Insurance — 2026-04-15 (partial)

Thank you. Thank you. Thank you Thank you. Thank you. Thank you Thank you. Thank you. Thank you Thank you. Thank you. . Thank you. Thank you. Thank you Thank you. Thank you. Thank you Thank you. Thank you. Thank you Thank you. Thank you. . Thank you. Thank you. Thank you Thank you. Thank you. Thank you Thank you. Thank you. Thank you Thank you. Thank you. Good morning, Vice Chair, members of the committee. Welcome to the Assembly Committee on Insurance. Today we will consider 11 bills. Four bills are proposed consent. These bills are file item 5, AB 1554, file item 6, AB 1683, file item 7, AB 1781, file item 11, AB 2471. We are going to start as a subcommittee today so we can establish quorum. Today we have a special order of business. Four bills fall under the special order, AB 1559, AB 1680, AB 1798, and AB 1888. I'd like to welcome Insurance Commissioner Ricardo Lara, who will be presenting on these measures. We're going to start with AB 1888, Assemblywoman Ortega, whenever you're ready.

Good morning, Madam Chair, Mr. Vice Chair, and members of the committee. Thank you for allowing me to speak in support of AB 1888. We know that wildfire risk is not a theoretical in California. It's a constant pressure on homeowners, insurers, and our entire communities. We know that mitigation is one of the most effective tools we have to improve insurance market stability and protect consumers. That is why I proudly sponsor AB 888. Last year, as our author said with the chair, establishing the California Safe Homes Grant Program administered at my department to help income-eligible residents afford critical measures like fire-safe roofs and defensible space. We are now building that program in real time with thanks in part to all of you for the funding approved in the current enacted budget to help cover my department's startup cost. Without clear workforce standards, we risk funding projects that could be inconsistent, incomplete, or ineffective. Homeowners can be left with false sense of protection, public funds being spent, and yet the underlying risk remains. That creates two problems, reduced protection and the potential for costly rework. AB 1888 addresses this gap and ensures that the work funded through the program is done correctly the first time. The bill requires that mitigation work is performed by qualified, licensed professionals, uses a skilled and trained workforce, and meets the prevailing wage standards. A skilled and trained workforce brings consistency, accountability, and the technical expertise needed for work that directly affects whether a home survives a wildfire. It also supports a stable pipeline of trained workers who can meet the growing demand for mitigation work across the state. The prevailing wage requirement ensures workers performing mitigation work are well-trained and appropriately compensated. Other states with similar state-funded mitigation programs like Alabama, Louisiana, already recognize the importance of workforce standards and include labor components in their programs. California is going to step further by aligning our workforce standards with the scale and complexity of our unique wildfire risk. With that, I respectfully ask for your aye vote. Thank you, Madam Chair.

Thank you. Do we have any other witnesses in support? Please come forward and state your name and affiliation. Okay, seeing none. Do we have any witnesses in opposition? All right. Seeing none. Okay. I'll bring it back to the committee. Do we have any questions? Comments? No? Thank you. We can't. We've got to wait until we have a quorum. Okay. We can hold that thought. No. Please hold that thought. Okay. Assemblywoman, would you like to close? At the appropriate time, I would respectfully ask for an aye vote. Okay. Thank you very much. Thank you. All right, next up we have file item number 2, AB 1680, by Assemblymember Calderon. Assemblymember, please proceed when you're ready. Thank you, Mr. Vice Chair. Today I'm presenting AB 1680, the California Make It Fair Act. With me today, I have a special guest, California Insurance Commissioner Ricardo Lada, the sponsor of AB 1860 Without delay I let the insurance commissioner begin his testimony Thank you Good morning Mr Vice Chair and members Thank you for the opportunity to testify in strong support of AB 1680 the Make It Fair Act a measure I'm proud to sponsor. With me today is Deputy Commissioner Laura Clement to answer any technical questions that may arise. As you all know, the California wildfire reality is now a year-round problem. Fires are larger, faster, and more destructive than ever. 2019 was a definitive turning point for California's wildfire landscape, making the transition into a new era where 100,000-acre megafires and 1 million-acre gigafires became the recurring reality rather than an anomaly. Last year's 14 destructive fires across L.A. and San Diego counties made this painfully clear once again. The Eaton Fire and the Altadena Fires and Pacific Palisades alone destroyed and damaged more than 16,000 homes. While the sustainable insurance strategy continues to build momentum, continued wildfire risk, insurer withdrawals from riding in wildfire risk areas, and widespread non-renewals have driven unprecedented growth in the Fair Plan enrollment. As the Fair Plan increasingly functions as a major insurer rather than a limited backstop, Gaps have emerged in its coverage, offerings, operational flexibility, and accountability and mechanisms. The Fair Plan statutory framework that was originally created by the legislature back in 1968 has not kept pace with the scale of its responsibility or the needs of its policyholders who rely on it today. Since my first year in office, I have pushed the Fair Plan to modernize, expand coverage, and meet basic customer service standards and treat policyholders fairly, Yet the fair plan has resisted several key reforms and continues to fight others in court. The Southern California wildfires again and smoke damage crisis that followed didn't create these failures. They exposed them. Families are still fighting for simple answers about contamination and safety. That that is completely unacceptable. My department has also taken formal legal action against the fair plan for illegally denying hundreds of smoke damage claims. This case is still pending. Despite major efforts to improve the fair plan's performance and accountability, wellfire survivors have continued to report ongoing problems assessing the fair plan insurance benefits with delays, denials, and miscommunication at the top of the list of consumer complaints filed with my department since January 2025. And this is in regards to the Los Angeles wellfires. considered the largest urban wildfire disaster in the state history. So the Department of Insurance report examination findings. Further, my department staff's two-part report of examination on the fare plan completed this past January and adding to the previous September 2023 examination is the most comprehensive review of the fare plan in decades and revealed systematic problems that have left wildfire survivors struggling, particularly after the 2025 LA wildfires. This examination evaluated the Fair Plan's financial conditions, corporate governance, and controls to protect policyholders across 32 areas, finding that in more than half of them, the Fair Plan had not started or fully implemented these critical recommendations since 2023. My department's report examination in January 2026 found that the Fair Plan had specifically failed to comply with 17 critical administrative recommendations, and these are not minor administrative issues. They are structural weaknesses that directly affect policyholders who rely on the Fair Plan when they have nowhere else to go AB 1680 responds directly to those findings with targeted necessary reforms I can go through all those 17, but I will spare you. If you have those questions, we can answer those directly. Again, just in closing, the Fair Plan is no longer a niche backstop. It is the insurer of last resort for hundreds of thousands of Californians, and it is failing to meet that responsibility. AB 1680 is not optional. It establishes standards of accountability, transparency, and consumer protections that Californians deserve when the state created the insurers such as a fair plan, again, ignoring 17 critical recommendations. AB 1680 ensures the fair plan modernizes its operations, strengthens its governance, and protects policyholders while our state's insurance market gets back on track. Californians are counting on us to fix what the examination made very clear. The fair plan must do better, and AB 1680, with AB 1680 at will. I respectfully ask for your aye vote. Do we have additional witnesses in support? Do we have additional witnesses in the room in support who would like to come up to the microphone? Thank you. Good morning. My name is Joel Loucher. I work for United Policyholders, a nonprofit that assists consumers with insurance issues countrywide. I'm going to be testifying on a couple of bills, so I'll just mention my background. I started a career as a commercial lines underwriter, joined the Department of Insurance. I'm sorry, we're just doing a Me Too testimony right now, so if you can just name, affiliation, and position. All right. I will say this. Ensuring that there is adequate coverage with the fair plan is essential for... I'm sorry, I've got to cut you off. We're just doing name, affiliation, and position here. Name, position. Position on the bill. Position is in favor. United Policyholders' Joel Loucher. Thank you. Appreciate that. Do we have additional witnesses in support? Mr. Chair, members, Andrew Antwi, here today on behalf of Los Angeles Mayor Karen Bass, proud to support this measure, thank the Insurance Commissioner for the good work and thank the author. We're going to take a brief pause to establish quorum here. Madam Secretary, can you please call the roll? Calderon? Here. Calderon here. Wallace. Wallace here. Addis. Alvarez. Alvarez here. Avila Fedeas. Berman. Chen. Chen here. Ellis. Ellis here. Gibson. Hadwick. Herbedian. Krell. Krell here. Nguyen. Ortega. Ortega here. Petrie Norris. Petrie Norris here. Rodriguez. Rodriguez here. Valencia. We have a quorum. All right, we have a quorum. Let's now head to lead opposition witness. You have two minutes. Thank you. Good morning, Mr. Vice Chair and members. My name is Ove Franco with Public Policy Advocates here today on behalf of the California Fair Plan Association. First, we would like to thank the author, the author staff and committee staff for their work and continued engagement on this issue. The bill has improved, but we remain respectfully opposed unless amended to AB 1680 and We continue reviewing the updated language. The review process is focused on how these provisions may be interpreted and implemented in practice, including whether further clarification is needed. We remain committed to working with the author and stakeholders as this bill moves forward. Thank you. Thank you very much. Do we have any additional opposition witnesses in the room? All right, seeing none, let's bring it back to the committee. Any questions? We have a motion by Ms. Ortega, second by Ms. Petrie-Norris. Assemblymember, would you like to close? Yes. Thank you, Mr. Vice Chair. I want to thank the Insurance Commissioner for being here today. This measure strengthens accountability. The fair plan was established to step in when California faces a voluntary market failure. Therefore, we need the fair plan to be transparent, accountable, and responsive, which AB 1680 aims to do. I respectfully ask for your aye vote. Thank you, Assemblymember. We have a motion and a second. Madam Secretary, please call the roll. This is item number two, AB 1680 by Assemblymember Calderon. The motion is due passed to the Committee on Appropriations. Calderon? Aye. Calderon, aye. Wallace? Aye. Wallace, aye. Addis? Alvarez? Aye. Alvarez, aye. Avila-Ferries? Berman? Chen? Chen not voting. Ellis? Not voting. Ellis not voting. Gibson? Hadwick? Harabedian? Krell? Aye. Krell, aye. Nguyen? Ortega? Aye. Ortega, aye. Petrie-Norris? Aye. Petrie-Norris, aye. Rodriguez? Aye. Rodriguez, aye. Valencia? Bill's on call. We'll leave the roll open for additional members. Next up, we will have file item number one, AB 1559, by Assemblymember Calderon. Please proceed when ready. Thank you, Mr. Vice Chair. AB 1559 provides new consumer protections to homeowners when insurers use aerial imaging to make decisions about coverage. Insurers have been increasingly using images from drones, aircraft, and satellites in lieu of in-person inspections to make underwriting decisions. California homeowners have reported that they were blindsided by non-renewals based on these pictures. In many cases, it turns out that the images were inaccurate or outdated. AB 1559 requires insurers to provide notice before collecting aerial images of a residential insurance policyholder's home and allows policyholders to receive any aerial images taken of their home. If an aerial image is used to non-renew, cancel, or reduce coverage, AB 1559 also ensures that the image is up-to-date, providing the policyholder with the right to request an in-person inspection to verify the accuracy of the image or to verify remediation of the issue. I respectfully ask for your aye vote. This bill is sponsored by Insurance Commissioner Lara, who is here with me to testify today. Thank you, Mr. Vice Chair and members of the committee. I also want to thank Chairwoman Calderon and Speaker Rivas for authoring this important measure, which would give consumers better protections when insurers collect or use aerial images to make decisions on new or existing insurance policies. Widely reported by the media and documented in consumers' complaints to my department, insurers are increasingly using aerial imagery to inspect their homes. Just a few weeks ago, this issue made headlines again in Southern California. A homeowner was told by the insurer to replace her entire roof or face a non There was no explanation provided and she had to investigate on her own and understand why she had to do all this work Consumers have the right to know when the aerial images are being used to make decisions about their policies and a right to access and dispute those images. This bill gives consumers that right. Insurers are, and more often, third-party vendors are using not just drones, but also satellite images and manned and unmanned aircrafts to collect images of homes and property, often without the homeowner's knowledge, and then using these images to make changes to insurance policies, deny coverage, or non-renewal policies. This bill is not about the capture of just aerial images. It's about ensuring that when insurers use those images to make decisions about coverage, consumers have transparency and a fair opportunity to respond. I respectfully ask for your aye vote on this important measure. Thank you, Commissioner. Do we have any additional witnesses in the room in support? Please come up to the microphone, state your name, affiliation, and position on the bill. Yes, Mr. Chair and members, Jolene Avoros with the League of California Cities in support. Mr. Chair and members, Anna Buck on behalf of the California Association of Realtors in support. Eduardo Rubalcaba with AARP, representing 3.2 million AARP members in support of AB 1559. David Bollag as an individual in strong support. Joel Lautzer with the United Policyholders in support. And do we have any witnesses in the room in opposition? Seeing none, let's turn it over to, we have one coming up. Christopher Sanchez of the Consumer Federation of California, not in opposition with the position of concern. Apologize the committee for submitting our letter late. We like the direction the bill is going. We would just like to see it go further. Thank you. Appreciate that. Thank you. Let's turn it back to the committee. Any questions or comments? We have a motion and a second. Assemblymember, would you like to close? Yes, thank you, Vice Chair. Insurers need to be able to accurately and cost-effectively price risk, but the burden shouldn't fall on homeowners to make sure that aerial images are used responsibly in this process. Thank you. I respectfully ask for an aye vote. Thank you, Assemblymember. We have a motion and a second. Madam Secretary, please call the roll. This is item number one, AB 1559 by Assemblymember Calderon. The motion is due pass to the Committee on Privacy and Consumer Protection. Calderon, aye. Calderon, aye. Wallace, aye. Wallace, aye. Addis, Alvarez, Alvarez, aye. Avila-Ferries, Berman, Chen, aye. Chen, aye. Ellis, aye. Ellis, aye. Gibson, Hadwick, Carabedian, Krell, aye. Krell, aye. Nguyen, Ortega, aye. Ortega, aye. Petrie-Norris. Rodriguez. Rodriguez, aye. Valencia. That bill is on call. We'll leave the roll open for absent members. I like to request a motion and a second on the consent calendar This is on the consent calendar, which includes item number five, AB 1554 Calderon. The motion is due pass. Recommended consent to the committee on appropriations. Item number six, AB 1683 by the committee on insurance. The motion is due pass, recommended consent to the Committee on Appropriations. Item number seven, AB 1781 by Assemblymember Michelle Rodriguez. The motion is due pass, recommended consent to the floor. And item number 11, AB 2471 by the Committee on Emergency Management. The recommendation is due pass, recommended consent to the Committee on Appropriations. Calderon, aye. Calderon, aye. Wallace. Aye. Wallace, aye. Addis. Alvarez. Aye. Alvarez, aye. Avila Ferris. Berman. Chen. Aye. Chen, aye. Ellis. Aye. Ellis, aye. Gibson. Hadwick. Harabedian. Krell. Aye. Krell, aye. Nguyen. Ortega. Aye. Ortega, aye. Petrie Norris. Rodriguez. Aye. Rodriguez, aye. Valencia. Okay, we're going to pick up AB 1888. Can I get a motion in a second? Yeah, it's the longest time. Thank you. Please call the roll. This is item number four, AB 1888 by Assemblymember Ortega. The motion is due pass to the Committee on Labor and Employment. Calderon, aye. Calderon, aye. Wallace? Aye. Wallace, aye. Addis? Alvarez? Aye. Alvarez, aye. Avila Fedeas? Berman? Chen? Chen not voting. Ellis? No. Ellis, no. Gibson? Hadwick? Harabedian? Krell? Aye. Krell, aye. Nguyen? Ortega? Aye. Ortega, aye. Petrie-Norris? Rodriguez? Aye. Rodriguez, aye. Valencia? Okay, now we're going to take up AB 1798. Assemblywoman Wilson, whenever you're ready. Thank you, Madam Chair and members. I'm honored today to present AB 1798. 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 should be encouraging. But instead, our current system creates risk and uncertainty. That is why my bill, 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 non-medical and is not currently used in underwriting. It prohibits insurers from seeking or using genetic information that individuals obtain on their own, ensuring that consumers remain in control of deeply personal data that they chose to explore for their own health benefits. 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, 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 from traditional medical data, as emphasized by, and in many cases, the science is still evolving or correlational, not causational. Members, this bill is necessary because the consequences of inaction are real and growing. When people believe their genetic information could be used against them, they avoid testing. They delay care. They opt out of research that could lead to life-saving breakthroughs. According to the Center for Disease Control and Prevention, a majority of individuals expressed concern that genetic test results could impact their access to life insurance. I would like to personally thank the chair and committee staff for their thoughtful engagement on this bill and confirm that I am accepting all committee amends. I have also personally had many impactful discussions with opposition, and I am committed, as I always am on every single bill that I put forth through the legislative process, to navigating further conversations with opposition throughout this process to ensure the bill is fair and balanced. That said, I would like to take a moment to directly address some of the concerns opposition has raised and detail the committee amendments we are accepting to address those concerns. After much discussion and compromise, AB 1798 incorporates a 1.5 million coverage threshold. This committee amendment was not included lightly. It is the result of thoughtful, good-faith negotiations with industry stakeholders to address concerns around high-value policies while still protecting consumers. This approach protects the vast majority of Californians and follows proven models in countries like the United Kingdom, Australia, and Singapore, where similar limits have not disrupted insurance markets. In fact, the international and domestic precedent shows no evidence that reasonable limits on the use of genetic information lead to market collapse or significant disruption. Life insurance continues to be widely available, competitive, and sustainable in jurisdictions that have adopted these protections. So when we talk about the $1.5 million cap, we are not stepping into the unknown. The evidence is clear. We are not choosing between consumer protection and market stability. We can achieve both, and this bill does exactly that. Some argue that this bill creates information asymmetry, that if insurers cannot access genetic data, they cannot accurately price risk, potentially leading to higher premiums or market instability. That concern deserves consideration, but we've already accepted limits on underwriting when fairness demands it. California law prohibits the use of protected characteristics like race or sexual orientation, even where statistical correlations may exist, because we recognize that some factors are simply inappropriate for pricing risk. We prohibit their use because fairness and civil rights outweigh purely actuarial considerations. Members, if we agree that people should not pay more or be denied coverage of because who they are, then we should also agree they should not be penalized for what's written in their DNA. Ultimately, this bill really is about balance. AB 1798 ensures that genetic testing leads to better health. It protects privacy, promotes early detection, and reinforces trust in both our healthcare and insurance systems. I would like to now introduce my two witnesses, California State Insurance Commissioner Ricardo Lara and Melanie Lindahl, Senior Vice President of Advocacy at the ALS Association. I mean, I'm done. This is fantastic. Thank you again, Madam Chair. Look, the fear of genetic discrimination is not hypothetical, as our amazing author was saying. It's real. Californians have told our department several times directly that they are afraid to undergo genetic testing because of how insurers might use the results. They worry not only for themselves, but for their children and their grandchildren, because genetic information is inherently familial. The fear has consequences. A study by the Journal of Empirical Research on Human Research Ethics found that 28% of individuals who declined whole genome sequencing cited insurance discrimination as their primary reason. UCSF researchers have told my department time and time again the same thing. Fear of discrimination is a major barrier to participation in genetic research and whole genome sequencing work is essential for developing new treatments and advancing medicine. Genetic testing is not widely accessible, and many people choose not to be tested. It's fundamentally unfair to penalize only those who do get tested, especially when testing is voluntary and when scientific understanding evolves rapidly. Someone who tests today could be judged by risk standards that look very different in five years. No one should be punished simply for seeking information early. Just in closing, Madam Chair, this bill, again, strengthens consumer privacy, promotes fairness, supports genetic research, and empowers individuals to make informed medical decisions without sacrificing their financial security. Again, as our author said, we look forward to continue to talk with the industry and with opposition to continue to make sure we strike the appropriate balance. Other countries have found that balance without disrupting the insurance market. That is the last thing I want to do as the insurance commissioner. We'll continue to have those dialogues with the author, with the opposition, and with your office. I respectfully ask for your aye vote. Chair Calderon and members of the committee, my name is Melanie Lendon. I lead the Advocacy Department at the ALS Association, and I'm here in strong support of AV 1798 because allowing insurers to use genetic information creates preventable risk. It undermines care, it suppresses research, and slows progress. 10% of ALS cases are genetic. But today, an FDA-approved treatment is showing not only that it can slow progression, but people are actually regaining function. And most importantly, researchers are today studying whether it can prevent symptom onset of this disease in its entirety. But that future depends on genetic testing. And the evidence is clear. As you've heard, without protections, people decline testing and avoid research out of fear of insurance discrimination. And I know that because I one of those people So the question is simple Will we allow fear to determine who is able to access life information The industry claims that this bill creates an uneven playing field. It does not. Genetic information is not a diagnosis. It is uncertain and not grounded in credible actuarial data. What they are asking for is not fairness. It is the ability to price risk based on speculation. Their amendments do not fix this. They entrench it. The science is ready, but the barrier here is real. The only question left is whether we allow the fear to persist or whether this committee takes action to remove it. AB 1798 does exactly that. I thank you for your time and encourage an I vote. Thank you. Do we have any other support in the room? Please come forward and state your name and affiliation. Chair and members, my name is Natalia. I'm with Greenberg-Trarik on behalf of Equality California, urging your support. Thank you. Good morning, Chair and members. Zoe Johnson on behalf of California Life Sciences in proud support. Terry Walter, a private individual but part of a family of FTD, frontal temporal degeneration, and ALS genetic family, and I support this bill. Chair and committee members, Gilbert Lahr here on behalf of Biocom in support of AB 1790. Thank you. Sarah Nacito on behalf of the California Chronic Care Coalition and GeneDx in support. Ann Blackwood on behalf of Ancestry in support. Chris Kahn representing the ALS Network in support. Madam Chair and members, Adam Caglin on behalf of Matera in support. Thank you. Thank you. Okay. Do we have any opposition? I'd like to come forward and testify. So we might have to make more. How many do you have to? Yeah, we have one person. Yeah, you can come in a moment to witnesses. Yeah. Thank you. Whenever you're ready. All right. Good morning, Madam Chair and members. My name is Michael Morris, and I'm NAFA California's Government Relations Chair and Immediate Past President. NAFA is the Association of Insurance and Financial Advisors, which represents financial professionals who provide individuals and families with secure financial protection through life, disability, and long-term care coverage. In my own practice, I work directly with clients to evaluate their needs and help them obtain appropriate coverage. I help people protect their todays and plan for their tomorrows. I'm here today in opposition of AB 1798. Of course, we support the goals of protecting Californians' personal information and people knowing more about their health through all types of medical advances, including genetic testing. Our opposition is based upon our concern that this proposal ignores a basic tenet of insurance underwriting that being able to accurately predict risk is critical to fair and accurate insurance rates for my clients CDI the sponsor of the bill has even acknowledged this principle in statements on other lines of insurance. Unfortunately, as proposed to be amended, this bill will create two classes of applicants, those whose genetic information can be considered and those who information cannot. One of the underlying justifications that we have heard from the supporters of this bill is that using genetic testing and life and disability underwriting could somehow deter people from taking a genetic test, understand more about their health. In my experience working with clients every day and representing thousands of agents across our districts, this concern has not materialized in the marketplace. Clients routinely discuss their health, family history, and coverage needs, but concerns about genetic testing in the context of insurance underwriting are not a primary driver of their decision-making. It is no more top of mind to most consumers than other common health indicators, such as cholesterol, weight, or blood pressure. I also want to emphasize that today's market already provides a range of options designed to expand access to coverage. These include guaranteed issue policies, simplified or accelerated underwriting products, and fully underwritten policies. As a result, the vast majority of individuals are able to obtain some form of coverage. Industry data consistently shows that over 90% of applicants receive life insurance at standard rates. Finally, from a practical standpoint, my role as an agent is to advocate for my clients. I regularly work with carriers to ensure that applicants are evaluated fairly based on their full health profile. For example, if a client has a family history of breast cancer but does not carry a BRCA mutation, that distinction is highly relevant to their actual risk, and I work to ensure that they are priced appropriately. So the idea that genetic testing information is used only adversely is simply inaccurate. For those reasons, we respectfully oppose AB 1798. And with that, I'd like to turn it over to the other witness from New York Life. Thank you. Whenever you're ready. Good morning, Madam Chair and members of the committee. My name is Dr. Paul Quateraro. I am the chief medical director at the New York Life Insurance Company. I've been there for 23 years and before that I practiced internal medicine for 10 years. Let me begin by acknowledging the patients and the families who shared their stories. I am truly, truly moved by what they shared. That is an important message. However, while those stories are tragic, people with severe medical conditions are often not insurable today. There is nothing in AB 1798 that will change that. Life insurance is designed to ensure people who are healthy and have modest impairments, and those people are expected to live over a long period of time. That is the contract we sign. At the core, life insurance depends on accurately stratifying risk. As a physician, I evaluate an applicant's health holistically and risk appropriately. When it is incomplete, we have uncertainty. And uncertainty leads to blind spots, it leads to increased risk and ultimately it leads to higher premiums for other policyholders AB 1798 removes access to information that is part of the complete picture and the cost of uncertainty will be borne by all policyholders. Genetic tests are not fundamentally different than other medical tests. They are simply an evolution of medical technology. Like a cholesterol test, it indicates the risk of a developing disease. We believe that if a physician who takes care of a patient orders such a test, patients should adhere to that advice and take that genetic test. And insurers should then be able to consider the results alongside the physician's guidance. In many cases, individuals with abnormal genetic findings who follow medical advice, such as lifestyle changes or surveillance can still obtain coverage, although it may not be at our best rate. We do not require genetic testing, and we only review results already included in the medical record. Consistent with any other clinically relevant medical information, we use genetic information solely for risk assessment, and only when it is actuarially supported. We are requesting amendments that allow appropriate access to this information. We believe an approach that preserves our access to the medical file will strike the right balance, protecting consumers while preserving a fair, stable, and affordable insurance market. Thank you, and I'm happy to answer any questions. Thank you. Do we have any additional public opposition to this bill? Please step forward and state your name and affiliation. I don't think the mic's on. Jerry Garcia representing Nafa, California out of San Leandro, California, and I oppose. I oppose. Hi, my name is Ivy Rappaport. I'm a life insurance agent with New York Life, and I'm from Woodland Hills near Los Angeles. I am someone with a genetic defect, and I oppose. Good morning, Madam Chair and members. My name is Roberto Hernandez. I'm a New York Life agent from Vallejo, California, and I oppose the bill. Good morning, Madam Chair and members. My name is Chrisanne Castenas. I'm a New York Life agent in Riverside, California. I'm here to oppose AB 1798 unless it's amended. Thank you. Good morning. My name is Steve Morgan. I'm with New York Life. I live right up the road here in Orangeville, and I oppose this bill unless amended. Good morning. My name is Scott Vitebski. I'm an agent with New York Life out of Lake Forest, California, and I oppose the bill unless it's amended. And we do look forward to working together with the insurance commissioner and the author. Hello, I'm Ralph Sklar from Oakland, California. I am with New York Life Insurance. Aaron's company is an agent for 31 years, and I oppose AB 1798. Also in New York Life, Lars Woolerup, Modesto, California. I do oppose the current bill as authored. Thank you. Hi, my name is Ted from Orange County. I'm an agent with New York Life, and I oppose this bill as it's written right now unless it's amended. Thank you. Thank you. Okay, I'm going to bring it back to the committee. members for questions. Madam Chair, one of the members of the community who spoke wasn't able to get his voice on record because the mic wasn't on. Okay. Should we have him come and do that? Thank you. The very first person. Good afternoon. Thank you again. Nafa California, Kent Teixeira as a board member. I oppose the bill. Thank you. Thank you. Okay. Bring it back to the committee. Do we have any questions? Go ahead. Assemblywoman Rodriguez. And I just want to state that I appreciate the work that you've been doing on this bill and hope to see you still engage with the stakeholders and see continued collaboration moving forward. Absolutely. Absolutely. Thank you. Assemblywoman Crow. Hi Assemblymember Wilson. Thank you so much for your work on the bill. I appreciate your position. I also appreciate what the sponsors have shared today. This is a really important issue and it's a weighty one. I plan to vote for the bill today. My concerns are though that the bill, even with the amendments, will raise premiums for the people that can least afford it. people that need life insurance and won't get it because they already are priced out and they'll be more priced out, kind of the middle market of insurance consumers. And I'm wondering if you can speak to that a little bit maybe in your closing, but that's my biggest hesitation with the bill, which I think addresses some really important issues. Thank you. And I would say, and I'll look to the insurance commissioner, Laura, to add on, and I would say that currently it's not used. And what happens is that the insurance providers receive a medical file related to the person that they're carrying, and they still have access to all that information. And it's based on the diagnosis of the medical professional or a risk of the medical professional who's directly interacting with a patient where they base their current risk now. And then on their side of the insurance, a medical professional review, there's a medical professional on the insurance side that also reviews that as well. and that's what it's based on. And we're not disrupting that at all, but we're saying if you voluntary get genetic testing, then that can't be used against you. If you mention that because they get the whole file, if you mention that you voluntary did it and you were concerned about a risk and then the doctor was assessing that risk and didn't say that you had that risk, then that can't be used against you. But if the doctor says, yes, you have that risk, let's do additional testing, then of course that information can be used. And so I don't think it will have an impact because it's not being used today. And like I said, we haven't seen this collapse in other markets, including Florida, including other countries that do this. We haven't seen this contraction in the market. Yeah, I would just say, Senator Krell, in the academic review research that we've seen in countries in Canada, the UK and other EU nations the review show that minimal market impacts again for the reasons that the author was stating It isn being used now We just trying to protect the sensitive information I might add the middle market is... You want to introduce yourself? Yeah. Hi, I'm Beverly Brand. I'm with the legal branch of the California Department of Insurance. And middle market, some might be medically underwritten in this face amount, but it tends to be a lower face amount. And when you hit a medically underwritten policy, you tend to start going into the higher level of the marketplace. Was there an additional related to that or any follow-up? I mean, it just seems like there is a bit of an information deficit, though, between the information that the consumer knows about their risk and the information that the insurance company knows about their risk. And I think what your side is saying is this isn't really risk. This is more attenuated. If it gets diagnosed by a doctor, that's one thing, but this is something else. Exactly. Because you might, so I did 23andMe, and it told me all these kind of potential risks that I have, right? And some of it said low, some of it said medium. And it was just doing this correlation, like between people who have this genetic or more than likely to, that, and I can assess that. you know, with my doctor, my doctor can determine the real risk of, or maybe you shouldn't, you know, somebody else who doesn't have that risk, I'm going to use something really simple, is like, if I have a risk of disease X and I eat grapes, then I will likely get disease X. But if somebody else has no risk, they can eat all the grapes they want. And so I might decide that I'm not going to eat grapes because eating grapes will actually increase that risk. But that's arbitrary, right? But if my doctor says, you know, in the file, oh yes, this is a real risk and you should be doing X, Y, Z, and then I regularly every year not doing X, Y, Z, and then that medical file goes because I'm trying to get a certain type of life insurance, especially permanent life insurance, which has a higher threshold, then of course life insurance companies can use that information because the doctor has opined on information that they got from me, but they just can't say, oh, Lori has this risk from 23andMe, and then now out of automatic, she's a higher risk person because they don't know that information. And so, I mean, we don't know that yet. Now, maybe five years down, 10 years down the road, we get really precise with the science and we start to draw a direct correlation that if you have this, it is really truly a risk and that's different and we can assess at this time. But at this time, we don't have that data that proves that out. And so we wanna make sure that the information that the insurance companies are using is real information from, that has been assessed by a medical professional that is interacting with the patient, not someone who's just reading a file and saying they mentioned a 23andMe test. And I hate to pick on 23andMe, there's lots of genetic testing out there. So they did some type of genetic testing and it's just noted. And then now all of a sudden they get to give them a higher risk as it relates to that. And we don't want that. And we recognize that there is a difference. That's why we were not amenable to the cap, but part of the legislative process You can ask for the world, but then you work with the policy experts, the subject matter experts to adjust. And so that's where the cap came from, is recognizing your average policy. And well, let me back up. Well, your average policy in California, we figured it out with median home prices, looking at income and all that, that it was a reasonable that your average person was not getting a life insurance above one point five million dollars. But we also know that if you get higher life insurance that sometimes they require blood testing Sometimes they require additional things So that okay fine if you getting a higher insurance premium I mean not a higher premium but a higher insurance coverage then you can look at additional testing. Got it. Thank you. Well, one thing I'd like to add, if I may, and I really do appreciate the question, is I do want to underscore the fact that this has been done, not only in other countries, but right here in the United States, the Florida insurance market has not taken a hit. It is alive and well. And even in countries that have had this on the books for long periods of time have not seen an impact in the insurance market. The other thing that I think is really important to note here is that- I'm sorry. Thank you. I'm sorry. I'm going to have to stop you right there. Okay. Assemblyman Petrie-Norris, could you please ask your question? Thank you, Madam Chair. And thank you to the author. I have a couple of questions as well. Though your answer to Assemblymember Carl's question makes me think perhaps I didn't fully understand the proposal. So I understood you to say that this is only prohibiting the use of direct-to-consumer genetic testing being incorporated into the underwriting process. Is that correct? Yes. Okay. Well, it's – go ahead. Oh, because you used the word only. Go ahead. Sorry. Go ahead. Yeah. It's predictive only. So it's testing in the absence of symptoms or disease or conditions. Okay. If you're concerned, you have a family history, perhaps you're concerned you want to do predictive testing. Some doctors will do that. Some won't within the medical records. Some, you know, if you come in with a direct-to-consumer test, right, then your doctor may decide to do a medical test because they're different quality between the two tests. so they can be in the medical record. And where there's an absence of disease is just to give you peace of mind or information for preventative care. That's what the bill is aimed at. So it does include direct-to-consumer, but it's possible a doctor also would do that, a similar type of test. And I very much, I totally understand that, the direct-to-consumer piece. I guess what I don't understand is just even in terms of the underwriting process, how would a medical professional who's providing an overall assessment of someone's health and attendant risk, how would they look at a medical file and then understand, like, oh, I can utilize this genetic testing, but I can't utilize that conclusion? I guess I don't understand how you would even distinguish between those if you're making an integrated assessment of someone's health risk. Because the doctor would be making that. The doctor who's interacting with the patient, not the person reviewing. So the doctor interacting with the patient would make that assessment on whether there was a real risk there. And so the insurance provider would be relying on the doctor's assessment, not the underlying predictive assessment. there are some genetic testing that you do to determine if there's an actual disease there. Like you do the genetic testing and it comes back, then you have that disease, right? Like, so we're not talking about that. So we're talking about, and really it's a diagnosis. So then they get to use it because it a diagnosis It doesn matter how you diagnosed it But then we talking about the predictive where do you have a risk of this or not And a sign you have these symptoms and you have now we done this genetic testing and this risk Now we determine that you're at this risk. That's at a doctor who's interacting with assessment. That can be used. Okay. There's nothing that prevents the insurance company from using that, right? Is that the understanding? Yeah, once there's, yeah, if it's the presence of symptoms. and disease and they're using it to diagnose or to treat or to look at that and that's part of it there'll be other testing right certainly once you have disease or a condition that's that is all fair game okay underwriting I mean there is an issue and I don't know if this is what you were hitting on between you can't unsee what you've seen and so by not barring it from being in the medical record it's possible the underwriter will have seen it underwriter is going to follow the underwriting guidelines, I think that's perhaps what, right? And so they'll go through and they'll grade different things, so they'll grade what's in there, and if it says that they're to omit the predictive test that they saw on the medical record that someone has a 10% chance more than another person of a particular disease, that's something that they wouldn't rate on on the rating sheet. And as I shared with the author, I will be supporting this bill today in committee, But I think, you know, my frame of reference with this is that we should be consistent in terms of how we're utilizing, you know, sort of this genetic testing information and how we're utilizing the other things that happen when you're getting life insurance. Like when I, I've only done this once, but like you, I had to go in, you know, you get a cholesterol test and that becomes part of it. Like I think you had to like run on a treadmill and they monitor your heart rate. Like none of those data points. None of those data points necessarily then mean it wasn't like, oh, my gosh, she's definitely got this as a problem. They used that to make an assessment. So I guess my question is, is it your intent that we will utilize this genetic testing in a way that's consistent with the data points I just described? So you're right on track, and this is where we're trying to differentiate, because the genetic information is uniquely sensitive, and it's immutable, right? So you can change your weight, you can change your blood pressure or lifestyle. You cannot change your genome, right? Genetic data reveals information about your entire family, not just you. And once it's disclosed, it can't be taken back. And that's what we're trying to figure out. What are the parameters here where it should be protected and how it's going to be used in the underwriting? And so, again, those are the things that we continue to talk with the opposition on what the appropriateness of this use, they don't use it. But then again, the technology is changing so rapidly. And in the countries that have been able to put some parameters around it, we haven't seen really significant or minimal market impact. Again, the science is changing rapidly. We're trying to provide those and, again, allow for people to join these studies as well because, again, a lot of the complaints we're hearing in our department is They don't want to be part of these studies because they're scared of the discrimination from their insurance policies. So it's having multiple effects. So we're trying to strike that balance, hence the amendments that we're taking in this committee and the future conversations we're going to be having with the opposition. And I would also note that opposition noted that when people are coming to get life insurance, that that's not top of mind. It's voluntary. So those people have already decided that's not an issue for them. So this is the people who are deciding not to do it. They're not going to seek life, or they want to seek life insurance, but they're not deciding because they're concerned about genetic information and the advent of, you know, just kind of like a technology in general, right, and how it's impacting discrimination. And so we don't want to create this environment where people are not participating in genetic testing because for every person that does that, we get way more information. And something that might be a 50% risk today, we might learn through the number of people that do it that really that's like a 5% risk, you know. And so we want people to get genetic testing at the end of the day. Okay. All right. Thank you. Assemblyman Chen. Thank you, Madam Chair. I appreciate that. I really appreciate the response of the author and also the medical professionals. I am curious in terms of Dr. Paul, your thoughts in terms of some of the questions and the answers that were raised right now, especially in the area of genetic testing. Thank you, Assemblyman Chen. I agree that we can find compromise here. We do see genetic testing from a different perspective. I do not view genetic tests as exceptional compared to other tests. I stated that in my comments, and I'll stand by that. And here's the reason why. Genetic testing has been around a long time. it has become more accurate and more reliable with time, much like many other tests we use. So let's take cholesterol for a second. When we first started doing cholesterol tests, you got a total cholesterol measurement. Over time, we learned to check LDL and HDL triglycerides. Now we're looking at sub-fractions of those, and there's recommendations to check lipoprotein A, VLDL. The list goes on. Science changes. What we are bound to do in the life insurance industry is different than what happens in the health world for a big reason. First of all, our product is voluntary. Second of all, it's paid for with discretionary income. So your concerns, Assemblywoman Krell, I think are very real. And the fact is that we are bound by actuarial standards. I can't just say, oh, there's a new test out there. I'm going to use it to underwrite. If Commissioner Lara gets a complaint about one of the cases that we underwrote, I need to prove to him and his team that we made a rational decision with sound actuarial principles or reasonably expected claims experience. I cannot willy-nilly adopt a genetic test that is not helpful in this selection. I will agree with you that there are genetic tests that are not very helpful. And as you, I'm sure, are aware, that genetic tests pretty much fall into one of three categories. Unhelpful, a variant of uncertain significance, and an actionable. In general, we are looking at actionable genetic variants if we make an underwriting decision with that. A variable of uncertain significance is not statistically sound from my point of view, and I will not make a decision on that. it doesn meet the criteria of the guardrails that are in place So I can understand your concern not only as a physician but as a patient I a human being too So I fully understand your concern But what I trying to impress upon this committee is that we take our responsibility very seriously, and we want people to have genetic testing done if their doctor recommends it. As to the issue of symptomatology, If symptoms are present, of course then there are symptoms and a diagnosis for which I need to put into the holistic equation of what is the risk. However, if there is an abnormal test with no symptoms, take high cholesterol. Most people with high cholesterol and even some with high blood pressure have absolutely no symptoms. But those two measurements tell me that that person is at risk of a stroke or a heart attack. Should I ignore that? No. If somebody has a genetic abnormality, I need to put that into the perspective of that physician who assessed that patient. And I know that we've been discussing that I will have access to the medical record to see that. But I believe that that access to the medical record needs to extend even to people without symptoms so that the physician can tell us what the risk is. I don't see the applicant. The physician sees the applicant. The physician knows the applicant. And even when no symptoms are present, there may be actuarial risk. And that's what I need to balance, because I need to help two things happen. I need to help all those agents and you sell a policy to provide protection to people that's going to help them with financial stability in case of an unpredictable loss, a premature loss in their family. Someone who becomes a widower or widower in their 40s with children needs to have a life insurance policy in place to pay off the mortgage, pay for college. That's one thing very much in my head. But the other thing in my head is that I need to keep the company financially solvent by making reasonable mortality assessments. And I can only do that when I understand the full story. and I have to use the full story. And I am, I don't want to say conservative, but I'm cautious about how I use information that is not necessarily clear. But we get that all the time in the medical records, right? Medical records, you've seen them. They're highly variable. We have to make decisions in the gray zone. That's my life. And I understand that through the chair, if I can respond. And I appreciate your comments, and we've had a chance to engage, and you are thoughtful. but you also represent one company. Correct. And I appreciate that your policy, as you direct that company's advice, as you advise that company through this process, that you are a man of integrity. And I found that in our interactions. Thank you. But there is more than one company in this field, and people have different assessments. And through your testimony, you noted that when you look at genetic testing, well, you don't look at genetic testing now, but as you consider the role of genetic testing, that it's about what's actionable, that there are various levels to it. But what's actionable is assessed by the doctor, the primary care physician that is in front of the patient, and that is noted in the medical file, which you have full access to. And so what we have been talking primarily about is the direct-to-consumer. So when someone does a 23-me test, which our expert from CDI has noted is a lesser grade quality than an actual genetic test And they go to talk to their doctor about it And if the doctor dismisses that 23andMe assessment because there are no symptoms and there is no reason to do additional genetic testing, then that should not be used against them in whether it's New York Life or any other insurance company. And that's the issue. But if a doctor says, oh, there is a concern there, Let's do our own higher grade medical testing. They do a higher grade medical testing and note a definite risk there. You would have access to that and be able to incorporate that in your actuary assessment. Nothing in our bill stops us from doing that. So what we're noting is that we have a lot of patients, a lot of consumers, human beings, going around getting genetic testing from numerous companies, looking at their health, doing all kinds of testing to determine what's going on with their body in case there might be something so that they can have a better successful outcome at life, live longer, kind of do a biohack, so to speak. We want people to be able to do that. The other thing that that does is it gives us additional information to work with so that we can be more accurate in whether genetic testing even matters and we can move more things to actionable. But every genetic testing that leads to an actionable result is actually assessed by a primary care physician in the medical file, and you get to see 100% about, and our bill does nothing to distinguish from that. Madam Chair, may I respond? Yes, you may. That was great. Thank you. Now, my concern is not about direct-to-consumer testing. If this whole room wanted to go out and get 23andMe, I'd say, fine, save your money for something else is my opinion. But if that's what you want to do, go ahead and do it. As you and I have discussed, if somebody, and as you described just now, if somebody gets a 23andMe response that is adverse some way, and they bring it to their physician, and the physician says, I'm not worried about it in you, we're both happy. If they say, if the physician says, I'm worried about this in you, let's do more specific testing, and maybe need to see a specialist and get more testing, I think we'll agree that I have access to that in the medical record. The question will become, one, if the information comes back, is it actionable by my company, even if that person has no symptoms? Because the physician or the specialist or both of them have decided that this person has extra risk of developing a disease. But the doctor assessed that risk, and you're allowed to base on the doctor, not the genetic testing, but on the doctor's assessment of that risk, you are allowed to take action on that. And nothing in our bill says that you cannot do that. Well, that gets us to the definition of what a genetic test is and the use of the word solely, doesn't it? No, it does not. I disagree. So then we need to have an additional conversation. Yeah, because you are allowed to make assessments on a doctor's assessment. If a doctor assesses risk, you are allowed to adjust the coverage in any way, shape, or you fit based on or set the premium based on that primary care physician that is in front of the patient that is looking at the complete picture. And nothing in our bill changes that relationship. But what happens if the person decides not to go for those tests that are recommended and not to have? And if they decide to do that, that's on them as well. and you can't take action on that. If they decide not to see a doctor, you can't push them. You are at risk Okay We going to go to the next committee member that has a question Assemblyman Alvarez Yeah and I want to apologize I had to present the bill and I really wanted to be here for the questions that I sure everybody asked and I got to catch just the end of this. And I think you're getting to sort of like the disagreement or friction. So I would just encourage that that communication continues. Absolutely. It's not going to get resolved here right now. But I, at least given the two of you here, it gives me, I think, some hope that there can be an understanding of where you're trying to reach land this. And I think, but a very sensitive, and I hear the, you know, there's, in my thinking, people have heard this before, I think of two Venn diagrams. What is a desire, of a Venn diagram, what is a desire of the policy you're seeking, the folks who are opposed, and then how to, Where is that sweet spot in the middle? I think there's something there. I don't think you're there yet. And maybe it's refining some definitions, it sounds like, maybe the place. But I think I'm supportive of giving the full picture to the decision makers who have to make decisions based on that full picture, to the extent we are not providing information or creating a situation where people are discouraged, as you have, I think, appropriately described. We want to protect against that. And so I think you're getting there to the right place, and I hope that this continues. I think it would be worthwhile. I'll support this today. I look forward to the end discussion of this. Thank you. Thank you. So would you like to close, Assemblywoman? Thank you, Madam Chair and members, and thank you for the discussion. California has always led the nation in recognizing that innovation must be matched with responsibility. As genetic technology advances, so too must our safeguards. We are standing at the intersection of innovation and policy, and the choices we make today will shape how Californians experience the future of medicine. AB 1798 ensures that the future is one of trust, access, and protection, not fear. I appreciate Insurance Commissioner Lara being the leader on this front, and with that, I respectfully ask for an aye vote. Thank you. And I just want to take a second to thank the Insurance Commissioner and Assemblywoman Wilson for working with my staff, working for the stakeholders. This is a very important issue for the industry and for the consumers that benefit greatly from this. And Assemblywoman, I appreciate you saying that you're going to continue to engage with all the stakeholders. I know you'd be a woman of your word. And so, and I'm heartened by what I heard here today. So thank you for that commitment. Secretary, please call the roll. This is item number three, AB 1798 by Assemblymember Wilson. The motion is due pass as amended to the Committee on Privacy and Consumer Protection. Calderon. Aye. Calderon, aye. Wallace. Wallace, no. Addis. Aye. Addis, aye. Alvarez. Alvarez, aye. Avila-Ferries. Berman. Chen. Chen, no. Ellis. No. Ellis, no. Gibson. Aye. Gibson, aye. Hadwick. Hadwick, no. Harabedian. Harabedian, aye. Krell. Aye. Krell, aye. Nguyen. Ortega. Ortega, I petri Norris. Petrie Norris, aye. Rodriguez. Rodriguez, aye. Valencia. Okay, we're going to hold the roll open. That bill is out. Thank you. Thank you all. Thank you very much. Thank you. Thank you. Appreciate it. Next, we will hear AB 2038 by Assemblyman Herabedian and Zabur. Thanks. Thank you. Okay. I love it. Go first. Whenever you're ready, gentlemen. Well, thank you, Madam Chair, and thank you to my colleagues for moving the bill and seconding it. I'm just going to briefly kick this off and hand it off to my joint author, Senate Member Zabur. And this bill is fairly simple, and it extends the moratoriums that apply to victims of wildfire. And it does so for those that have suffered a total loss of their home. It would extend the moratorium from two to three years. And for homes in and around the fire zone, it would extend the moratorium from one to two years. As many of you know, SB 824, which was authored by then-Senator Ricardo Lara, allows the insurance commissioner to institute a moratorium so that anyone who's affected by a wildfire does not get canceled from their residential insurance policy. I would just like to give, before handing it over to Senator Zabur, a big shout out for really championing this. And I think, as the chair knows, at the beginning of the legislative session, this was really top of mind for him and is why we're here today. So I just want to thank you for everything you've done and just allow you to give your introduction. So thank you. Thank you very much, chair members. And so, first of all, you're giving way, way too much credit. I did speak to both you and of course our committee chair about these issues. And I want to thank both you and our committee chair and the members of this committee for your leadership on really addressing this insurance crisis. You know, this AB 2038 is critical to protecting Californians and advancing affordability. One of the things I hear from people in my district more than anything else is basically the insecurity that they are facing and the uncertainty that they're facing about whether or not they can continue to have insurance for their homes. The growing threat and destruction of wildfires has severely increased across the state with record-breaking disasters occurring over the last decade. As I mentioned, just over a year ago, the state was victim to catastrophic Eden and Palisades fires, which took the lives of over 31 people and destroyed more than 15,000 structures. And I want to thank my co-author for his incredible leadership and the members of this committee also for stepping forward on these issues. Of the people who lost their homes in the Palisade fires, a large portion of those displaced families now reside in my district and are now my constituents, unfortunately, for the fact for them and the fact that they had to lose their homes and are now living in displaced quarters The total monetary damage from the Eaton and Palisades fires is estimated to total over billion in damage when long economic damage is included And the devastation coupled with the ongoing insurance crisis facing California has put our community members at severe risk. risk. In my district alone, which borders the fire areas, I've heard countless devastating stories from constituents who are completely out of options and are faced with either leaving California or paying unreasonable insurance premiums from the not admitted market or living without insurance at all. And in some cases, that means losing their mortgages because they end up not having insurance to cover their homes. Additionally, in these high fire risk areas, they also deal with the significant delays in identifying which policies they can receive as replacement for canceled coverage and unpredictability on the status of their existing policies in the admitted market. AB 2038 will help these Californians. Again, it's a very simple bill, but it will help these Californians by extending the insurance moratorium, which will give Californians who are at risk of losing coverage from the admitted market more time to protect their homes and will give more time for the state insurance commissioner and for the state of California to address the underlying causes of our insurance crisis. This is critical to support and to support those facing insurance instability and create a pathway to a more affordable California. So again, I want to thank the author of this bill, the lead author of this bill, and all of you for really your dedicated help in protecting Californians and I urge an aye vote at the appropriate time. Thank you, Senator Here is our witness is Joel Loucher with the United Policyholders. Okay, thank you. I know this is my opportunity to speak, so thank you for that. My name is Joel Loucher. I have over 40 years of experience in the insurance world. First as an underwriter, then as a regulator, California Department of Insurance for 35 years, where I started as a market conduct examiner and ended my tour there as Chief Deputy Commissioner under then Commissioner Dave Jones. So for the past five years, I have worked for United Policyholders, a nonprofit that assists consumers, homeowners, renters, anyone who is dealing with the aftermath of a catastrophic loss. And these are very challenging times for those people. Working through their insurance coverages is very difficult, and so they already have a lot to deal with. Our surge in major wildfires has shown over these many years that recovery is not a short-term process. When losses are widespread, infrastructure is damaged and contractors, materials and labor and adjusters, insurance adjusters themselves, are all in high demand and they're just not ready, readily available for people to use. As you might expect in any region, there are only as many contractors as there is typically work to do. So this surge that comes after a catastrophe, there just isn't the workforce to deal with it. Current insurance moratorium protections are an important safeguard but the existing time frame does not reflect the real pace of recovery AB 2038 helps close that gap by ensuring families are not placed at risk of losing insurance coverage in the middle of rebuilding their homes and stabilizing their lives. I'll mention here again that United Policyholders is having routine community events still about the rebuilding process, how to get through it, the permitting, all of this continues despite, you know, how much time has already passed. This bill does not increase policy limits or expand coverage. It simply provides additional time for policyholders to use the coverage they already have, often under extremely difficult circumstances. Homeowners are not delaying recovery by choice. Delays are driven by system-wide constraints in labor materials and claims resolution capacity, the ability to get their claims adjusted by the insurer. The impacts of catastrophic events extend beyond the directly burned areas, and neighboring communities also experience significant market disruption and insurance instability that this bill appropriately addresses. This proposal aligns insurance protections with the actual timeline of recovery in California following major disasters today. So we urge your aye vote for this bill. Thank you. Thank you. Do we have additional public support? Please come forward, state your name and affiliation. Good morning, Madam Chair and members. Christopher Sanchez with the Consumer Federation of California in strong support. Good morning. Stacey Heaton with the Rural County Representatives of California, representing 40 rural counties statewide in support. Jill and Ivoris here on behalf of the League of California Cities in strong support. Cal is still with the California Community Foundation in support. Thank you. Do we have any witnesses in opposition? Please come forward and come to the table. Whenever you're ready, gentlemen. Good morning. Morning, Chair and members. My name is Mark Secklin. I'm Vice President of State Government Relations for the American Property Casual Insurance Association, here in respectful opposition to AB 2038. AB 2038 further constrains and insures ability to underwrite, rebalance its portfolio, and align exposure with available capital and reinsurance. At a time when the homeowner's insurance market is already under severe strain, this bill risks accelerating market pullbacks and reducing new writings in California. We believe this dynamic is already contributing to the growing reliance on the fair plan. When insurance cannot actively manage exposure, particularly during a period of elevated risk, they are forced to make difficult decisions. If a significant portion of the company's book is locked under moratorium, that company may be compelled to reduce exposure even in lower risk areas to remain solvent. These mandates are especially problematic because section 675.1 doesn't contains no explicit exception for insurer financial condition or capacity. In other words, there's no solvency safety valve. This issue was raised during the consideration of AB 824 and the amendments to address it were requested but ultimately rejected The same underlying concern remains unsolved today When the commissioner last appeared before this body he acknowledged that the decisions you make will have real impacts on the insurance market As insurers consider whether to expand their writings in California or reenter the market altogether legislation that further restricts underwriting decisions becomes a serious deterrent. It is also important to understand the scale of these moratoriums. Moratorium triggered by a wildfire does not just apply to homes that are damaged or destroyed. it implies the entire zip codes adjacent to the fire, capturing far more homes than the total loss caused by the fire itself. California has more than 8 million homeowners insurance policy. In 2024, the department reported that 1 million homes were under a non-renewal moratorium, a very substantial number. Just this year, a moratorium was declared, covering 150,000 policies around Kern, Santa Barbara, San Luis, Ventura counties following the Gifford Fire, even though the fire damaged five structures. Similarly, in December, nearly 1,400, 14,000 policyholders received a one-year moratorium after the PAC fire, which destroyed 30 structures. These examples highlight the imbalance between the actual loss and the scope of the mandated continuation. When extended repeatedly without regard to insurance capacity, these policies undermine the stability of the market rather than protect it. For these reasons, APCIMS respectfully oppose AP203. Good morning, Madam Chair and members. Paul Ramey with the Personal Insurance Federation of California. I'd like to start by thanking the author and his team for what has been a candid and collaborative process to this point. I think it goes without saying that we share the desire to create predictability and stability. We certainly share concerns about the slow pace of recovery in the aftermath of the Eaton and Palisades fires. Our challenge, as you all know better than most, is that the insurance market across the state has been in crisis for years. We're optimistic that the commissioner's sustainable insurance strategy will significantly improve the health of the market, but the ink on the cyst is barely dry, and we are certainly not far enough along to start seeing real results. In this fragile environment, taking hundreds of thousands of homes out of play for years means insurers have to turn to the rest of the market to rebalance risk. The result is that those homes not under moratorium bear a disproportionate share of the burden. Although this bill creates temporary stability for those homes under the moratorium, it exacerbates the availability and affordability crisis across the rest of the market, including for homeowners and communities who have done the work to reduce risk. For these reasons, we are respectfully opposed to AB 2038. Thank you. Do we have any additional opposition? Please come forward and state your name and affiliation. Good morning, Chair and members. Naomi Padron on behalf of the Pacific Association of Domestic Insurance Companies, respectfully opposed. Thank you. Okay, I'll bring it back to the committee. Do we have any questions? Assemblyman Alvarez. Thank you. I'm trying to understand how to better approach this because I think what the opposition is saying, and this is going to sound probably harsher than it's intended to, but the idea that you would be forced to provide insurance coverage in certain areas is not one that you're favoring. In this case, the areas would be areas surrounded by fires. I guess I'm trying to understand, I'm trying to get to the why, and I know it has to do, and I'm sure you'll respond partially with the fact that, the cost of insurance is increasing in California and the rates that you need to charge in order to ensure that there's stability in the market I know that's part of the response. I fully not only have heard you but understand that. But I'm also trying to understand in areas, and maybe I'm trying to understand if all areas should be treated the same. So I can see an urban area perhaps being different in this, the catastrophe that occurred in the communities that our colleagues represent, you know, are perhaps not as prevalent as some other rural areas where it happens often. But we're also talking about less structure. So I'm trying to get more into the detail as to why the resistance, particularly in these communities that are not necessarily, and you could please correct me if I'm wrong, they're not high fire hazard areas per se. So provide some of a picture for me as to why the opposition in these communities. I don't think it's opposition to these communities. This moratorium happens all over the state. It's just a question of, for the greater insurance market, while we appreciate the needs of these individuals, what is the impact on the greater insurance market? When you talk about zip codes adjacent to a recent fire, those same discodes could have similar risk to those zip codes that just burned down, but because of the way the wind blew at a particular time or the firefighting resources were deployed, they didn't burn down. So the risk may be the same. And now you're locking in a policy potentially at a rate that is lower than would otherwise be considered when the rate and the risk is actually known better. And so that's one of the problems we have. Like if you're an insurance company and you need to reduce your book of business and say 20 percent of the policies are locked up under moratorium, where else do you go? Well, you have to go somewhere else to do that. And that's our concern, and that's one of the reasons we think that, you know, we're always surprised that the fair plan is picking up low-risk business. Now, part of it could be price, but part of it also could be is that that's where insurers have to non-review new policies to balance their vote because they can't in these other areas. Tell me, I was intrigued by your comment about the fire where there was five structures, and you said that if that was deemed to meet the definition of this, and now every adjacent zip code essentially would face the moratorium, even though perhaps the, I don't know if you were, you're trying to communicate that maybe in that case, the fire zone was so limited. So why is this so far reaching? No, actually the opposite. I think one of the challenges we had this in this bill when Senator Lahr introduced it, initially it was introduced as it would apply to the entire county. So, for example, if you had a small fire in West L.A. County that was an emergency and almost all wildfires are declared emergencies, the entire county of L.A. could be under a one-year moratorium. We're able to get that down to a zip code. But the problem is some of these zip codes can be very large, and they may just be tangentially related to the wildfire. And that's where you get these large numbers. One of the things I do enjoy is the commissioner always does a press release on these, and they always put in how many policies that they call them protect, and that's where I found those numbers. Okay. Let me ask the authors on the selection of zip codes. And yeah, I think it's true. Some zip codes are very large. Some are very compact. Was there some other discussion about a perimeter that you ever contemplated? So under SB 824 the perimeter and the zip codes are chosen by the Department of Insurance in conjunction with CAL FIRE and with the experts at the Forest Department So this doesn change that process and that would be a scientific method that applies with or without this extension Okay. Can you tell us what the impacts are and why the two years resolves, or maybe you might think it doesn't resolve, but it's perhaps your approach that you're taking here, the concern of individuals who are being non-renewed? Are you just buying them a year because then they're going to be facing this essentially in year three? Yeah, I mean, I think that it's a fair question, and I think that you could argue that you're just delaying the inevitable. I hope that's not the case, and hopefully the industry would not agree with me. Hopefully the inevitable is not that they just get non-renewed. But the two to three year for the total loss really is just trying to align with the modern constraints of rebuilding. We're seeing timelines that folks are facing to rebuild that go well beyond two years. And three years, we think, is a much better timeline for those folks who are having to rebuild from the ground up. But it is a temporary fix. I mean, we have to fix these broader market issues. And I think I understand that and feel completely compelled to support that in the areas that are impacted. But this bill now reaches areas that don't need to rebuild. And that's where I'm trying to understand what are we trying to accomplish. Right. And I'll let my joint author weigh in as well. But for those areas, I actually think that this is why the bill is so critical. In many ways, if you think about it, when there's a total loss, insurance companies are insuring in many ways, most of the time, a vacant lot that then gets rebuilt. If I was an insurance company, that's an easy deal for me to make. I'm going to extend that policy. There's not a lot of risk. The fire has already happened. It's in these communities that Senator Zabur represents where this bill is really needed, because those areas have seen historically more non-renewals over time because of its tangential nature of the fire that preceded it. And that's why the moratorium going from one to two years gives those folks, a lot of whom may have experienced smoke damage, obviously maybe housing folks who have been displaced by the fire more time to figure out their insurance policy. I'll give our colleague, Mr. Zaburo, a chance to respond. Do we have data on non-renewals in adjacent zip codes? Have we seen this play out in data from the Department of Insurance? We haven't. I mean, I don't see a lot of data yet, but anecdotally, what happened after the Palisades fire, and I represent the areas that abut it. And so after the Palisades fire, there was a host of notices that went out to all of these homeowners indicating that their insurance may not be renewed. It was because of the moratorium that they actually had a year where they had some amount of certainty. This is also coupled with reforms that I know this committee is making and our chair is making under the fair plan, because there's also limitations on some of these folks not having the ability to be insured under the fair plan, which I know that the chair is actually focusing on now as well. So these folks that got these notices basically were looking at not being able getting their insurance canceled, not potentially having any availability to get insured under the fair plan, either because of the limitations on coverage or other factors on how the fair plan insures folks and then having to go to the not admitted market and facing insurance premiums that were north of a year that were mere fractions of that into the admitted market. So this gives them, I mean, this is a bit of a Band-Aid. It's a Band-Aid in the sense that it gives more time for the state to address the underlying issues related to the insurance crisis that we're facing. And it also gives us more time to sort of shore up, even though that is, you know, the insurer of last resort, but at least it gives more time to shore up some of the criterion under the fair plan to give them a backup for that. So, you know, these folks, there's folks now that have actually gotten their insurance canceled in this gap, but there are other folks that their insurance is not coming up yet. And this will help those other people by giving them more time. And frankly, them losing their insurance, I mean, in many cases, this is about getting their mortgages canceled. We can't leave people without an ability to have any insurance from any place. I'm interested in getting the data on that to understand the scope of the problem before we get to the final decision on this bill. To the folks who are here testifying in opposition, What would it take, in your opinion, I think I know what the answer is going to be, but in your opinion, for there to be no notices of cancellation and that we maintain some stability from folks who are, as is being described in this region, perhaps no longer insuring? I'm not sure I can answer that question. It would depend on company by company. I mean, if the company has the financial solvents and still wants to continue writing in those areas, then they certainly can. If they have financial issues and need to reduce their risk, that does put a challenge on them. And so I think really this all it comes back to is we need to figure out a way to make the amended market work better. And we're not sure while we appreciate what the Assemblymember is saying and do appreciate the struggles that the folks go through. We're not sure that this is the right tool. But what you may want to do as a stopgap, at least to improve the bill for those companies that may have financial issues, is put in the amendments that we suggested in SB 824 when the bill was due to put some type of solvency stopgap. There is language in other parts of the code that if the insurer can show a financial risk, they may be able to get off these policies. Now, that won't help those individuals, but it could stop a wider spread of non-renewals. I'm interested in that. And I'm also interested in how many rate cases are there before the department in zip codes that we're talking about? I have no way of knowing that information because most rate cases are built on a statewide basis. And then they'll do rating bans based on where the zip code and the risk are. But I don't know. Yeah, that'll be in my questions. I'd like to, if you can help us, somebody can help us get that information. because I think there's legitimacy to the argument that if people can't sustain, the market can't sustain, what do we expect they're going to leave? And if that's due to the ever-consistent problem, which I know the sustainability strategy is supposed to address, of rate cases not being adjudicated, then that's a problem. And so I like to know what is the real on scenario with people who are getting cancellation notices and to the scope of the problem on that front and the scope of the problems for those who do want to continue to offer a product that are not able to or we not moving fast enough as government to provide you the tools to do so in addition to following up with you on the suggestion that perhaps on the solvency issue because I think that's a real issue. But I think for now I'm supportive to move this forward, but I'd like to see that information before I get another chance to vote on this. Thank you.

Okay, seeing no – oh, Assemblyman Chen.

I will just say thank you for the questions, Senate member. This bill does not change underwriting processes, rate making. There should not be a cost shift from certain members to other members. Frankly, that would be arguably illegal, and it would be against, I think, the practices of, I think, all the insurers here. So I actually think that those questions are best left to be answered by the opposition witnesses, but nothing about this bill would change any of those factors.

Okay. Would you gentlemen like to close?

Secretary, please call the roll. This is item number nine, AB 2038 by Assemblymember Herbedian. The motion is due passed to the committee on appropriations. Calderon? Aye. Calderon, aye. Wallace? Wallace not voting. Addis? Aye. Addis, aye. Alvarez? Aye. Alvarez, aye. Avila-Fediz? Aye. Avila Farias, aye. Berman, Chen, no. Ellis, no. Gibson, aye. Gibson, aye. Hadwick, aye. Oh, Herbedian. Aye. Herbedian, aye. Krell. Aye. Krell, aye. Nguyen. Ortega. Aye. Ortega, aye. Petrie-Norris. Aye. Petrie-Norris, aye. Rodriguez. Valencia. Thank you. That bill is out. We'll hold the roll open. Okay, next we have EB-1800 by Assemblywoman Krell. Aye. Move the bill. Second. Second. Appreciate it.

Okay, whenever you're ready. Mr. Jensen. Yes, thank you, Madam Chair and members. Kelly Jensen on behalf of Sherian in support of the bill. Happy to answer any questions given the lateness of the committee. Thank you. Thank you. Do we have any additional support for this bill in the room? Please come forward and state your name and affiliation.

Thank you. Is there any opposition to this bill? If so, please come forward. Seeing none, I'll bring it back to the committee. Do you have any questions? Okay, would you like to close the Summer Woman Crell?

Thank you. All right. Secretary, please call the roll. This is item number 8, AB 1800 by Assemblymember Crell. The motion is due passed to the Committee on Appropriations. Calderon? Aye. Calderon, aye. Wallace? Aye. Wallace, aye. Addis? Aye. Addis, aye. Alvarez. Alvarez, aye. Avila-Feddeus. Aye. Avila-Feddeus, aye. Berman. Chen. Aye. Chen, aye. Ellis. Aye. Ellis, aye. Gibson. Aye. Gibson, aye. Hadwick. Hadwick, aye. Harabedian. Aye. Harabedian, aye. Krell. Aye. Krell, aye. Nguyen. Nguyen, aye. Ortega. Aye. Ortega, aye. Petrie-Norris. Aye. Petrie-Norris, aye. Rodriguez. Valencia. That's out, and we'll hold the roll open. Okay, next we have AB 2198 by Assemblywoman Rodriguez. Whenever you're ready.

Thank you, Madam Chair and members. Happy to keep my comments brief. Appreciate the author introducing the bill on our behalf and happy to answer any questions the committee may have.

Thank you. Do we have any additional support in the room? Please come forward. Seeing none. Is there any opposition to this bill in the room? Okay. Seeing none. Any questions from the committee? Seeing none. Would you like to close, Assemblywoman?

Okay. Thank you. Secretary, please call the roll. This is item number 10, AB-2198 by Assemblymember Michelle Rodriguez. The motion is due pass to the Committee on Appropriations. Calderon? Aye. Calderon, aye. Wallace? Wallace, aye. Addis? Aye. Addis, aye. Alvarez? Aye. Alvarez, aye. Avila Farias? Aye. Avila Farias, aye. Berman? Chen? Aye. Chen, aye. Ellis? Aye. Ellis, aye. Gibson? Aye. Gibson, aye. Hadwick? Aye. Hadwick, aye. Harabedian? Aye. Harabedian, aye. Krell? Aye. Krell, aye. Nguyen? Nguyen, aye. Ortega? Aye. Ortega, aye. Petrie-Norris, aye. Petrie-Norris, aye. Rodriguez, aye. Rodriguez, aye. Valencia, aye. That bill's out. We'll hold it open. Okay, we're going to go through the roll for any members that need to add on. This is item number one, AB 1559 by Assemblymember Calderon. Addis? Aye. Addis, aye. Berman? Or excuse me, Abila-Fediz? Avila Feddeus, aye. Berman? Gibson? Aye. Gibson, aye. Hadwick? Aye. Hadwick, aye. Harabedian? Harabedian, aye. Nguyen? Nguyen, aye. Petrie-Norris? Aye. Petrie-Norris, aye. Valencia? Item number two, AB 1680 by Assemblymember Calderon. Addis? Aye. Addis, aye. Avila Ferrias? Aye. Avila Ferrias, aye. Berman? Gibson? Aye. Gibson, aye. Hadwick? Hadwick, no. Harabitian? Aye. Harabitian, aye. Nguyen? Nguyen, aye. Valencia? This is item number three, AB 1798 by Assemblymember Wilson. Avila Ferrias? Aye. Avila Ferrias, Aye. Berman. Nguyen. Nguyen not voting. Valencia. This is item number four, AB 1888, by Assemblymember Ortega. Addis Aye Addis aye Avila Aye Avila aye Berman Gibson Aye Gibson aye Hadwick Hadwick no Herbedian? Aye. Herbedian, aye. Nguyen? Nguyen, aye. Petrie-Norris? Aye. Petrie-Norris, aye. Valencia? On the consent calendar, Addis? Aye. Addis, aye. Avila-Fedais? Aye. Avila-Fedais, aye. Berman? Gibson? Aye. Gibson, aye. Hadwick? Hadwick, aye. Harabideon? Aye. Harabideon, aye. Nguyen? Nguyen, aye. Petrie-Norris? Petrie-Norris, aye. Valencia? Item number eight, AB 1800 by Assembly Member Krell, Berman. Rodriguez? Aye. Rodriguez, aye. Valencia? on item number nine AB 2038 by assembly member Herbidian Berman Nguyen Nguyen aye Rodriguez aye Valencia okay I'm going to leave the roll open for five minutes if the authors if committee members want to vote please come to the committee in five minutes Secretary, please call the roll. This is item number one, AB 1559 by Assemblymember Calderon. Berman, Valencia. Valencia, aye. Item number two, AB 1680 by Assemblymember Calderon. Berman, Valencia. Yes. Berman, or Valencia, aye. Item number three, AB 1798. Berman, Valencia. No. Valencia, no. Item number four, AB 1888 by Assemblymember Ortega. Berman? Valencia? Yes. Valencia, aye. On the consent calendar, Berman? Valencia? Yes. Valencia, aye. Item number eight, AB 1800 by Assemblymember Krell. Berman? Valencia? Yes. Valencia, aye. Item number nine, AB 2038 by Assemblymember Herabitian, Berman, Valencia. Yes. Valencia, aye. And item number 10, AB 2198 by Assemblymember Michelle Rodriguez. Berman, Valencia. Yes. Valencia, aye. Yes. Yes. Thank you Thank you. All right. Secretary, please call the roll. This is item number one, AB 1559, by Assemblymember Calderon. Berman? Aye. Berman, aye. This is item number two, AB 1680, by Assemblymember Calderon. Berman? Aye. Berman, aye. This is item number three, AB 1798, by Assemblymember Wilson. Berman? Aye. Berman, aye. Item number four, AB 1888 by Assemblymember Ortega. Berman. Aye. Berman, aye. On the consent calendar, Berman. Aye. Berman, aye. Item number eight, AB 1800 by Assemblymember Crowell. Berman. Aye. Berman, aye. Item number nine, AB 2038 by Assemblymember Herbedian. Berman. Aye. Berman, aye. And item number 10, AB 2198 by Assemblymember Michelle Rodriguez. Berman. Aye. Berman, aye. Thank you, everybody. Thank you. Assembly Insurance Committee is adjourned. Thank you. Thank you.