Senate Insurance Committee

Good afternoon, Mr. Chair and Senator. I would like to thank the chair, his staff, and all the stakeholders for coming together, which resulted in the opposition moving to neutral. AB 69 addresses the overarching goal of depopulating the fare plan through the clearinghouse programs while maintaining consumer choice. This measure accomplishes the following. Requires a fare plan to provide a separate and distinct notice to policyholders about their coverage options. Requires a fare plan to report to the public and legislature quarterly on the clearinghouse programs. Requires brokers and agents to take additional training and educate their customers on the clearinghouse programs. And last but not least, AB 69 will allow the Fair Plan to provide relevant policyholder information to insurers that will allow them to provide an offer to a Fair Plan policyholder, while providing the same offer to the agent or broker of record. The bill in front of you is a product of the outcomes review hearing authorized by the Speaker that focused on obstacles that hindered the success of the Clearinghouse programs. AB 69 takes a simple and supported approach to address those obstacles highlighted at that hearing. With me today in support of the bill, I have Armand Feliciano from Public Policy Advocates, representing the California Fair Plan. And for technical questions, I have Josine Figueroa from the Department of Insurance and Tony Signorelli.

Good afternoon, Armand Feliciano. Good afternoon, Mr. Chair, members of the committee. Here for the fare plan, we support AB69. It will help depopulate the fare plan, expand consumer choice, very consistent with the sustainable insurance strategy in depopulating the fare plan. And as Assemblymember Calderon mentioned, it will help track better data to see how the clearinghouse is working. We'd like to thank Assemblymember Calderon, her staff, and CDI for working with us, and we're at your eye vote.

Hello, I'm Joel Launcher with the United Policy Holders, and we support this bill.

Chair Padilla and members of the committee, Josephine Figueroa on behalf of Insurance Commissioner, Riddick Abdelada in support of the bill.

I'm fine here, Mr. Chairman and members. John Norwood on behalf of the Independent Insurance Agents and Brokers of California. We're not here in opposition. I WANT TO THANK THE AUTHOR HER STAFF THE DEPARTMENT OF INSURANCE YOUR CONSULTANT OTHERS INVOLVED THAT ALLOWED US TO COME TOGETHER AND REACH A COMPROMISE ON THIS BILL I TRULY BELIEVE THIS IS A WIN COMPROMISE others involved that allowed us to come together and reach a compromise on this bill I truly believe this is a win compromise Consumers are going to be protected from inadequate insurance. Agents and brokers, client lists and work products are going to be protected from abuse, I believe. The fair plan became depopulated when insurers left, and people had nowhere else to go. It's going to become unpopulated as insurers come back to the state and fair plan rates get to the point where they exceed the private market. Both of those things are starting to happen, and we're very pleased to see that. So, again, we appreciate the work together.

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

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

Thank you, Mr. Chair. Members, the intent of AB 1554 is to increase transparency. This measure makes clarifying changes by requiring the California Earthquake Authority to post the annual report on their website and also provide to relevant committees. AB 1554 also directs California's Insurance Commissioner to convene a working group by January 1, 2028, to incorporate hazard mitigation projects to its recommendation related to risk transfer market mechanisms. This working group was established in 2018 via legislation to focus on the impacts of climate change. I respectfully request your aye vote at the appropriate time.

No.

Mr. Chair and Senator, AB 1680 strengthens accountability by requiring the Fair Plan to take corrective actions following operational violations found by the California Department of Insurance. This measure also allows the Insurance Commissioner to adjust policy limits to fit the needs of Californians. The California Fair Plan was established to step in when California faces a voluntary market failure. We depend on the Fair Plan to fill insurance gaps, but we also depend on the Fair Plan to be transparent, accountable, and responsive. AB 1680 aims to improve upon all three. I have Josephine Figueroa Deputy Commissioner of the California Department of Insurance the sponsor of the bell here today to testify in support Recent amends take and remove opposition from this bell

Good afternoon, Chair. By the end, members of the committee, Josephine Figueroa, Deputy Commissioner and Legislative Director for the Department of Insurance, under the leadership of Insurance Commissioner Ricardo Lara. I want to thank Assemblymember Calderon for authoring this important bill which brings long-needed oversight accountability and consumer protections to the Fair Plan as this takes on a far larger role in today's wildfire-driven insurance market. The Fair Plan was created as a safety net and insurer of last resort, but in recent years, wildfire risks, insurer withdrawals, and widespread non-renewals have pushed enrollment to levels never seen before. The Fair Plan is now functioning as a major insurer in high-risk regions, yet its statutory structure still reflects a much smaller, limited-purpose program. That mismatch has created serious gaps in coverage, governance, and consumer protection. The Department's recent report of examination, the most comprehensive review of the Fair Plan in decades, made this abundantly clear. The examination found systematic weaknesses that left wildfire survivors facing delays, denials and inconsistent claims decisions, particularly after the 2025 Los Angeles wildfires, the largest urban wildfire disaster in state history. The review assessed 32 areas of the fair plan's operations, financial conditions and governance. In more than half of these areas, the fair plan has had has not begun to fully implement the department's recommendations. These findings show that the fairs plan current structure is not keeping pace with the needs of the Californians and the coverage that they need and they depend on. At the same time, the fair plan's exposure and policy count have grown dramatically, creating financial and operational risks that extend far beyond its original mission. AB 1680 directly addresses these problems by requiring mandatory compliance with the department's examination findings. The department's report found that the fair plan has failed to comply with 17 critical administrative recommendations structural deficiencies that directly affect policyholders who rely on the Fair Plan when no other coverage is available. Addressing increased workload and insufficient staffing. AB 1680 requires the Fair Plan to hire additional staff to meet its operational demands, ensuring that the Fair Plan has the capability and capacity to process claims, manage policies, and respond to consumers in a timely effective manner. And importantly, strengthening the clearinghouse program. AB 1680 requires the Fair Plan's responsibility to help policyholders transition back into the voluntary market when transitional insurance becomes unavailable or when it becomes available. The bill requires improvements to the clearinghouse program so that the Fair Plan can actively identify opportunities for policyholders to return to the admitted market and facilitate those transitions effectively. In short, AB 1680 brings the fair plan into alignment with the realities of today's insurance market and the needs of Californians who rely on it. It strengthens accountability, improves consumer protection, and ensures that the fair plan can operate responsibly as the states insure a last resort. On behalf of Insurance Commissioner Herrera, I ask for your aye vote. Thank you.

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

Mr. Chair Armand Luciano for the Fair Plan. We are now neutral with the recent amendments, and we've removed our opposition. Thank you, Madam Chair.

That's correct. Those two issues are the main issues that we had the most recent discussions on, and we believe were addressed.

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

Okay, thank you

Yes, at the appropriate time when you do get a quorum Respectfully ask for an aye vote

Thank you. Good afternoon, Chair and members of the committee. Josephine Figueroa, Deputy Commissioner and Legislative Director for the Department of Insurance under the leadership of Insurance Commissioner Ricardo Lara. Commissioner Lara is a proud sponsor of AB 1795, a bill that finally brings statewide clarity and consistency and accountability to the way smoke claim damages are inspected, tested, and remediated after a wildfire. I want to thank Assemblymember Gibson on behalf of the Insurance Commissioner for authoring this important bill, which finally establishes enforceable standards to smoke damage claims, protecting families who have been left navigating inconsistent and often inadequate insurance policies. California's wildfire reality is now year-round. Fires are larger, faster, and more destructive than ever. The Eton fire in Altadena and the Palisade fire in Pacific Palisades alone destroyed or damaged more than 16,000 homes. These two fires were fundamentally different from what California has historically experienced. They were not remote forest fires. They were two of the largest, most destructive urban interface fires in our state's history. The scale and proximity of these fires created indoor contamination that survivors, insurers, and even environmental health experts have struggled to assess because no statewide standard exists. Today, California has no enforceable statewide standards for testing or remediation of smoke damage. As a result, survivors face inconsistent claims handling denials and disputes over what must be tested, what levers are safe, and when a home is habitable. To address this, Commissioner Lada convened a smoke claims and remediation task force last summer, bringing together consumer advocates, industrial hygienists, restoration experts, public health experts, and insurers. The task force identified significant gaps in science, testing protocols, and claims practices. AB 1795 directly addresses these gaps by placing responsibility with the appropriate expert agencies. It creates the first statewide science-based sampling and testing standards for smoke-damaged homes nationwide by requiring the Cal EPA, in coordination with others' agencies, to issue guidance. AB 1795 empowers environmental agencies to use their expertise to establish enforceable protections by developing a comprehensive statewide approach. This ensures that survivors have real science-based standards governing their claims. The bill also ensures that wildfire public health or environmental guidance applies to all claims from that event within the designated impact zone ending insurer decision and discretion It also protects families from being forced back into unsafe homes by prohibiting insurers from terminating consumers' additional living expenses until a home is declared habitable. Finally, AB 1795 requires appropriate agencies to develop training and certification programs for adjusters, public adjusters, industrial hygienists, restoration contractors, and laboratories, ensuring qualified professionals are making the decisions about the safety of California's homes. In closing, AB 1795 is about restoring certainty and safety for families who have already endured the trauma of wildfire. When thousands of Californians are still displaced by smoke-contaminated homes, they should not be left navigating inconsistent insurer practices or paying out-of-pocket just to prove their homes are unsafe. This bill replaces confusion with enforceable standards, replaces delay with clear timelines, and replaces inconsistent claims handling with science-based requirements that every insurer must follow. AB 1795 ensures that when disasters strike, Californians can rely on a fair process and a safe path home. On behalf of Insurance Commissioner Ricardo Lara, I ask for your aye vote. With me today also is Tony Signorelli, Deputy Commissioner for the Consumer Service in Mark and Conner, to answer any technical questions you may have.

Thank you, Mr. Chair, member of the committee.

Allison 80, on behalf of the Personal Insurance Federation of California, AB 1795 is an enormous bill, one that tackles a very challenging and complex topic. We're currently in an opposed unless amended position while we continue to iron out operational issues with the bill, particularly around the potential cost and clarifying some legal standard issues. The industry agrees that greater clarity around remediation standards and expectations are needed in the smoke claims realm. It's an area that has ballooned in numerosity and severity in recent years. That's why both PIF and APCIA participated in CDI's Smoke Claims Task Force last year, understanding the importance of a thorough investigation for all aspects of this emerging problem. Based on those prior discussions and the continued collaboration around this bill, we believe there are real and achievable solutions to our continued concerns. We have not yet reached concrete solutions, but are hopeful that in the near future we will. Should these not be resolved, however, it is essential to know that this bill has the potential to drastically increase the cost of insurance across the state for all policyholders. It is for that reason that we're grateful to the author and to see DI for their continued commitment to addressing this problem. As I said, smoke is a complicated and technical issue, one that's inherently emotionally charged given the catastrophic events of last year's LA wildfires. However, solutions based in emotion do not result in thoughtful long-term solutions. It's essential that the solution to this problem is not a response only to one unique situation of one fire, but consider the statewide impact and application in the future. The author has pulled together various stakeholders to engage a comprehensive conversation. This is the only way we'll reach a meaningful and lasting solution. Again, we appreciate the ongoing conversations with the author and the department and are hopeful that we can reach a resolution soon. Thank you.

Chair, Vice Chair, and members of the committee, thank you. My name is Jane Lawton-Potel with Eaton Fire Residents United, representing more than 4,000 residents whose homes survived the Eaton and Palisades fires but were and continue to be contaminated by toxic debris. We all agree on what this bill should do. Set science-based, health-based standards for when a home is safe to reoccupy after a wildland urban interface fire. Unfortunately, AB 1795 does not deliver on that promise. Three weeks ago, on the Assembly floor, the author agreed to take amendments to address three issues, but we've seen no progress. Outside of these three commitments, three other crucial issues continue to rely on specious and undeveloped trade and industry standards that are wholly insufficient. The bill still references industry standards for determining when a home is safe to inhabit. standards the industry itself has told the legislature in a letter to assembly on march 7th that they are still working on developing standards for wui disasters second this bill only protects survivors whose policies were issued amended or renewed on or after the bill's effective date two neighbors with the identical coverage from the same fire could end up with two different protections based solely on paperwork timing and nothing to do with the fire or policy itself Third, training and certification requirements for adjusters and restoration professionals don't take effect until 2028, leaving years where insurers can send their own preferred contracted vendors with no disclosure requirement. Survivors have no way to know that the person cleaning their home for reentry may have a financial stake in that outcome. We've engaged at every stage of this bill in good faith. We are asking for the committee to hold AB 1795 until all amendments are reflected in the bill. And we have recently learned that the insurance industry has proposed amendments to leave smoke damage victims with uncompensated losses. This is a direct violation of existing California law, which requires insurers to restore homes to pre-loss condition and provide coverage for all loss by fire. Fire survivors deeply urge you to reject any such amendment offered at any time. Thank you.

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

Kim Stone I have a long list of opposition I gonna go really quick 301 Organics 350 Cunejo 350 South Bay LA 350 Southland Legislative Alliance After the Fire, Altadena Arts, Altadena Collab, Altatogether, Bansup, Biomax Environmental, California Community Foundation, Civic Sundays, Clergy Community Coalition, Consumer Attorneys of California, Consumer Watchdog, Dina Rise Up, Eaton Fire Collaborative, Eaton Fire Renters Coalition, Eaton Fire Residents United, End Child Poverty California, Glendale Environmental Coalition, Indivisible Alsa Pasadena, Joan Collaborative, LA Voice, LA Standing Homes, Leap of Faith Family to Family Support, Long Beach Alliance for Clean Energy, Pacific Film Foundation, Pasadenans Organizing for Progress, Resilient Palisades, San Diego 350, and Sonoma County Climate Activist Network. Thank you. You were certainly correct at the beginning when you

This is Joel Otcher again for United Policyholders. We are also worried about future sublimits and agree with the residents that smoke damage is fire damage and thus is subject to the full limits of fire coverage in the policy. Thank you.

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

It limits the bill to policies issued, amended, or renewed on or after the operative date. So if a policy is not renewed after a set date of this bill goes into effect and a fire happens at that moment, if I'm reading this correctly, they won't have the added protection that this bill has.

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

Okay. And if we need to clarify that, we're happy to clarify that.

two components. There's the policyholder's obligation and there's the insurer's obligation. Returning it to the pre-loss condition only speaks to the insurance side. It doesn't include language about a compensable claim and making sure that it's something that's actually covered under the contract. So we've asked that that be included in the language so that it's clear that this isn't opening up new obligations that were not originally covered by the contract. The other piece is around cost, and that is an ongoing more collaborative conversation. We haven't figured out the right way to address that. Testing for smoke and the various contaminants with it is incredibly expensive. We have seen costs go up by 200 percent by some companies, 400 from other companies between 2018 to now in terms of the costs for smoke remediation. We have seen total losses based only on smoke multiple times over. So this is something that if it is not addressed and contained is going to mean that every policyholder statewide winds up paying more for insurance because we have to assume that a home could be a total loss without a single ember touching the house. It undoes any benefit of wildfire mitigation. It makes companies reassess how they reenter the market and where they reenter the market. The author and the department have been sensitive to those concerns, so we are talking about that and the right way to address it, but it is a very real concern.

Yes, ma'am.

Furthermore, the California Highway Patrol reported that from the years 2021 through 2025, there were 3,240,000 speeding citations issued in the state. California drivers may not change their dangerous driving patterns on their own. So AB 311 incentivized safer, good driving behavior through the use of telematics technology. People often tell friends and loved ones to be safe on the road, given the many hazards and challenges of traveling in an automobile. And I am so proud that I'm authoring AB 311 today because three close personal friends of mine died in vehicle accidents just in the short several years ago. John Vigna, and some of you guys may know these people, John Vigna, Peggy Moore, and Hope Wood were killed, all three killed, by speeding wrong-way drivers just a few years ago. And that's why I'm carrying this bill. People ask me, why are you carrying a bill like this? Well, my good friends, they died in car accidents, and they were very young. They were so vibrant in their 30s, starting their careers out. Maybe John might have been in his 40s. Peggy and her wife was in their 30s, in their 40s, and, you know, they were cut off. They're gone. And I'm in L.A., and they're driving really, really fast. And this is a way that I really, really, really thought we could slow traffic down. Their deaths are devastating, and I committed then to work with other families who have lost loved ones in vehicle accidents to make our streets and roadways safer. Telematics is a tool to do just that. It is time for California to join 49 other states and give drivers the option. So this is an option, an option to use modern available technology to improve safety on the roadways and to save money on their vehicle insurance. I respectfully ask for your aye vote. My witnesses today are Damian Kevett, Executive Director of Streets Are For Everyone, and Kelly Montevallo, Safe Inland Empire, SoCal Chapter. Thank you.

We are one of the bill's two sponsors, the other being Streets for All, another road safety advocacy organization. I want to make it clear. While we are here, appropriately so, as part of the Senate Insurance Committee, this is a bill about public safety, a bill that will save lives on California roads. You've heard a number of stats. I'm going to quote another one. 40,000 people have died in California in the last decade due to traffic violence. Over 2 million seriously injured. Per the CDC, the most likely to die due to traffic collisions are youth and young adults ages 14 through 29. You're going to get to hear today from some of the families from Kelly who have been impacted so deeply by traffic violence. I was also impacted, was hit, pinned underneath a car, dragged nearly a quarter of a mile from the streets of Griffith Park onto and down the five freeway at freeway speeds where I lost my leg. This is personal. While we know that speeding is the single largest factor, per report from CMT, 34% of all drivers were distracted in the minute before getting into a crash. Every year, California legislators propose new bills to increase penalties, enhance enforcement, automated enforcement. Sometimes these laws make a big difference. Sometimes they make little to no difference. All of these penalties enforcement, but what about incentivizing people to simply drive safer? essentially paying them to be good drivers. That's telematics. That's AB 311. Multiple studies have been released about the effectiveness of telematics programs across the U.S. A Journal of American Medical Association found that telematics programs reduced handheld phone usage by 14 to 21 percent. A AAA Foundation study found that the use of telematics reduced speeding in 11 to 13 percent of drivers, reduce hard braking and rapid acceleration by 16 to 25 percent. Look, I want to be honest. I am not a technical expert on insurance, Prop 103. Ugh, I don't know that stuff. I do know this. I am an expert on strategies and policies to help save lives on our roads. It is the reason why Streets Are For Everyone and other advocates across the state have been working with Assemblymember McKinner, privacy rights groups, the insurance industry, and CDI for the past several years to get to this point. It's that important, and it's the reason why I'm asking for your aye vote today. Thank you.

Good afternoon, Chair and members of the committee. My name is Kelly Montalvo, and I am representing my son, Benjamin Montalvo, as well as Streets Are for Everyone, Inland Empire, and other victims that are in this room today. I am speaking in support of AB 311. On June 12, 2020, my just-turned-21-year-old son, Benjamin, was riding his bike with friends to go meet his brother for dinner. He was struck and killed in the city of Corona by a distracted driver named Naomi Vellato, who left him to die in the street. Vellato had exchanged 24 texts with her boyfriend in the six minutes surrounding the crash I have learned that according to NHTSA texting and driving at a speed of 45 miles per hour the speed that Velado was doing at the time of the crash, a car covers the length of a football field in just five seconds. This means that Velado drove completely blind for nearly the entire field of play. This visual is especially disturbing to our family as she killed Benjamin almost directly in front of his high school football field where he and his brothers had spent many hours of practice and play. To think that he died in a place that he so loved and spent so much time is devastating. This statistic is for just five seconds of distracted driving. Velado exchanged 24 texts within the six minutes around the crash. That is a lot of football fields. She chose to drive through the city virtually blind and with no regard for anyone on the road. Benjamin's killer was young. She was just 27 years old, and yet she already had a record of speeding tickets, prior crashes, and this was her fourth hit and run. She was in traffic school when she killed Benjamin. I spend many sleepless nights wondering if she had been stopped at any point prior to that horrific night. Would my beautiful son be here today? AB 311 will improve road safety by reducing poor driving. My son's killer could have been and should have been a safer driver. It may be too late for Benjamin, but it is not too late for the next victim. Please advance this bill. We all deserve to be safe on our streets, and AB 311 will save lives. Thank you for your time and attention today.

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

Good afternoon, Mr. Chairman and Madam Vice Chair. P. Anthony Thomas, the Thomas Abixie Group, on behalf of the Environmental Justice Coalition, African American Coalition throughout the state of California. I'm sorry for your loss, ma'am, in support of the bill.

Rodney, thank you. Sorry for your loss.

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

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

If you could move to a conclusion.

Thank you. Next witness.

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

Thank you. Thank you. We will bring it back to the committee, and I will at this point hand the gavel back over to the chair. And unfortunately, our temporary vice chair, I become vice chair now. All right. We'll bring it back to the committee then for comments or questions. Yes. Vice Chair Nilo followed by Senator Menjivar.

Yeah, we've heard that concern raised before. And so the conversations that we have had across how it works in other states and what we would need to do in order to be compliant with Prop 103 is to ensure that there are two parallel tracks that are siloed. So the rating for those under the traditional rating factor stays the same. Your rate stays the same. If you go into a telematics program, that first mandatory factor can be discounted or surcharged to ensure that the traditional rating factors don't have to subsidize the other pool. Okay.

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

But the opt-in to incentivize people to be safer, that is my top priority. Again, I lost some beautiful people that are close to me. And, you know, I think about John Vigna, and I can just hear him telling me to keep fighting. I been working on this for three years and my top priority is just to really keep people safe so I don know about the gas tax thing If I may on the mandatory opt this has been in other states since the 1990s

So, and this really does kick in on those drivers that think they're a good driver. Obviously, when you have a safe driver, you have a safe driver. But those that think they're a good driver, and then they realize, you know what? I'm actually not qualified for this program, and maybe I better become a good driver. That's where you get your improvements. That's where you get the percentages that are coming up in the Journal of American Medical Association, AAA study, and things like that. Very good point.

Thank you, Senator. Thank you. I know there's concerns around privacy, but that's better situated in the next policy committee that is the expert on that. So I'll stick to more on the insurance questions. And I know the chair over there will have his pound of flesh, I suppose. The opposition mentioned that the credit score is going to be utilized. I just want to know if there's – is that correct? It's illegal to use credit score in California. That's nowhere in this bill. Right. Okay. Yeah.

And is this a mandate? No. This is a mandate. It's an update. So you'll get to choose if you want to do all of this. Yes. If I get to choose, would I potentially save money on my car insurance if I'm a good driver? If you're a good driver. Okay. Yes. And then how would it determine if I'm using my phone? So there are a few different ways that telematics programs can operate. There are some that are on your phone and it's app-based. Some of them it's a dongle that connects into your dash. Some of them it's a tile that gets connected to your windshield. The ones that are most effective are the ones that are apps on your phone because they can determine when you're interacting with your phone while driving. Okay. Okay. And I know some of the sponsors of this bill are also sponsors of my other bill, and I think we're seeing in California just an out-of-control bad behavior on the streets. And I recognize that perhaps the bad apples are not going to opt into this, but sometimes it's in one incident who don't have a record of anything, and then they go on to kill someone or hurt someone. So even saving one individual is going to be impactful. So I recognize that something needs to be done to address the reckless driving that continues to occur in California. And if we can save some of those cases, I'm all in for that. I recognize there is, like I mentioned, privacy concerns. But I hope that you can land some of those concerns in the next committee for that. And if this is the ability to help save some dollars for good drivers, why not allow that opportunity for consumers? Thank you. Thank you. All right. Thank you, Senator Menjivar. Welcome. I think we do have a quorum, so let's go ahead and establish. Please call the roll. Senators Padilla? Present. Padilla here. Nilo? Here. Nilo here. Becker? Here. Becker here. Jones? Menjivar? Here. Menjivar here. Richardson? Rubio? We have a quorum. Thank you. Thank you very much. Any other questions or comments on this bill? All right, now that we have a quorum, we'll entertain. Thank you. The bill has been moved. Please call the roll. Motion is due pass to the Committee on Privacy, Digital Technologies, and Consumer Protection. Senators Padilla? Aye. Padilla, aye. Nilo? Not voting. Becker? Aye. Becker, aye. Jones? Mandivar? Aye. Mandivar, aye. Richardson, Rubio. The eyes are three, the noes are zero. We'll place that item on call. Thank you, Senator. Thank you so much. All right, brings us to file item number six, AB 1798. Assemblymember Wilson, been very patient, back and forth. Welcome back. Thank you, thank you. I assuming we have witnesses who can approach and make themselves comfortable We do We do I start talking as they make their way Welcome. Send member, proceed when ready. Thank you. Good afternoon. former chair, now vice chair, and former vice chair. Today, more Californians than ever are turning to genetic testing to better understand their health. These tools allow individuals to detect risk early, pursue preventative care, and make informed medical decisions. This is exactly the kind of proactive, health-conscious behavior we as a state should be encouraging. Instead, our current system creates risks and uncertainty. That is why my bill, AB 1798, prohibits life and non-health disability insurers from using non-diagnostic genetic information to deny coverage or increase premiums. The bill also addresses the growing role of direct-to-consumer genetic testing, which is considered non-medical and is not currently used in underwriting. It prohibits insurers from seeking or using genetic information that individuals obtained on their own, ensuring that consumers remain in control of deeply personal data they choose to explore in their own health. At the same time, AB 1798 is carefully balanced, and this type of policy is already being implemented in states like Florida. It does not prevent insurers from accessing medical history or asking about family history. It simply makes clear that genetic data, whether obtained directly or indirectly, cannot be used to make underwriting decisions. In other words, insurers can still evaluate risk, but they cannot rely on data that is uniquely sensitive, speculative in nature, and often uncertain. It is extremely important to note that genetic data is fundamentally different than traditional medical data. As emphasized by the American Medical Association, it often reflects only a possibility, not a diagnosis. Many genetic markers indicate risks that never materialize, and in many cases, the science is still evolving or correlational, not causational. I would like to thank both Chair Padilla and his incredible committee staff for their thoughtful collaboration on this bill. I am committed to taking the committee's suggested amends to ensure that as genetic testing advances into diagnostic capabilities, not simply predictions, insurance may consider a diagnosis directly resulting from a genetic test as a part of a person's medical record, noting that particular amendment that's in analysis. And I would also like to thank opposition for their continued engagement and address the concerns that have been raised. And as I should note, we are still having conversations, and we will until this gets to the finish line. So first the bill includes a million coverage threshold added through good negotiations with industry stakeholders in the Assembly Insurance Committee This protects most Californians while addressing concerns about high value policies. Second, this approach isn't new and these protections have been implemented in countries like the UK, Australia, and Singapore and have adopted similar limits without disrupting insurance markets. Finally, regarding information asymmetry, we already limit what insurance can use when fairness demands it. California law prohibits using characteristics like race or sexual orientation, even if statistically relevant, because civil rights outweigh purely actuarial considerations. If we agree that people should not pay more or be denied coverage because of who they are, then we must also agree that they should not be penalized for what's written in their DNA. Ultimately, this bill truly is about balance. It ensures that genetic testing leads to better health. It protects privacy, promotes early detection, and reinforces trust in both our health care and insurance systems. I have two witnesses available today, including one for technical, but I'll introduce those that will be speaking. Greg Moll, a scientist at UCSF working on gene editing therapies and a fellow with Global Brain Health. And then Josephine Figueroa, Deputy Commissioner for the California Department of Insurance. Thank you, Assemblymember. Please state your name again for the record. You'll have two minutes. Welcome. Good afternoon, Chair and Committee members. My name is Greg Moll. I'm an Atlantic Fellow and postdoctoral scholar at the University of California, San Francisco. I work with Dr. Claire Clollin to develop new gene editing therapies and at the Global Brain Health Institute to ensure equitable access to new technologies. I'd like to thank Assemblymember Wilson for her leadership in authoring this critical bill to protect Californians from genetic discrimination. Sequencing and genetic testing are becoming a standard part of clinical care. Sequencing can be used for diagnosis, early cancer screening, and even to identify which medicines will work in a given disease. The NIH is also currently piloting using newborn whole genome sequencing to replace newborn screening. And just last year, a baby was healed with a personalized gene editing therapy for the first time. Gina and CalGina allow life and disability insurers to use genetic information for underwriting, which disincentivizes patients to get life-saving genetic testing. Genetic discrimination is a major barrier preventing people from getting genetic testing. A study from the MedSeq project found that 28% of people who actively declined sequencing cited genetic discrimination as their primary reason. I've spoken to gene carriers and their family members, many of whom refuse to participate in clinical research or get genetic testing due to these fears. We can close to the genetic discrimination loopholes while also maintaining robust insurance markets. Florida, France, Canada, Australia, and other countries do not allow life and disability insurers to use genetic testing and underwriting. All of these countries and Florida have robust insurance markets that have not been destabilized or hurt by this policy, and several countries insurers voluntarily imposed a moratorium on themselves. The opposition have said that AB 1798 will cause increased prices, market disruption, and information asymmetry that will undermine their ability to underwrite. These claims are exaggerated. The data are clear. Family history is sufficient for insurers to price risk, and genetic data is probabilistic, not diagnostic, in the absence of symptoms. The amendments that the opposition proposed leave existing insurer practices unchanged and will not help patients and consumers. We need strong clearly enforceable genetic discrimination protections to remove barriers for patients so they can access life care There will be incredible benefits to patients For these reasons I respectfully ask for your aye vote Thank you Good afternoon Chair Padilla and members of the committee Josephine Figueroa, Deputy Commissioner and Legislative Director for the Department of Insurance under the leadership of Insurance Commissioner Ricardo Lara. With me today is Beverly Brand, Assistantship Counsel for the Department's Policy and Regulation and Approval Bureau to help answer any technical questions you may have. As a proud sponsor of AB 1798, Commissioner Lara would like to thank Assemblymember Wilson for her leadership in authoring this important measure, which protects Californians' genetic information in life and disability insurance underwriting. Californians should never have to fear that genetic test results would be used against them when applying for life and disability insurance. Instead, individuals should be encouraged to get tested early and take proactive steps to protect their health. Early testing not only helps people stay healthier, but also contributes to stronger, more stable risk pools of insurers. Federal law already prohibits genetic discrimination in health insurance and employment. AB 1798 extends this same logic to genetic testing of any type that predict the potential for future disease when performed in the absence of symptoms or clinical diagnosis. These are tests taken by healthy individuals and insurers will continue to have full access to all the other traditional underwriting tools. These predictive genetic tests are uncommon and, importantly, are more reliable predictors of whether a disease will ever develop or when. For that reason, they should not be used to penalize individuals who are currently healthy. Genetic information is fundamentally different from traditional underwriting factors. It is immutable, deeply personal, and often only dictates a remote or uncertain possibility of future disease rather than a reasonably anticipated risk. California law already recognizes the need to protect certain genetic traits. Insurers are currently and appropriately prohibited from refusing to issue sell or renew life or disability insurance or from charging higher premiums for individuals who carry genetic traits associated with Tay-Sachs, sickle cell, thalassemia, or X-linked hemophilia A. AB 1798 builds on that foundation. It threatens consumer privacy, promotes fairness, and supports genetic research, and empowers individuals to make informed medical decisions without putting their financial security at risk. And importantly, there has been no disruption to insurance markets and other jurisdictions that have developed or adopted similar protections. Insurance remain fully capable of underwriting effectively without relying on predictive genetic testing results from healthy asymptomatic individuals. On behalf of Insurance Commissioner Lada, I ask for your aye vote. Thank you for your testimony. Are there any individuals or organizations who would like to register support for the bill? Step forward, state your name and affiliation. Chris Kahn representing the ALS Network in support. Mr. Chair and Senators, Adam Kegwin on behalf of Natera in support. I'm Ed Ferguson, just a family member affected by a genetic condition and in support of this. My name is Ann Ferguson, and I support this also. Good afternoon. Scott Sadler on behalf of the ALS Association in support. Terri Walter, a family of genetic disease, and I totally and completely support this for the survival of genetic families. Thank you. Ann Grafe, California Life. Leadership Council for the ALS Association and former primary caregiver of an ALS patient, and I support this bill. Lori Bonds, an ALS volunteer, and I support this bill. Ann Blackwood on behalf of Ancestry in support of the bill. Thank you. Any other individuals like to register on themselves on their own behalf or for an organization in support, please come forward. Seeing no one, we have principal witnesses in opposition. Please approach. Welcome. We can have you sit next. Welcome. State your name again for the record. You have two minutes each. Thank you very much, Mr. Chair and members of the committee. Matt Powers with the Association of California Life and Health Insurance Companies, or ACLIC. I'm here today in opposition to 1798, but I want to start by thanking you, Mr. Chair. your staff, the author, and sponsors for their continued engagement on the proposal. The central question in this bill is how genetic testing should be treated in individual life and disability insurance. These are optional products, and when they're medically underwritten, meaning the consumer has consented to the price being based on medical information, insurers need to evaluate material health information supported by medical evidence and correlated with illness. Making decisions based on a full health picture, including information that predicts future illness, is not discrimination. It is the insurance product the consumer has chosen. Supporters argue that genetic testing is different because a person may never develop a disease based on genetics. But consider that doctors use genetic tests to make medical recommendations based on the risk of a disease manifesting. They know when a correlation is valid enough to warrant extra screening or lifestyle changes over the long term. We look at an applicant's test in the same way, just through the lens of assessing insurance risk. Also, the argument that this prediction is unfair or not actuarially sound breaks down because the bill still allows for underwriting based on genetic testing for policies above $1.5 million. This effectively concedes that genetic testing information is material to insurance. On the claim that insurance concerns are driving genetic testing behavior, the CDC survey cited in the analysis deserves more context. The same percentage of respondents who were concerned that genetic testing could affect their life insurance were also concerned that it could affect their health insurance, even though health insurance is no longer medically underwritten and genetic testing has no bearing on insurability. That suggests the problem is not simply insurer practices, but public misunderstanding. This bill may not eliminate that fear any more than the existing ban on medical underwriting and health insurance has eliminated confusion there. Members, this bill is ultimately about helping a group of people access an important product. We're not insensitive to that, and we do underwrite people with genetic conditions. And there are also numerous options that are not medically underwritten. But medical underwriting is about assessing risk before a claim occurs. So the higher the likelihood a condition will manifest, the higher the price is likely to be. That's why we encourage people to apply for insurance as young as possible. It's also why we've offered amendments to bring some balance back to the bill by taking consideration for research and direct-to-consumer testing completely off the table. We hear the argument and we agree about the importance of clinical trials. So let's take them completely off the table for all face value amounts. Then we propose to only allow consideration of a documented doctor test when it is in the medical file and our consideration is tied to the reason that that test was ordered We think those are reasonable guardrails, and with that, I'll turn it over to my colleague, Dr. May. Dr. Brandon May, Chief Medical Officer at Northwestern Mutual Life Insurance Company. So, good afternoon, Chairman and Committee members. As I said, I'm the Chief Medical Officer for Northwestern Mutual Life Insurance, and my background is in family medicine. I've been underwriting insurance for almost eight years. Built into our name, Northwestern Mutual is a mutual company, which means we operate for the benefit of our policy owners, not shareholders. Our products are voluntary and designed to help individuals achieve financial security with underwriting guided by appropriate use of medical information. Underwriting is the process insurers used to assess risk and price that coverage accordingly. It's what enables us to offer the most coverage to the most people at an affordable price, ultimately helping maximize the financial protection available to families and their loved ones. But that balance falls apart when individuals at the highest risk for premature death or limitation are placed in the lowest risk pools. Even a small number of cases can undermine the system and drive up costs for all insurance consumers. When we don't have access to the same information that an applicant has that could impact their longevity or morbidity, we cannot accurately assess risk. Over time, this misalignment could affect all policy owners as premiums may need to increase to cover the cost to meet our obligations to our policyholders. This industry is highly regulated with respect to an applicant's information. We follow state and federal privacy laws and regulations, unfair discrimination laws, and other laws and regulations pertaining to how information is used in underwriting. Furthermore, insurance companies do not access sensitive information without an applicant's consent. Insurers are committed to respecting and protecting the private information of our policy owners and our applicants, and in that way, genetic information is no different. than other medical information in the medical record. We support the author's intention to encourage individuals to get genetic tests for medical purposes. In fact, in some cases, genetic testing results can provide an applicant with an even better and more affordable coverage. Most importantly, when a physician determines a genetic test is necessary and becomes part of a medical record, we believe it should be considered as part of an applicant's overall health profile. It is no different than a blood test, a cholesterol test, or your height and weight. If an insurance company does not have access to this information, including genetic tests, It must assume more risk, which results in all policy owners paying higher premiums. Conversely, access to more information will result in more affordable products. Under its current form, this bill gives special status to a subset of consumers at the expense of others who may not have the discretionary income to afford the rising cost of food, housing, gas, and life and disability insurance, which could result in squeezing more Californians out of the life insurance market. Our company believes in fairness and mutuality. Underwriting is the cornerstone to fair and accurate pricing. It leads to our ability to provide the best coverage to the most people at the lowest cost. This bill, if not properly amended, undermines that. I respectfully ask that this bill be amended before passage. Thank you for your testimony. Are there individuals or organizations wanting to register opposition to the bill? Please approach. State your name and affiliation. Welcome. Thank you. Good afternoon. Sherry McHugh representing the National Association of Insurance and Financial Advisors. We are opposed unless amended to the bill, but we look forward to continuing to work with the author and the sponsor. and your committee as well to see if we can reach compromise. Thank you. Thank you, Mr. Chair and members. Megan Loper on behalf of the American Council of Life Insurers would echo Sherry's comments, but we are at this time opposed unless amended. Patrick McNulty, Northwestern Mutual, similar to my colleagues here, opposed unless amended. Thank you. Any other individuals or organizations wishing to register opposition to the bill I see no one coming forward bringing it to the committee I just going to start by thanking the author and reflecting the testimony on both support and opposition about the efforts have been consistently underway for quite a few hours now and days to try to move to some sense of appropriate resolution here and I want to commend the author and your office, and I want to commend opposition, the department, everybody, for trying to get there. And just before we get into Q&A, and I'll have a couple questions for one of the opposition witnesses, is this is a classic situation I think we're going to continue to confront in society. And certainly as we look at policymaking and legislation and we look at the equities that we have to balance through the lens of policy, We're going to come up against increasing pressure to utilize new technology, new information that is collated, analyzed in a new and different way, and have the difficult conversations about what do we do with that tech or that capability and how do we extrapolate or utilize that information, not just from a scientific standard or from a medical standard, but from a public policy and equity standard. And sometimes those two things are going to be completely in conflict with one another. And it is our role to try to balance that out against the backdrop of what our responsibility is, which isn't to just take a unilateral approach from one direction or the other. I think that's the rub and the difficulty here is we have a capability and a science today that not long ago did not exist. that can provide some indicative, determinative perhaps information and data in a medical chart in ways that we did not have the ability to do before. The question isn't whether that, you know, arguing over the degrees of accuracy or probability accuracy as the doctors will know. The question is how do we allow the use of that data in an equitable and appropriate way for purposes of regulating insurers? And so to that, I think where I have come down on this in terms of trying to guide this conversation is there's a distinction between based on actuarial standards, looking at when an applicant makes a waiver and consent to assess risk of that potential insured, that you look at the chart and you look at manifested, present medical conditions or diagnoses. And we've also gone beyond just a diagnosed or present situation to look at what does that correlate to other risks. The easiest example is a patient who's been diagnosed with type 2 diabetes. That's manifested, it's diagnostic, it's in the chart. The person has diabetes. But that correlates pretty clearly within standards to a higher risk for stroke, heart attack, other conditions. And so we've always looked at drawing within guidelines a correlation of assessing risk based on manifested conditions. Here we have a new science capability that can look at data and information that would look at not just what is presented in a patient, what's been diagnosed in a patient and what that present manifested condition might correlate to. But now we can look and say, well, at some point in the future, this person might get X or Y course of disease. The issue there is for me at least that distinct and different and new And the question is that data could suggest a risk maybe someone could arrive at that may never ever manifest ever And that's different and new from how we've done this heretofore. And it presents a real question, is that appropriate? Right? Obviously, in an underwriting process, you want to get as much data and information you could possibly have because you want to more clearly assign and price risk. But that's not the only consideration, right? The consideration, what's appropriate for the use of that data and where, and what are we protecting? I think the parties have worked really hard to try to get to a place where we can sort of articulate what those boundaries are. It had gotten awfully close, but I don't think we're still there, and I don't know whether they'll be able to get over that fundamental disagreement, right? The underwriters want to look at if it's in the chart, we should be able to not just look at what's present in the applicant or the patient, but we can extrapolate risk based on that on something that may or may not ever manifest. Obviously, you are seeking to prohibit and curtail that under very, very distinct circumstances. I think that's wise. Hence the recommendation from the chair to let this bill move, because I think it's trying to move in the right direction. And with that, I would just say to Dr. Main, I mean, isn't there a distinction between how we've looked at diagnosed or present conditions in a patient and correlating that to other risks that are yet undiagnosed or even not present yet? There's no development or course of disease or disorder manifested in a patient yet. We have some genetic information that says, oh, there's some probability they might get it 20 years from now. That's new and distinct, isn't it, how we've always sort of looked at conditions in a chart to extrapolate risk that is not yet diagnosed? I mean, isn't this different? What I would say is that we are currently bound by, when we're talking about actuarial principles, right, It has to correlate with the increased risk of early mortality or if we're talking about DI for morbidity. So I'll give an example. For someone who smokes, right, it is not a foregone conclusion necessarily that they would develop lung cancer or anything like that. But we do know that there is a correlation based on clinical research studies that there is increased risk there. So we have to assess that, you know, with typically tobacco. But you don't get to assess an applicant's risk based on their smoking habit by getting access and a HIPAA waiver and consent to look at their medical chart. I'm sorry. I mean, you don't need to go into a medical chart to assess if a potential applicant smokes or has a history of smoking. I mean, those are pre-squeening questions on every application for life insurance I've ever seen. Oh, true. Right? In other words, you don't have to go to a chart to find out that somebody smoked. Correct? Yeah, like if they disclose it or if it is a part of a normal requirement, like for labs, correct. All right, thank you for that. All right, with that, I'll bring it to the committee. Are there members with questions or comments? Senator Menjivar? Thank you, Mr. Chair. I think I appreciate you grounding us because I think I kind of had some similar concerns. I think that's where the chair is like just continue working on it. We just heard a bill about, you know, telematics. Telematics. Telematics. I heard that bill too. Just a little bit. And utilizing that to discount so forth, are you a good driver, a bad driver? I look at it kind of like the same way, allowing an extra tool to determine risk. I am sympathetic that we don't want to assume just because of why you're going to get Z and so forth. But I do think I heard a commitment, while the committee is not proposing an amendment, a commitment to look at what they are asking you to consider looking at, some kind of balance there. I just wanted to see if you can explain a little bit more because I know it's not a committee proposed amendment. Right. Right. So we've been, from the very beginning, upon introduction, been having conversations about this. And they noted the 1.5, I noted the 1.5. That came from Chair Calderon in an effort to find a landing space because we couldn't find a landing space. So it was determined that policies over a certain amount maybe could get it. And neither one of us liked that, but we were in front of the chair. And the chair was like, okay. And so I wanted to get out of committee, so accepted those amendments. And so today, as we progressed, they've updated the amendments that they're proposing. And a lot of those were noted in their testimony. Those are the amendments that came to my committee today. I haven't got briefed on them yet from my staff, but got briefed while I was waiting for Assemblymember Gibson to finish his bill on what those are. And we will take those into consideration. That was right before we came to committee. So we are still actively discussing on whether it's appropriate in terms of when something is medically underwritten. Right now, they were initially asking for everything. They're narrowing it now to medically underwritten. If there was another part of it, I don't remember it all. But excluding research, making it specific to condition, one of the things that we were very much concerned about is take, for instance, this is my phone. And let's say you had permission to look at an email exchange between Senator Richardson and I, but then I gave you my phone. You technically can look at everything. And so with genetic code, that is everything. That is not just one thing. I just gave you my whole entire makeup. And so making sure that there's not phishing expeditions, right? Well, like, oh, the doctor was looking at this, but since you got the genetic code, I see this risk over here. Now I'm factoring that in. Oh, making sure there's protections that if my kid gets insurance from you, now you're saying, well, I got 50% of their DNA and this is the risk associated. I mean, there's like a lot of things associated with this that we want to make sure we're cartelling. So definitely continuing those discussions. But we just want to make sure it's tight, very tight. And we've been working with CDI. They're the original – not the original. They are the sponsors of the bill. And so we've been really mindful of their technical expertise and what their role is in the insurance market and making sure we're being mindful that it matches what they already do and what they know that can be done. Is that even possible to – because it's a medical provider, right, that looks at – that's the medical underwriter, right? It's a provider, the physician that looks at it? So when they're talking about medically underwritten, that would be where my doctor, let's say it's me, my doctor has ordered a genetic testing. Sure. And that is now in my file. For a specific, yeah. For whatever it could be. I have symptoms or I don't have system. It just depends on what the doctor is trying to do. But the doctor notes it in the file. And so then it goes, so somebody is getting insurance, and if they're medically underwritten, they ask for the file, and it is now a part of the file. So that's what I'm saying, but is it possible to, because we're talking about, hey, we just want to look at one certain piece and not look at everything. Is that even possible if you handing over the entire file Well that where there stuff that they not allowed to look at now And that up to a look to counsel Do you want to talk about like the platform? I'm sorry. There is already a foundation similar to that. They can't look at things. Yeah. So it might be there. It might be like the phone is on the table, but you can't touch the phone. Right. Like so you cannot consider it in your analysis. So what we're saying is you're getting this medical file that you cannot consider the genetic testing, the genetic code of that individual in your actuarial analysis is what we're currently saying, except now we have this little rule, this little cap, 1.5 million and above. Unless it's above 1.5 million, but right, that's where the bill is as it stands today. And we have some additional language that we did accept. I'm looking through. It's providing clarity about that file. So if a doctor notes it or, you know, it provides a little bit of clarity around what that looks like and a pathway for them. Assembly member, did you want one of your technical assistance? Yes, if they wanted to give insight into that. Into how you would – I mean, there can be things in the file that you don't consider for underwriting. So we'll have you set up underwriting guidelines, and that's what you consider. So you may see things in the file that you don't consider. Not everything in the medical file is even relevant to underwriting. There may be lots of things in there that you don't look at at all, things that are not actuarially sound. Also, there is a precedent for it. So you can trust the company not to as they're sitting and filling out the underwriting guideline. Yes, there might be something in there. The phone might be sitting there, but you would not look at it. And in the past, for example, with HIV, there was a period of time where companies were instructed not to look at it or the testing that was in a file, testing had to be done a certain way and certain requests and that kind of thing. And companies did follow that. Okay. And to the opposition, it's really a matter of either having, utilizing all of the genetic testing versus utilizing a specific genetic testing that is connected to a diagnosis.

State your name before you answer.

Exactly.

Okay. Okay. Well, thank you. I know you're still trying to land. I do agree that there has to be some ability to look at that. I know you're trying to land it. You're going to continue working on it. I will be voting it out. But I do want to see that similar consideration, at least for me personally. for further consideration of supporting this bill. Thank you. Thank you.

Any other questions from Vice Chair Nilo?

Okay.

Cobains, thank you. Any other questions or comments? I don't think we have a set. We don't have a quorum to take the vote because I think one of our members stepped out. But we will place that item on call and we'll come back to it. And note that Senator Richardson wants to move. Thank you so much for your patience, Senator, and for all your witnesses.

Chair?

All right, let's call the vote.

Please do.

I appreciate you noodling, Assemblymember, and let the noodling continue. And we did establish a quorum earlier, so we can call for the vote. The bill has been moved by Senator Richardson. Please call. Motion is due passed to the Committee on Privacy, Digital Technologies, and Consumer Protection. Senators Padilla? Aye. Padilla, aye. Nilo? Not voting. Becker? Jones? Menjavar? Richardson Aye Richardson aye Rubio Thank you We keep that item on call I think I saw Assemblymember Papin here being very patient in the front row With respect to file item number 7, AB 1931, welcome. Witnesses present, please approach.

Thank you, and good afternoon, Chair and Committee members. My name is Kristen Olson-Kate, and I represent Homeserve, a longstanding home protection contract administrator that serves customers in California and across the nation. I'm here with Scott Paris, HomeServe Senior Director and Counsel for Government and Regulatory Affairs, who's available to answer any questions today. We want to start by thanking Assemblymember Papin for carrying this important bill that will allow home protection companies and utilities to continue serving customers who rely on our services to repair major appliances and utility service lines at an affordable cost. When a utility partners with a home protection company to deliver those repair plans, the transactions fall under the insurance code. And under current law, that would require the utility to obtain a full property and casualty license. AB 1931 creates a better path forward by establishing a limited lines license tailored to this specific activity. AB 1931 is the product of months of genuine ongoing collaboration and, between Homeserve and the California Department of Insurance. That shared commitment is reflected in the bill's design. It maintains clear regulatory guardrails while creating a more workable framework for utilities and the customers they serve. It also strengthens consumer protections for utility customers by adding utility-specific disclosures, a 30-day free look period, expanded oversight, and CDI authority to act swiftly if concerns arise. We respectfully ask for your aye vote on this bill, and as I said, Scott and I are happy to answer any questions you may have. Thank you very much for your testimony.

First of all, that would be former Assemblymember and minority leader, Kristen Olson. My question is the fees, $10,000 up front and $5,000 a year. What is the justification for that? You mean to have the license? I'll let you guys answer.

But a company could choose to either secure the property, I'm sorry, secure the limited lines license, alternatively get a full property and casualty agent license. I'm sorry, run that by me again. Forgive me. It's just the implementation cost on what was anticipated on how much it would cost CDI to create the new license

so that it wouldn't be costing CDI or California taxpayers any amount of money for actually creating a license. So you would anticipate that to come down subsequently?

Really? No, yes. Nobody told me that. Right? Shocking.

Okay. Thank you.

Sure. I appreciate that we're a pay-as-you-go kind of bill, Senator Nilo. You're welcome on that one. We're supposed to request an aye vote. This is something that I think in the end run really does protect folks that have this big endeavor, big expense, which is a home. And I mentioned this in the last committee hearing. I'll mention it again. I mentioned about getting a limited license for rental cars. And in 1999, that became law, and it was carried by Lou Papin. So here we are 27 years later, another limited license bill, and I'm hopeful we can get it done by requesting an aye vote.

Welcome. Proceed when ready. Thank you, and good afternoon, Mr. Chair and Senators. I am here to present AB 2361. I want to start by thanking the committee staff for all their hard work on this bill. AB 2361 modernizes treatment of vicarious liability for peer-to-peer vehicle sharing platforms, also known as PVSPs, by aligning liability with fault while preserving strong protections for consumers and injured parties. California is currently the only state that subjects personal vehicle-sharing platforms to uncapped, vicarious liability. Under existing law, a PVSP must assume a vehicle owner's legal responsibility for claims arising during a vehicle-sharing transaction. with no limit on liability exposure, even when the platform complied with all legal requirements, acted in good faith, and had no ability to prevent the incident. AB 2361 preserves consumer protections while addressing this unique and inequitable liability structure. The bill maintains existing insurance requirements and ensures that minimum insurance coverage remains available, including access to additional coverage where applicable. At the same time, it establishes reasonable limits on a platform's vicarious liability exposure and clarifies that a PVSP is responsible only for owner liabilities arising from the sharing of the vehicle. As amended, the bill reflects a compromised reach with stakeholders. Specifically, the bill clarifies that a PVSP must assume owner liability only for bodily injury and property damage resulting from the vehicle sharing transaction, eliminating ambiguity that could otherwise expose platforms to liability unrelated to car sharing. Establishes reasonable limits on the vicarious liability of a PVSP. Must assume on behalf of an at-fault vehicle owner $250,000 for bodily injury or death of one person, $500,000 for bodily injury or death of all persons, and $100,000 for property damage. Importantly, AB 2361 does not reduce the total damages recoverable from at-fault party, does not limit a PVSP's liability for its own negligent or wrongful conduct, and does not reduce existing insurance requirements, which remain higher than those applicable to traditional rental vehicles or personal automobiles. California is home to innovative transportation businesses that provide consumers with affordable mobility options while creating jobs and economic opportunity. AB 2361 preserves these benefits while ensuring that liability remains tied to fault and that strong consumer protections remain in place. And with me today to testify in support and to answer any technical questions is Larissa Cespedes on behalf of Turo and I will hand it over to my witness Hello Welcome State your name again You have up to four minutes Thank you very much Chair Vice Chair and members

All right. Are there any individuals who would like to register for themselves or on behalf of an organization in support of the bill? Please approach. State your name and affiliation. Thank you, Mr. Chair and members. Annalee Augustine with the Civil Justice Association of California, pleased to support. Thank you. Any others? Seeing no one come forward, any principal witnesses in opposition to the bill? Please approach. Removal of opposition, neutral.

All right. Thank you. Any other individuals or organizations wanting to register opposition to the bill, please approach. Seeing no one come forward, bring it back to the committee.

Senator Becker moves the bill. Any other discussion? Please call the roll. Oh, of course. It's been one of those days. I apologize, Assemblymember. You've been very patient.

All right. All right. Now then, the bill's been moved. Please call. Motion is due pass to Judiciary Committee. Senators Padilla? Aye. Padilla, aye. Nilo? Aye. Nilo, aye. Becker? Aye. Becker, aye. Jones? Menjavar? Richardson? Aye. Richardson, aye. Rubio? Eyes are for the no, zero. We'll keep that on call. Thank you so much for your patience. And Assemblymember Bauer-Keyan, great patience back and forth today. File item 11, AB 2724. I'm going to leave to go get ice cream, and I never got the ice cream. Sounds a lot more fun to me. Assemblymember, do you have any witnesses?

All right. It's going to be a quick finale. Proceed when ready.

Thank you very much, Assemblymember. Appreciate that. Are there any individuals wishing or organizations wishing to register support on this bill? Please approach. State your name and affiliation. Afternoon.

Hello. Joel Lauter on behalf of United Policyholders here to support the bill and from Moraga as well.

Respectfully ask for your aye vote.

Thank you, Mr. Chair and members.

Motion. Move the bill.

Senator, thank you.

Move the bill. Thank you, Senator Richardson. Please call the roll.

Just note here, for those following along, the chair asked me to wrap this up, help wrap this up and lift some calls. So we'll now go to file item 2, AB 1554. Senators Becker? Aye. Becker, aye. Jones? Medjavar? Rubio? Aye. Rubio, aye. Okay. That one is also 5-0. That will stay on call. File item 3 is next, AB 1680, also by Calderon. Senators? Yeah. Senators Becker? Aye. Becker, aye. Jones? Menjivar, Rubio. Aye. Rubio, aye. All right. There's also 5-0, and we'll keep it on call. Next up, file number 4, AB 311 by McKinner. Please call the absent members. Senators Jones, Richardson. Aye. Richardson, aye. Rubio. Aye. Rubio, aye. That's also 5-0. Stay on call. Next file 5, AB 1795 by Gibson. Please call the absent members. Senators Becker. Aye. Becker, aye. Jones. Menjivar. Richardson, Rubio. Aye. Richardson, aye. Rubio. So it's four to one. Keep that one on call. Next up file item six AB 1798 by Wilson Please call the absent members Senators Becker Aye Becker aye Jones Menjivar Rubio? Aye. Rubio, aye. 4-0. That will stay on call. File item 7 is next, AB 1931 by Pappin. Please call the absent members. Senators Jones? Menjivar? Rubio? Aye. Rubio, aye. 5-0. Stay on call. Next we have the consent calendar, which I guess is one item on it, AB 2061. Please call the absent members on the consent calendar. Senators Becker? Aye. Becker, aye. Jones, Menjivar, Rubio? Aye. Rubio, aye. Five to zero. I'll keep the consent calendar on call. Next up, follow-up, 9AB-2198 by Rodriguez. Please call the absent members. Senators Becker? Aye. Becker, aye. Jones, Menjivar, Rubio? Aye. Rubio, aye. 5-0, on call. Next up, file 10, AB 2361 by Pacheco. Please call the absent members. Jones, Menjivar, Rubio? Aye. Rubio, aye. 5-0, on call. And lastly, file 11, AB 2724 by Bauer-Cahan. Please call the absent members. Senators Becker? Aye. Becker, aye. Jones, Menjivar, Rubio? Aye. Rubio, aye. That one is also 5-0, and that will stay on call. We will now take a recess. I was very careful. I rephrased my words. when I said I was taking over, like designated. Okay. It's just that I'm in the car. Mr. Jones is absent. So, yeah. She's left. All right, let's begin.