CERTAINTY IN DEFINITIONS AND
SCOPE BEFORE WE'RE ABLE TO FIND
A WAY FORWARD ON DISCLOSURES.
WITH MORE THAN 60 BILLS IN THE
LEGISLATURE DEALING WITH
ARTIFICIAL ARTIFICIAL
INTELLIGENCE, MOST OF THEM WITH
VARYING DEFINITIONS, AND BOTH
THE CALIFORNIA PRIVACY
PROTECTION AGENCY AND THE
DEPARTMENT OF INSURANCE WORKING
ON REGULATIONS RELATED TO
ARTIFICIAL INTELLIGENCE AND
AUTOMATED DECISION MAKING. WE
FEAR THAT THERE IS GOING TO BE A
GREAT AMOUNT OF CONFLICT, AND
THAT THE IMPLEMENTATION OF THIS
COULD BE PROBLEMATIC, THE
LANDSCAPE NEEDS TO SETTLE BEFORE
WE CAN ENGAGE ON HOW, HOW AND
WHEN DISCLOSURE IS APPROPRIATE.
ADDITIONALLY INSURERS ARE
PARTICULARLY CONCERNED ABOUT THE
POTENTIAL SCOPE OF THE
DISCLOSURE AND ANY ADDITIONAL
BURDEN TO THEIR BUSINESS MODEL.
WHEN WE HAVE BEEN OPERATING AT A
DEFICIT FOR THE PAST FEW YEARS,
ADDITIONAL STRAIN, HOWEVER
INCONSEQUENTIAL A DISCLOSURE MAY
SEEM, IS STILL AN INCREASE IN
OPERATING EXPENSES, ESPECIALLY
WHEN EXTENDED OVER MILLIONS OF
POLICIES. FOR THESE REASONS, WE
ARE OPPOSED TO SB 1229 AND
RESPECTFULLY REQUEST A NO VOTE
TODAY. THANK YOU. YOU MAY
PROCEED. GOOD AFTERNOON, CHAIR
AND MEMBERS OF THE COMMITTEE. MY
NAME IS LAURA CURTIS. THANK YOU
FOR THE OPPORTUNITY TO TESTIFY
TODAY. I'M HERE ON BEHALF OF THE
AMERICAN PROPERTY CASUALTY
INSURANCE ASSOCIATION. WE ALIGN
OUR COMMENTS WITH PIPH AND WE
ARE ALSO IN RESPECTFUL
OPPOSITION. WE APPRECIATE THE
AUTHOR AND HER STAFF MAKING
THEMSELVES AVAILABLE FOR US TO
DISCUSS OUR CONCERNS. WE ALSO
APPRECIATE THE COMMITTEE'S
ANALYSIS. HOWEVER WE ARE VERY
CONCERNED THAT THIS BILL ADDS
MORE FRICTION TO A MARKET THAT
IS ALREADY IN CRISIS, AS THIS
COMMITTEE IS ACUTELY AWARE,
CALIFORNIA IS FACING A SEVERE
INSURANCE AVAILABILITY SHORTAGE
SINCE 2022. MORE THAN HALF OF
THE STATE'S TOP 15 INSURERS HAVE
BEEN FORCED TO RESTRICT ACCESS
TO NEW POLICIES OR LEAVE THE
CALIFORNIA MARKET ENTIRELY,
LEAVING MILLIONS OF CONSUMERS
WITHOUT ACCESS TO COVERAGE THAT
THEY NEED. SB 1229 WOULD REQUIRE
AN INSURER TO DISCLOSE WHEN IT
HAS USED ARTIFICIAL
INTELLIGENCE. WHILE THIS
DISCLOSURE MAY SEEM
INCONSEQUENTIAL, NOW IS NOT THE
TIME TO FURTHER BURDEN THE
INDUSTRY. THE TIME, ATTENTION
AND OPERATING EXPENSES
NEGATIVELY IMPACT AN INDUSTRY
THAT'S ALREADY LOSING $0.13 ON
EVERY DOLLAR IN PREMIUMS. MORE
DISCLOSURES MEAN ADDITIONAL
LENGTH TO ANNUAL NOTICES THAT
CAN WIND UP ADDING SUBSTANTIAL
COSTS WHEN AGGREGATED ACROSS
THOUSANDS OF POLICIES STATEWIDE.
JUST LAST YEAR, AS MENTIONED BY
MY COLLEAGUE, LEGISLATION WAS
PASSED TO DECREASE THE NOTICE
REQUIREMENT FOR INSURERS
RECOGNIZING THAT OVER DISCLOSURE
OFTEN LEADS TO THE MOST
IMPORTANT INFORMATION BEING LOST
IN THE STACK, BROAD NOTIFICATION
IS FOR LIKELY BENIGN ACTIONS.
FURTHER, DIMINISHED DIMINISHES
ANY MEANINGFUL NOTIFICATIONS
WHEN THERE IS AN ACTUAL NEED. WE
DO NOT BELIEVE THAT THIS BILL
WOULD RESULT IN ANY GREATER
CONSUMER PROTECTION THÀNH, AND
WOULD ONLY ADD ADDITIONAL STRAIN
ON INSURERS FOR THESE REASONS,
WE ARE IN RESPECTFUL OPPOSITION
AND ASK FOR YOUR NO VOTE TODAY.
THANK YOU SO MUCH AGAIN FOR THE
OPPORTUNITY. THANK YOU, WE
DIDN'T HAVE A LEAD, WITNESS IN
SUPPORT, BUT I WANT TO GIVE
ANYBODY IN THE OPPORTUNITY IN
THE AUDIENCE TO STATE YOUR
SUPPORT FOR THE BILL. SEEING
NONE. I WILL TURN IT OVER TO
THOSE IN OPPOSITION. GOOD
AFTERNOON. SHERRY MCCUE,
REPRESENTING THE PACIFIC
ASSOCIATION OF DOMESTIC
INSURANCE COMPANIES, OPPOSED THE
BILL. THANK YOU. THANK YOU.
ANYONE ELSE? SEEING NONE, I WILL
TURN IT NOW OVER TO OUR
COLLEAGUES. WE'LL START WITH
SENATOR DODD. YES, SENATOR, I, I
DO BELIEVE THAT THE OPPOSITION
BROUGHT UP SOME VERY COGENT
POINTS ABOUT ABOUT THIS BILL,
ONE THAT ON THE I DEFINITION,
YOU KNOW, THERE ARE A LOT OF
DIFFERENT DEFINITIONS THAT WE
HAVE AND A NUMBER OF DIFFERENT
BILLS THIS YEAR, RELATIVE TO AI.
AND, YOU KNOW, THERE WAS ONE MY
BILL HAS A DEFINITION THAT'S
BEEN APPROVED BY THE AI WORKING
GROUP OF THE CALIFORNIA STATE
SENATE. SO I THINK AS A START,
THAT MIGHT BE SOMETHING THAT,
THAT YOU LOOK AT AND I THINK
THERE'S ANOTHER LOTS OF OTHER
ISSUES LIKE, STREAMLINED, THE
BILL FOR UNINTENDED CONSEQUENCE.
I THINK THERE'S A LOT OF
UNINTENDED CONSEQUENCES HERE,
JUST THE MERE FACT THAT THEY'RE
USING AI TO FOR DECISION MAKING
PURPOSES IN ITSELF DOESN'T MEAN
THAT THAT'S AN INADEQUATE WAY OF
DOING IT OR WRONG WAY OF DOING
IT. AND I THINK THAT THERE'S A
NUMBER OF OTHER DIFFERENT BILLS
THAT WE HAVE GOING THROUGH THE
LEGISLATURE. THAT'S GOING TO BE
PUTTING FRAMEWORK AROUND THOSE
DECISION MAKING POINTS. SO I'M
NOT REALLY CLEAR WHY THIS. I'LL
LISTEN TO YOUR YOUR CLOTHES, BUT
I'M JUST REALLY NOT CLEAR WHY IN
LIGHT OF THAT, THAT THIS BILL IS
REALLY NECESSARY. ANYBODY ELSE
WISHING TO SPEAK GO AHEAD, MR.
NEIL. THANK YOU, MADAM CHAIR.
IT, TRULY PAINS ME TO, HAVE
QUESTIONS ABOUT MY COLLEAGUE'S
BILL. EXCUSE ME? I KNOW THAT HER
ATTENTION INTENTIONS ARE,
CERTAINLY VERY GOOD. I
UNDERSTAND WHAT IT IS THAT SHE'S
TRYING TO DO IN TERMS OF
DISCLOSURE AND TRANSPARENCY, BUT
I HAVE TO ALIGN MY COMMENTS WITH
WITH SENATOR DODD, AND IT'S
REALLY KIND OF TWO ISSUES. IT'S
THE DEFINITION OF AI. AND A
GOOGLE SEARCH OF TEN YEARS AGO
COULD HAVE BEEN DEFINED AS
ARTIFICIAL INTELLIGENCE, AND,
THE USE OF ANY SORT OF
ELECTRONIC PROCESSING, ON THE
PART OF A COMPANY FOR ANY
PARTICULAR PURPOSE MAY OR MAY
NOT BE, MAY OR MAY NOT FALL
UNDER THE DEFINITION OF AI
BECAUSE IT'S STILL UNSETTLED AND
THE OTHER CONCERN IS THAT TO
DISCLOSE TO CUSTOMERS THAT WERE
UTILIZING AI TO ASSESS YOU AND
RATES AND THE LIKE, I'M AFRAID,
HAS A PEJORATIVE CONNOTATION TO
IT. AND I'LL FALL BACK ON
COMMENTS THAT I MADE IN THE
PREVIOUS BILL THAT WE HAVE A
VERY UNSETTLED AND UNSTABLE
INDUSTRY HERE, AND THAT DOESN'T
HELP, SO THAT'S THE CONCERN THAT
I HAVE, AND I CAN'T SUPPORT THE
BILL. THANK YOU. ANYBODY ELSE
WISHING TO SPEAK ON THIS MEASURE
? WHAT WOULD YOU LIKE TO CLOSE?
THANK YOU, MADAM CHAIR, I, I
HEAR YOU. I SAT ON THIS
COMMITTEE WITH YOU LAST YEAR AS
WELL, SO I'M VERY, VERY WELL
AWARE OF THE SITUATION THAT IS
HAPPENING IN THE INSURANCE
INDUSTRY. AND WE HAVE ALL STOOD
SIDE BY SIDE TRYING TO FIGURE
OUT AND WORKING WITH THE NOT
ONLY FROM THE CONSUMER SIDE, BUT
ALSO FROM THE INSURANCE COMPANY
SIDES TO MAKING SURE THAT WE CAN
WEATHER THIS STORM. THAT'S
HAPPENING. SO I'M WELL AWARE
THAT'S GOING ON, BUT I DON'T
THINK THAT THAT SHOULD
COMPLETELY PUT A STOP INTO
WHAT'S LOOKING INTO THE FUTURE.
WE CAN'T JUST COMPLETELY BECAUSE
THERE'S A CRISIS. WE STOP DOING
BUSINESS, AND I THINK I BELIEVE
THAT CONSUMER HAS THE RIGHT TO
KNOW, AND, SENATOR DODD, I HEAR
YOU. THERE ARE A LOT OF
DEFINITIONS. WE DID ASK. AND
WE'VE BEEN, YOU KNOW, IT'S BEEN,
WE REALLY APPRECIATE PIPH AND,
AND THE AND ALL THE OTHERS
WHO'VE WORKED WITH US AND HAVE
BEEN TRYING TO WORK WITH US IN
THIS BILL, THE DEFINITION WHAT
WE DID WAS WE OFFER AND ASK FOR
DEFINITIONS. IT WASN'T GIVEN TO
US. IT WASN'T OFFERED FOR
AMENDMENTS, AND I UNDERSTAND. I
MEAN, THEY ARE DOING A LOT OF
OTHER THINGS, AND THIS IS THE
ONE THING THAT THEY DON'T NEED
TO ACTUALLY HAVE TO SHOULD NOT
NEED TO SPEND THE TIME. AND SO
WHAT WE DID WAS WE LOOKED TO
NAIC, WHICH IS THE NATIONAL
ASSOCIATION OF INSURANCE
COMMISSIONERS. THEY HAVE A
DEFINITION. SO WE LOOK TO THEM
AND ADOPTED THEIR DEFINITION,
WHICH HAS BEEN ADOPTED BY EIGHT
STATES ALASKA, CONNECTICUT,
ILLINOIS, NEW HAMPSHIRE, NEVADA,
RHODE ISLAND, AND VERMONT. AND
IT'S A MODEL THAT OTHER STATES
ARE LOOKING AT ON HOW THEY
DEFINE I. SO I'M MORE THAN
HAPPY, AND I'M WILLING AND WILL
CONTINUE TO WORK WITH THE
OPPOSITION AS THIS. I'M HOPING
THAT YOU WOULD CONSIDER HAVING
THIS AND ALLOWING THIS TO MOVE
FORWARD. IN TERMS OF THE
COMMENTS IN REGARDS TO
DISCLOSURES THAT WAS MENTIONED,
I THINK WE'RE NOT ASKING TO HAVE
A NEW PAPER. YOU CAN YES, I
UNDERSTAND THAT LAST YEAR WE
WORKED ON MINIMIZING THE
DISCLOSURE, BUT I THINK THE
CONSUMER SHOULD JUST KNOW AND
ADDING IT INTO THE CURRENT
DISCLOSURE IS NOT EVEN A FEW
WORDS. IT'S NOT LIKE YOU'RE
GOING TO ADD ANOTHER PAGE OR
ANOTHER PARAGRAPH. AND SO I
THINK THAT AT THE END OF THE
DAY, IS ALLOWING CONSUMERS TO
KNOW IF YOUR RATES ARE GOING TO
BE CALCULATED BY AN AI, OR IF
YOU'RE GOING TO BE QUALIFIED TO
BE ABLE TO BUY THAT INSURANCE.
YOU SHOULD KNOW THAT IT'S FROM
AI. SO IT'S REALLY IT IS A
SIMPLE BILL, YOU KNOW, I AM
COMMITTED TO CONTINUE TO WORK
WITH EVERYBODY AND ANYBODY WHO
WOULD LIKE TO WORK WITH US. AND
AS THIS I'M HOPING THAT YOU
WOULD CONSIDER ALLOWING THE BILL
TO MOVE FORWARD. AND IF ANY OF
MY COLLEAGUES HERE HAVE IDEAS ON
IF YOU WANT A DIFFERENT
DEFINITION OF AI VERSUS NAIC
AND, YOU KNOW, WE'LL ALSO LOOK
AT SENATOR DODD'S FRAMEWORK AS
WELL TO SEE HOW THAT COMPARES TO
NAIC AS WE MOVE FORWARD AS WELL.
SO I RESPECTFULLY ASK FOR YOUR
AYE, VOTE. THANK YOU. SENATOR
NGUYEN, DO WE HAVE A MOTION? I
WILL OFFER A COURTESY MOTION. WE
HAVE A MOTION BY SENATOR NILO,
MADAM SECRETARY, PLEASE CALL THE
ROLL WHILE ITEM. I'M SORRY.
BEFORE WE GO FURTHER, I JUST
WANT TO KNOW, FOR THE RECORD,
THAT SENATOR OKUBO HAD TO LEAVE,
AND SHE WILL NOT BE COMING BACK.
SO WE HAVE ALL MEMBERS PRESENT.
SO WE WILL CLOSE AFTER THIS
VOTE. YOU MAY PROCEED. FILE ITEM
TWO SB 1229 BY SENATOR NGUYEN.
MOTION IS Dð PASS AS AMENDED TO
APPROPRIATIONS. RUBIO I, RUBIO I
NILO. NOT VOTING. ELO NOT VOTING
. ALVARADO, GIL. NO. ALVARADO,
GIL. NO CABALLERO. NO.
CABALLERO. NO CORTEZ. NO.
CORTEZ. NO. DODD NOT VOTING.
OKOBO THREE. THREE. FIVE. THREE.
NOT HERE. ONE. TWO. THREE.
THREE. SO THE MOTION FAILS. TO
MOVE FORWARD. THANK YOU SO VERY
MUCH. AND, SINCE WE HAVE ALL
MEMBERS PRESENT, I WILL BRING IT
BACK TO OUR CONSENT CALENDAR, SB
1217 BY SENATOR GLAZER. DO I
HAVE A MOTION FOR A CONSENT
CALENDAR MOVED BY SENATOR
CORTEZ? MADAM SECRETARY, PLEASE
CALL THE ROLL CONSENT CALENDAR.
RUBIO. AYE RUBIO. AYE. NILO.
NILO. AYE. ALVARADO, GIL.
ALVARADO. GIL. AYE. CABALLERO.
CABRERA AYE. CORTEZ. CORTEZ.
AYE. DODD AYE. DODD. AYE. OCHOA.
BOGH SIX ZERO. THIS. THE MOTION
PASSES, ONCE AGAIN, FOR THE
RECORD, SENATOR OCHOA WILL NOT
BE COMING BACK. SO THAT'S THE
FINAL MOTION ON THAT. AND I WILL
BE TURNING THIS OVER TO MY
COLLEAGUE. SENATOR NILO, TO TAKE
OVER AS I WILL BE PRESENTING A
BILL. THANK YOU. YOU'RE GOING TO
HAVE TO CLIMB OVER. GOOD. GOOD
ADVICE. OKAY I KNOW YEAH. I
MEAN, HE SHOULD. YEAH WELL, THAT
WAS QUITE THE CLIMB. OKAY
PROCEED. ONE. READY? THANK YOU
SO MUCH. MEMBERS OF THE
COMMITTEE TODAY I'M PRESENTING
SB 1295, A CRITICAL BILL THAT
PROTECTS CONSUMER DÍAS FROM
UNFAIR AUTO INSURANCE
CANCELLATIONS PRACTICES BY
CLARIFYING THAT CONSUMERS HAVE
TEN DAYS TO CURE A NONPAYMENT.
UNDER A CURRENT LAW, AUTO
INSURERS ARE REQUIRED TO PROVIDE
A TEN DAY NOTIFICATION FOR A
NOTICE OF CANCELLATION TO THE
POLICYHOLDER FOR A NONPAYMENT.
UNFORTUNATELY, EXISTING LAW IS
UNCLEAR REGARDING THE INSURER TO
PROVIDE THE NON NON NOTIFICATION
AFTER THE DEFAULT. WITH THAT
SAID, CONSTITUENTS FROM ACROSS
THE STATE ARE BEING DROPPED FROM
THEIR AUTO INSURANCE FOR EVEN
BEING LATE ONE DAY ON THEIR
PAYMENT. THIS MISHAP OFTEN
HAPPENS DUE TO CREDIT CARD
ERRORS AND OTHER, INSTANCES.
THAT'S BEYOND THE CONTROL OF THE
CONSUMER. WITH THAT SAID,
CONSTITUENTS FROM ACROSS THE
STATE ARE BEING DROPPED FROM
THEIR AUTO INSURERS FOR NOT
HAVING THEIR AUTO INSURANCE IN
PLACE. SB 1295 WILL REMEDY THIS
SITUATION BY PROVIDING
CLARIFICATION OF WHEN AN AUTO
INSURER CAN SEND OUT A NOTICE OF
CANCELLATION. THIS BILL HELPS
EASE THE CONFUSION OF CONSUMERS
BY NOTIFYING THEM OF AN ACTUAL
NONPAYMENT, AND ALLOWING THEM
THE TIME AFFORDED BY LAW TO CURE
THE NONPAYMENT. WITH ME TODAY WE
HAVE RICHARD OTIS WITH UNITED
POLICYHOLDERS OUT, WHO IS A
SPONSOR OF THE BILL, TO TESTIFY
IN SUPPORT OF THE BILL. THANK
YOU. GOOD AFTERNOON, MADAM
CHAIR, AND MEMBERS OF THE
COMMITTEE. MY NAME IS RICHARD
OTIS, SPEAKING ON BEHALF OF
UNITED POLICYHOLDERS, WHICH
SERVES AS A VOICE OF INSURANCE
CONSUMERS THROUGHOUT THE STATE
OF CALIFORNIA AND AROUND THE
COUNTRY, UNITED POLICYHOLDERS
STRONGLY SUPPORTS THIS
LEGISLATION. IT'S IMPORTANT TO
OFFER DRIVERS EVERY REASONABLE
OPPORTUNITY TO MEET THEIR LEGAL
OBLIGATION TO CARRY AUTOMOBILE
INSURANCE, WHICH IS ONE OF THE
MOST IMPORTANT FINANCIAL
PERSONAL PROTECTION CONTRACTS
THAT EXISTS. THE Kò COMPONENTS
OF AUTOMOBILE INSURANCE, BODILY
INJURY, PROPERTY DAMAGE
LIABILITY, MEDICAL PAYMENTS
COVERAGES PROTECT INDIVIDUAL
CONSUMERS, INNOCENT THIRD
PARTIES, AND SOCIETY AS A WHOLE.
MOREOVER AUTO INSURANCE PREMIUMS
THAT ARE AN ALL TIME HIGH FOR
MANY CALIFORNIANS AND SOME
INSURERS HAVE REDUCED OPTIONS
FOR INSTALLMENT PAYMENT PLANS.
MAILING AND Â BILL PAYMENT
ERRORS OCCUR AND DELAYED
PAYMENTS ARE COMMON. WE
APPRECIATE THAT THIS BILL WILL
HELP PREVENT LAPSES IN COVERAGE
AND THE SIGNIFICANT FINANCIAL
REPERCUSSIONS SUCH LAPSES CAUSE
FOR INDIVIDUALS, FAMILIES, AND
THE WORKERS WHO RELY ON THEIR
CARS TO EARN A LIVING. AND OF
COURSE, IMPORTANTLY FOR THE
GENERAL PUBLIC, WHICH EXPECTS
AND RELIES UPON ALL DRIVERS TO
CARRY AUTOMOBILE INSURANCE. TWO
MORE IMPORTANT POINTS WHICH WERE
WELL ARTICULATED BY THE
CALIFORNIA APPELLATE COURT FOR
THE FIRST APPELLATE DISTRICT.
FIRST RECEIPT OF A NOTICE OF
CANCELLATION SHOULD BE AN
UNANTICIPATED EVENT THAT SPURS
THE INSURED INTO ACTION. FOR
EXAMPLE, ROUTINE NOTICE THAT IS
SENT MAY BE 10 OR 15 DAYS BEFORE
THE PAYMENT DUE DATE DOES NOT
SERVE THE FUNCTION OF INFORMING
AN INSURED THAT THEIR COVERAGE
IS IN DANGER OF LAPSING FOR AN
INADVERTENT ERROR, SUCH AS
SOMETHING LIKE A BOUNCE CHECK,
SECOND, AS THE COURT ALSO
ARTICULATED, THE INSURANCE
INDUSTRY IS, WELL ABLE TO
PROTECT ITSELF FROM IN ANY
POSSIBLE ISSUE OF FREE INSURANCE
BY TAKING APPROPRIATE
UNDERWRITING AND BILLING PAYMENT
ACTIONS, ULTIMATELY, UNITED
POLICYHOLDERS BELIEVE THE IT'S
THE GENERAL PUBLIC THAT WILL
RECEIVE THE GREATER BENEFIT OF
THIS LEGISLATION, NOT SIMPLY THE
INDIVIDUAL CONSUMER WHOSE
COVERAGE IS EXTENDED. WE
RESPECTFULLY URGE YOUR AYE VOTE
IN FAVOR OF SB 1295. THANK YOU.
THANK YOU FOR THAT. NOW, IS
THERE ANYBODY ELSE IN THE
AUDIENCE IN SUPPORT OF THIS
LEGISLATION? IT'S TIME FOR THE
ME TO TESTIMONY, SEEING NOBODY
COMING FORWARD, DO WE HAVE LEAD
WITNESSES IN OPPOSITION? DO WE
HAVE ANYBODY IN OPPOSITION?
LOOKS LIKE YOU'RE IN GOOD SHAPE,
SENATOR. WE'LL BRING IT BACK TO
THE COMMITTEE AND MOVE THE BILL.
WE HAVE A MOTION BY SENATOR
ALVARADO. GIL ANY OTHER
COMMENTS? QUESTIONS SEEING CALL
THE ROLL. OH. I'M SORRY. LOOKS
LIKE YOU DON'T NEED IT, BUT
PLEASE FEEL FREE TO, TAKE YOUR
CLOSING STATEMENT. IN THE
INTEREST OF TIME, I RESPECTFULLY
ASK FOR AN AYE VOTE. THANK YOU.
THANKS FOR THE HELP. FILE ITEM
FOR SB 1295 BY RUBIO. MOTION IS
Dð PASS. RUBIO AYE. RUBIO. AYE.
MELLOW YELLOW. AYE ALVARADO.
GIL. ALVARADO. GIL. AYE.
CABALLERO CABALLERO. AYE.
CORTEZ. CORTEZ. AYE. DODD DODD.
AYE. OCHOA LOPEZ. SIX ZERO, SIX
ZERO. THAT MEASURE IS OUT. THANK
YOU. OH, YES. OKAY SO WE WILL
NOW OPEN THE ROLL UP SINCE WE
HAVE ALL MEMBERS PRESENT FOR SB
1060. BECKER, MADAM SECRETARY,
PLEASE CALL THE ROLL CHAIR. AYE
VICE CHAIR. NO. ALVARADO. GIL.
AYE ALVARADO. GIL. AYE.
CABALLERO AYE. CABALLERO. AYE
OCHOA. Ó ONE THAT I WAS NOT
VOTING ON. YEAH. COULD YOU CALL
THAT LAST? I HAD ALREADY
FINISHED THERE. WE GO. YOU CAN
ASK FOR RECONSIDERATION. YEAH.
CABALLERO. NO. IT'S STILL. IT'S
4 TO 2. IT PASSED 4 TO 2, THE
MEASURE IS 4 TO 2. THAT BILL IS
OUT. AND I BELIEVE THAT
CONCLUDES THE OUR COMMITTEE
HEARING. THANK YOU, EVERYONE,
FOR JOINING US HERE TODAY. AND,
WE ARE NOW ADJOURNED. THANK YOU