This was a positive year defeating bad ideas to come out of the Legislature. Extensive efforts on the part of PIFC lobbyists, PIFPAC members, and numerous stakeholders proved successful in defeating SB 1060 (Becker). The bill is inconsistent with both the Sustainable Insurance Strategy proposed by the Insurance Commissioner and the recently adopted CDI Safer from Wildfire regulations. It is also extremely premature since it expects insurer underwriting risk models to incorporate mitigation information that does not exist in a form they can access. Without current data on mitigation activities, insurers and modelers cannot properly assess their impact or include them in risk models. Further, it attempted to give new authority for the California Department of Insurance (CDI) to control underwriting decisions, which would further destabilize California’s fragile insurance market. SB 1060 died in the Assembly after the author pulled the bill from committee.
Additionally, Senator McGuire’s two-year bill, SB 672, was never heard in committee. The bill sought to mandate that insurers provide residential property insurance to any applicant who performs certain building hardening and property-level mitigation regardless of their rate adequacy or financial capacity to take on more risk. SB 672 would have eliminated an insurer’s ability to manage risk. The combination of inadequate rates and unmanageable risk would present significant solvency issues for California insurers.
Two PIFC supported bills AB 1901 (Chen), and AB 2872 (Calderon) passed out of the Senate and moved on to Governor Newsom for his signature or veto. AB 1901 was recently signed by the Governor. The bill restores the ability for salvage pools to obtain title to abandoned vehicles, when directed to take possession by an insurance company, without going through the diligent efforts process, which can take months. This will result in a more streamlined process without undermining the vehicle owner’s rights.
Unfortunately, Governor Newsom vetoed AB 2872. The bill dealt with personnel and staffing issues at the California Department of Insurance (CDI). The CDI has been fighting staffing shortages across multiple divisions, making it challenging for them to keep up with the demands on the department. PIFC is supportive of efforts to address staffing shortages at CDI. In his veto message, Governor Newsom noted that the bill bypasses the collective bargaining process and the salary-setting authority of the California Department of Human Resources. By establishing a specific salary for one department, it restricts the state’s ability to account for various factors affecting compensation for other employee groups.
Unfortunately, AB 2996 (Alvarez), which PIFC supported because it would have allowed the California FAIR Plan (CFP) to secure bond funds from the IBank and help insurers better manage a potentially massive CFP assessment that could deplete their reserves, was held in the Senate despite broad bipartisan support. Additionally, AB 2416 (Connolly), which PIFC was neutral on, dealing with building hardening measures for property-level mitigation efforts and communitywide wildfire mitigation programs was also held in the Senate.
Artificial intelligence:
PIFC participated in a coalition led by the CA Chamber of Commerce opposing two artificial intelligence (AI) bills AB 2013 (Irwin) and AB 2930 (Bauer-Kahan). Thanks to extensive advocacy efforts to narrow the scope and increase the workability of both bills, we were able to come to a neutral position. Though AB 2930 ended up with limited opposition thanks to amendments, the bill died in the Senate after it was held on the final night of session. AB 2013 passed out of Senate and was recently signed by the Governor.
