WELCOME TO THE ASSEMBLY
INSURANCE COMMITTEE'S OVERSIGHT
HEARING OF THE CALIFORNIA
DEPARTMENT OF INSURANCE. THIS
HEARING IS THE THIRD ASSEMBLY
OVERSIGHT HEARING TO DATE, SINCE
THE CALIFORNIA INSURANCE
COMMISSIONER, RICARDO LARA,
ANNOUNCED HIS SUSTAINABLE
INSURANCE STRATEGY. TODAY, ONCE
AGAIN, WE'LL RECEIVE AN UPDATE
FROM INSURANCE COMMISSIONER LARA
ON THE PROGRESS OF HIS STRATEGY
SINCE THE LAST OVERSIGHT
HEARING, THE INSURANCE
COMMISSIONER HAS ANNOUNCED A
NUMBER OF REFORMS INTENDED TO
STABILIZE THE INSURANCE MARKET,
AND I'D LIKE TO HEAR MORE DETAIL
TODAY ABOUT THESE REFORMS,
SPECIFICALLY RATE REFORM,
CATASTROPHIC MODELING, AND THE
MOST RECENT FAIR PLAN
MODERNIZATION. WE ANTICIPATE THE
SUSTAINABLE INSURANCE STRATEGY
TO BE COMPLETE BY THE END OF
THIS YEAR. HENCE, WE'D ALSO LIKE
TO HEAR ABOUT WHAT WORK IS LEFT
TO COMPLETE AND MORE
IMPORTANTLY, HOW THE ASSEMBLY
CAN CONTINUE TO PARTNER WITH YOU
AS WE ENTER INTO THE NEW YEAR. I
CONTINUE TO THANK YOU. INSURANCE
COMMISSIONER LARA, FOR TAKING ON
THIS INHERITED RESPONSIBILITY,
WHICH IS FIXING CALIFORNIA'S
OUTDATED INSURANCE MARKET. THE
PROGRESS BEING MADE IS CRUCIAL,
BUT I ALSO HOPE IT RETURNS MUCH
NEEDED RESULTS FOR ALL OF OUR
CONSTITUENTS CONSTITUENTS.
BECAUSE CALIFORNIANS NEED
INSURANCE MEMBERS, WE'RE GOING
TO TAKE QUESTIONS FOLLOWING THE
COMMISSIONER'S TESTIMONY AND
WITHOUT FURTHER DELAY, INSURANCE
COMMISSIONER LARA, PLEASE BEGIN
WHEN YOU'RE READY. THANK YOU.
GOOD MORNING. MEMBERS AND THANK
YOU, CHAIRWOMAN CALDERON, FOR
GIVING ME THE OPPORTUNITY TO
TESTIFY AND TO PROVIDE ANOTHER
UPDATE ON MY SUSTAINABLE
INSURANCE STRATEGY. SINCE THE
LAST TIME I SPOKE TO YOU, YOUR
COMMITTEE WAS IN MAY. WE MADE
SEVERAL SEVERAL KEY ADVANCES.
I'M JOINED BY MY STAFF, WHO ARE
SITTING IN THE AUDIENCE. MICHAEL
MARTINEZ, MY CHIEF DEPUTY, WHO,
YOU KNOW, AND MIKE PETERSON, MY
DEPUTY FOR CLIMATE AND
SUSTAINABILITY. THIS IS MY THIRD
TIME, AS YOU MENTIONED,
TESTIFYING BEFORE THIS COMMITTEE
SINCE I INTRODUCED MY STRATEGY
ONE YEAR, ALMOST ONE YEAR AGO.
AND I APPRECIATE THE CONTINUED
INVOLVEMENT FROM YOU AND THE
MEMBERS OF THE ASSEMBLY, THE
SENATE AND THE GOVERNOR TO HELP
US SOLVE THE STATE'S HOMEOWNERS
AND COMMERCIAL INSURANCE CRISIS
THAT WE'RE ALL LIVING IN. YOUR
PARTNERSHIP HAS REALLY, REALLY
BEEN INVALUABLE. I'M PROUD TO
SAY THAT THIS THAT IN THE PAST
YEAR WE'VE MADE HUGE STRIDES
TOWARDS MEETING THE DEADLINE I
SET OF DECEMBER 2024 TO
IMPLEMENT AMBITIOUS REFORMS
DESIGNED TO STABILIZE OUR
STATE'S INSURANCE MARKETPLACE.
I'M VERY THANKFUL FOR MY
DEPARTMENT STAFF. I WANT TO JUST
TAKE A SECOND TO THANK HIM
PUBLICLY, GIVEN ALL THE WORK
THAT THEY'VE DONE, THEIR
INCREDIBLE COMMITMENT TO THIS
BOLD, COMPREHENSIVE STRATEGY
THAT WILL MODERNIZE OUR STATE'S
INSURANCE MARKET. AS YOU
MENTIONED, ESPECIALLY WITH THE
GROWING THREAT OF CLIMATE
CHANGE, THEY REALLY HAVE RISEN
TO THIS UNPRECEDENTED CHALLENGE
TO THINK CREATIVELY AND BE
CRITICALLY AND CRITICALLY WITH
CONSUMER PROTECTION AT THE
FOREFRONT OF EVERYTHING THAT
THEY DO. AS WE INCH CLOSER TO
THIS FINISH LINE UNDER THE
INCREDIBLE AGGRESSIVE TIMELINE
THAT WE SET FOR OURSELVES, THEY
KNOW THEIR WORK WILL NOT LET UP,
WILL NOT LET UP AFTER THIS
CALENDAR YEAR, AND THAT THEIR
COMMITMENT TO FIX OUR STATE'S
INSURANCE MARKETPLACE WILL
ENDURE UNTIL WE SEE INSURANCE
WRITTEN FOR CONSUMERS AND
BUSINESS OWNERS WHO NEED TO, WHO
NEED IT ACROSS OUR GREAT STATE.
I WANT TO ADDRESS THE QUESTIONS
EVERYONE IS ASKING, AND HAVE
CONTINUED TO ASK ME UPFRONT.
WHEN WILL OUR WORK BE COMPLETED
AND WHEN WILL CALIFORNIANS START
SEEING SOME BENEFITS? AND MY
ANSWER IS WE WILL FINISH OUR
REGULATORY WORK. JUST MISSED
THAT. YEAH, GOOD. I'M IN CHARGE
OF WORKER'S COMP AS WELL, SO WE
CAN. YEAH. RIGHT, RIGHT. I WANT
MAKE SURE EVERYBODY'S TAKEN CARE
OF, AGAIN, YOU KNOW, WE WILL
FINISH OUR REGULATORY WORK THIS
YEAR IN CALIFORNIA. IS ALREADY
SEEING SOME OF THE BENEFITS
STARTING JANUARY ONE, 2025,
CALIFORNIA'S INSURANCE
MARKETPLACE WILL BE OPEN FOR
BUSINESS IN ALL PARTS OF
CALIFORNIA. I WANT TO REMIND US
FIRST WHY WE ARE HERE. MASSIVE
WILDFIRES ARE BEING ARE BURNING
JUST MILES FROM WHERE WE SIT,
FUELED BY RECORD BREAKING HEAT
WAVES AND CONTINUED DRY WINDS.
WE ALSO KNOW THAT ALLEGEDLY SOME
OF THESE WERE MAN MADE. BUT IF
YOU LOOK AT THE RECIPE FOR
DISASTER, WE'VE ALREADY LIVING
IT. THIS EXTREME HEAT AND THESE
WINDS CONTINUE TO PROVIDE THE
PERFECT SPARK FOR THESE
WILDFIRES. I WANT TO SPEAK
DIRECTLY TO THE COMMUNITIES
AFFECTED BY THESE WILDFIRES,
INCLUDING WRIGHTWOOD, RUNNING
SPRINGS, LAKE ELSINORE, BIG BEAR
LAKE AND MANY OTHERS. I HAVE
YOUR BACK AND WE WILL BE
IMPLEMENTING THE LAW THAT I
WROTE WHEN I WAS A MEMBER OF THE
SENATE. THAT WILL KEEP YOUR HOME
INSURANCE IN PLACE AFTER THESE
DEVASTATING WILDFIRES. IF YOU
LIVE WITHIN THE PERIMETER OF THE
BRIDGE LINE, AIRPORT WILDFIRES,
OR ZIP CODES NEARBY, YOU WILL
HAVE ONE YEAR OF PROTECTION FROM
THE HOMEOWNERS INSURANCE
NON-RENEWAL. SINCE 2019, I HAVE
PROTECTED NEARLY 4 MILLION
PEOPLE UNDER THIS LAW, AND I
BELIEVE CONSUMERS SHOULD NOT
HAVE TO WORRY ABOUT INSURANCE
WHILE THEY'RE TRYING TO RECOVER.
WITHIN THAT YEAR. WE KNOW THIS
IS A TEMPORARY PROTECTION AND
WILL. THIS ALSO WILL HELP
STABILIZE THE MARKET. WHILE
THESE REFORMS WE ARE MAKING TAKE
TAKE INTO EFFECT. SO AS SOON AS
AS SOON AS WE CAN, MY CONSUMER
SERVICES AND COMMUNITY OUTREACH
STAFF WILL HELP, WILL HOLD THE
LOCAL ASSISTANCE CENTER IN THE
IMMEDIATE IMPACTED AREAS OF
THESE MAJOR WILDFIRES TO HELP
ANSWER QUESTIONS AND ASSIST IN
THE FILING OF CLAIMS SO THAT
WILDFIRE SURVIVORS CAN START
REBUILDING THEIR LIVES AS
QUICKLY AS POSSIBLE. IN
ADDITION, IT'S IMPORTANT TO NOTE
THAT MY ENFORCEMENT SWORN
OFFICERS WILL BE WORKING WITH
THE LOCAL LAW ENFORCEMENT OF
THESE COMMUNITIES TO ENSURE
UNSCRUPULOUS INDIVIDUALS ACTING
AS INDIVIDUAL INSURANCE
ADJUSTERS DON'T TAKE ADVANTAGE
OF VULNERABLE WILDFIRE SURVIVORS
DURING THEIR TIME OF NEED. I
WANT TO TURN NOW TO THE CHANGES
THAT WE ARE MAKING TO HELP
CALIFORNIANS. WE HAVE DECADES OF
DELAYED MAINTENANCE IN OUR
FOREST AND DELAYED DECISIONS IN
OUR INSURANCE REGULATIONS. UNDER
PROP 103, INSURANCE COMPANIES
HAVE SET THEIR RATES AT WHATEVER
LEVEL THEY NEEDED TO COVER THEIR
FUTURE CLAIMS, BUT THEY ARE NOT
REQUIRED TO WRITE MORE POLICIES.
LET ME SPELL THIS OUT.
CALIFORNIANS ARE GETTING LESS
AND PAYING MORE, WHILE
CALIFORNIANS STILL PAY LESS ON
THE AVERAGE FOR INSURANCE THAN
THOSE IN OTHER DISASTER PRONE
STATES. THOSE AT GREATER RISK
PAY THE MOST TO THE POINT WHERE
IT IS UNAFFORDABLE FOR SO MANY.
YOU WILL NOT HEAR THIS FROM
CONSUMER WATCHDOG. THEY ARE
UNDERWRITTEN BY INSURANCE
COMPANIES WITH SIX FIGURE
SALARIES, ULTIMATELY AND
UNKNOWINGLY PAID BY CONSUMERS.
CONSUMERS ARE HURTING BECAUSE
THEY CANNOT FIND INSURANCE UNDER
THE OUTDATED 30 YEAR OLD RULES.
UNDER PROP 103, CONSUMER
WATCHDOG WANTS THINGS TO STAY
THE SAME BECAUSE ONLY THEY
BENEFIT, NOT CONSUMERS. AND
THAT'S NOT ACCEPTABLE. I'M
ANSWERING THE INSURANCE CRISIS
OF TODAY TO MEET THE CHALLENGES,
REALLY, OF THE FUTURE. MY
STRATEGY IS INTENDED TO FIX THIS
MAJOR SHORTCOMINGS IN OUR LAWS.
LET ME PUT OUR WORK INTO
PERSPECTIVE. WE ARE CREATING AN
ENTIRELY NEW LAW, NEW PROCEDURES
FROM THE GROUND UP, AND WE ARE
DOING IT IN RECORD TIME. OUR
ENTIRE TEAM HAS CONTINUOUSLY
ENGAGED AND WORKING HARD
THROUGHOUT THIS INSURANCE
CRISIS, AND WE CONTINUE TO DO
OUR JOB THOROUGHLY REVIEWING
INSURANCE RATE FILINGS. AS A
RESULT, WE HAVE MANY COMPANIES
CONTINUING TO WRITE AND RENEW IN
OUR STATE, INCLUDING SOME OF THE
LARGEST PROVIDERS OF HOMEOWNERS
AND COMMERCIAL COVERAGE.
ALTHOUGH SEVERAL COMPANIES
CONTINUE TO PAUSE WRITING OR ARE
LIMITING WHERE THEY WRITE NEW
BUSINESS, TODAY, MANY MORE
COMPANIES ARE GEARING UP TO FILE
UNDER OUR REGULATIONS IN THE
COMING NEW YEAR. ONE OF THOSE,
ALLSTATE, PUBLICLY TESTIFIED AT
ONE OF OUR WORKSHOPS THAT IT
WILL OPEN NEW BUSINESSES, NEW
BUSINESS IN NEARLY EVERY CORNER
OF OUR STATE ONCE THE WORK IS
DONE, FARMERS AS HAS HAD
CONSTRUCTIVE CONVERSATIONS WITH
MY DEPARTMENT IN ORDER TO ALLOW
THE COMPANY TO REMAIN WRITING IN
THE STATE. ON THE OTHER HAND,
WE'VE ALSO HEARD FROM STATE FARM
CONTINUES TO NON-RENEW POLICIES
WHILE SEEKING EVEN HIGHER RATES.
WE ARE USING ALL OF THE
DEPARTMENT'S INVESTIGATORY TOOLS
TO GET TO THE BOTTOM OF STATE
FARM'S FINANCIAL SITUATION AND
MAKE SURE THAT WE TAKE ALL THE
NECESSARY STEPS BEFORE
CONTINUING TO ASK CONSUMERS TO
GIVE MORE. THIS IS THE REALITY
OF OUR SITUATION THAT WE ARE
LIVING IN. YOU'VE HEARD THIS
BEFORE, BUT IT BEARS REPEATING
WE ARE ON OUR WAY OF ENACTING
THE STATE'S LARGEST INSURANCE
REFORM IN 30 YEARS. SINCE THE
PASSAGE OF PROP 103 AND 1988, WE
ARE COMPRESSING DECADES OF
DEFERRAL AND DELAY INTO ONE YEAR
TIMELINE, ESSENTIALLY A ONE YEAR
TIMELINE OF ACTION, AND WE ARE
WELL ON OUR WAY TOWARDS MEETING
OUR DEADLINE. LET ME NOW GIVE
YOU A COMPREHENSIVE UPDATE ON
THE VARIOUS COMPONENTS OF MY
STRATEGY. THE FIRST COMPONENT,
INCORPORATING CATASTROPHE
MODELING INTO OUR RATE MAKING.
THE FIRST COMPONENT OF MY
SUSTAINABLE INSURANCE STRATEGY
IS TO INCORPORATE THE USE OF
CATASTROPHIC CATASTROPHE MODELS
INTO OUR RATE MAKING. AS YOU'VE
HEARD BEFORE, CALIFORNIA IS THE
ONLY STATE REMAINING REMAINING
WHICH DOES NOT ALLOW CATASTROPHE
MODELS IN. IN THE RATE MAKING
PROCESS, WE ARE INSTEAD RELYING
ON HISTORICAL DATA, WHICH IS NOT
AS ACCURATE AND DOES NOT ACCOUNT
FOR THE STRIDES WE'VE MADE IN
MITIGATION EFFORTS. AS I TESTIFY
BEFORE YOU TODAY, MY DEPARTMENT
MY DEPARTMENT IS SIMULTANEOUSLY
HOSTING A PUBLIC HEARING RIGHT
NOW ON MY CATASTROPHE MODELING
AND RATE MAKING REGULATIONS THAT
ARE IN THE FINAL PHASE OF BEFORE
IMPLEMENTATION BY THE END OF THE
YEAR. THESE REGULATIONS ARE A
RESULT OF AN AMBITIOUS YEAR
WHERE MY DEPARTMENT HOSTED TWO
PUBLIC WORKSHOPS IN ADDITION TO
HOLDING COUNTLESS STAKEHOLDER
MEETINGS WITH INSURERS, WITH
INSURERS, GROUPS REPRESENTING
CONSUMERS AND BUSINESSES, AND
MODELERS TO ENSURE THAT THE THAT
THESE REGULATIONS WILL ADDRESS
THE CURRENT INSURANCE CRISIS
HERE IN CALIFORNIA. THAT MEANS
THAT BY THE END OF TODAY, SINCE
MAY 20TH 23RD, WE WOULD HAVE
HELD FOUR PUBLIC WORKSHOPS AND A
PUBLIC HEARING AND A PUBLIC
HEARING TO GET BROAD PUBLIC
INPUT IN OUR NEW CATASTROPHE
MODELING REGULATIONS. SO WE
INTEND TO IMPLEMENT THE
REGULATIONS THAT WOULD DO THE
FOLLOWING THINGS ONE. MEET PROP
103 MANDATE FOR PUBLIC REVIEW
AND TRANSPARENCY. WHILE
RECOGNIZING THE PROPRIETARY
MATERIAL CONTAINED IN
CATASTROPHE MODELING, WHICH IS
NO EASY FEAT. ALLOW MORE
ACCURACY IN RATE MAKING AND MORE
RECOGNITION IN MITIGATION
EFFORTS AT THE PARCEL AND
COMMUNITY WIDE LEVEL. PROVIDE
THAT INSURANCE COMPANIES COMMIT
TO INCREASING THEIR WRITINGS OF
WILDFIRE DISTRESS PROPERTIES
ACROSS THE ENTIRE STATE. REMOVE
POLICIES FROM THE FAIR PLAN TO
GO BACK INTO THE REGULAR
INSURANCE MARKET, AND ULTIMATELY
INCREASE INSURANCE AVAILABILITY
FOR THOSE CURRENTLY UNAVAILABLE
TO GET COVERAGE, EXCEPT FROM THE
FAIR PLAN. AT THIS JUNCTURE, MY
TEAM IS NOT ONLY FOCUSED ON THE
REGULATORY PHASE OF THESE
REGULATIONS, BUT ALSO
ESTABLISHING THE NEW
ADMINISTRATIVE PROCESSES WE NEED
TO OVERSEE THE SMOOTH AND
EFFECTIVE IMPLEMENTATION TO SEE
OF THESE REGULATIONS STARTING
THE NEW YEAR. SO WE ARE LOOKING
AT ALL PARTICIPANTS IN THE
PROCESS OUTWARDLY AT THE
INSURANCE INDUSTRY AND THE
INTERVENER GROUPS AND INTERNALLY
WITHIN OUR DEPARTMENT. THIS HAS
BEEN AN ALL HANDS ON DECK EFFORT
INVOLVING NEARLY EVERY BRANCH OF
MY DEPARTMENT. AN ANALOGY THAT
YOU ALSO HAVE HEARD ME SAY
BEFORE THAT WE USE CONSTANTLY,
IS THAT WE'RE BUILDING THE
AIRPLANE AS WE'RE FLYING IT.
THIS IS THIS PAST WEEK WE POSTED
AN OPENING FOR A NEW INSURANCE
MODEL ADVISOR, WHICH IS THE
INDIVIDUAL WHO'S GOING TO
OVERSEE THE PROCESS OF PUBLIC
REVIEW OF THE CATASTROPHE MODELS
THAT WILL BE USED IN THE RATE
MAKING. SO PLEASE, IF YOU KNOW
ANY QUALIFIED CANDIDATES, SEND
THEM OUR WAY AND MÐI RATE
REGULATION BRANCH, WHICH REVIEWS
THE INSURANCE COMPANY RATE
FILINGS, IS ALSO KEY TO
IMPLEMENTING THESE REGULATIONS.
SO WE HAVE MADE A SIGNIFICANT
HIRING STRIDES, WHICH I KNOW WAS
ONE OF THE QUESTIONS YOU ALL
WANTED FROM THE LAST HEARING.
THIS PARTICULAR BRANCH IS
ALREADY GOING TO BE READY FOR
JANUARY 1ST. WE'VE HIRED MORE
THAN TWO DOZEN NEW INDIVIDUALS
PROMOTED NEARLY ANOTHER 2000,
TWO DOZEN, NOT THOUSAND, HIRED
MORE THAN 2000 NEW INDIVIDUALS
AND WE'VE PROMOTED NEARLY TWO
DOZEN MORE. AND WHILE LOOKING TO
RECRUIT AND HIRE AND ONBOARD
EVEN MORE KNOWING THAT THE
RECRUITMENT FOR PUBLIC SECTOR
ACTUARIES AND RATE ANALYST IS A
VERY CHALLENGING TASK GIVEN THE
CHANGE AND THE AMOUNT THAT WE
PAY AT THE STATE LEVEL. MY RATE
REGULATION BRANCH IS ALSO
CURRENTLY UNDERGOING THE ENTIRE
FIRST EVER ORGANIZATIONAL
ASSESSMENT TO DETERMINE THE
APPROPRIATE LEVEL OF STAFFING
NEEDED TO ADDRESS THE GROWING
RATE. FILING WORKLOAD DEMANDS
FOR A 21ST CENTURY MÀ DEPARTMENT.
THIS EFFORT IS EXPECTED TO BE
COMPLETED THIS FALL, AND IT IS
ANTICIPATED THAT THE TREMENDOUS
AMOUNT OF THE TREMENDOUS AMOUNT
OF POSITIONS AT ALL LEVELS WILL
BE IMMEDIATELY BE REDIRECTED IN
SUPPORT OF THE REORGANIZATION TO
MEET THE EXPECTED RATE FILING
WORKLOAD ASSOCIATED WITH THE
STRATEGY AND AN EVEN GROWING
INSURANCE MARKETPLACE WITH NEW
PRODUCT OFFERINGS. GIVEN THE
CONTINUED THREAT OF CLIMATE
CHANGE. IN ADDITION TO OUR
HIRING EFFORTS, THE DEPARTMENT
HAS ENTERED INTO CONTRACTS WITH
SEVERAL FIRMS FOR ACTUARIAL AND
RATE REVIEW SERVICES IN
PARTNERSHIPS WITH MY
DEPARTMENT'S RATE REGULATION
EXPERTS. THIS IS MADE POSSIBLE
DUE TO THE BUDGET AUTHORITY THAT
YOU ARE. THE LEGISLATURE AND THE
GOVERNOR GAVE ME. SO I WANT TO
THANK YOU FOR THAT AND LETTING
YOU KNOW THAT WE'RE PUTTING THAT
MONEY TO WORK AS QUICKLY AS
POSSIBLE. ON JANUARY 1ST, 2025.
WE WILL BE READY IN CALIFORNIA,
WILL BE OPEN AGAIN FOR BUSINESS
AGAIN IN ALL PARTS OF THE STATE.
AND I'M EXPECTING INSURANCE
COMPANIES TO DO THE SAME AND BE
READY TO SUBMIT THE RATE FILINGS
TO MY DEPARTMENT SO THAT WE CAN
GET OUR INSURANCE MARKETPLACE
BACK ON TRACK. WHEN I SPOKE TO
YOU BACK IN MAY, I DISCUSSED ONE
MATTER THAT CONTINUES TO COME UP
IN MY DEPARTMENT'S REGULATORY
WORKSHOPS, WHICH IS THE QUESTION
AROUND A PUBLIC WILDFIRE
CATASTROPHE MODEL. THERE IS NO
CURRENT. THERE'S NO CURRENT
EXISTING PUBLIC OPTION FOR
WILDFIRE CATASTROPHE MODELS THAT
WE CAN USE TODAY. AND EARLIER
TODAY, I PUBLICLY ANNOUNCED A
MAJOR STEP FORWARD, WHICH IS A
MAJOR WIN FOR US. MY DEPARTMENT
WILL BE WORKING WITH HIGHER
EDUCATION EXPERTS TO CREATE THE
NATION'S FIRST PUBLIC WILDFIRE
CATASTROPHE MODEL. CAL POLY
HUMBOLDT WILL BE CONVENING A
STRATEGY GROUP THAT WILL MAKE
RECOMMENDATIONS FOR THE STEPS
THAT WE NEED TO TAKE TO MAKE
THAT A POSSIBILITY. CREATING A
PUBLIC WELFARE MODEL CATASTROPHE
WILL HAVE BENEFITS FAR BEYOND
THE INSURANCE REGULATION FOR
PUBLIC SAFETY. FOR THE EDUCATION
AND CAREERS OF FUTURE STUDENTS,
FOR OUR UNDERSTANDING OF HOW
EXTREME HEAT AND CLIMATE CHANGE
ARE AFFECTING OUR ENVIRONMENT BY
LAUNCHING A STRATEGIC WORKING
GROUP, WE ARE TAKING THE FIRST
STEP IN CREATING THE NEEDED
MOMENTUM TO MAKE PROGRESS AND
ENGAGE WITH EXPERTS. I ALSO WANT
TO UNDERSCORE THAT THIS IS NOT A
QUICK OR SIMPLE SOLUTION. THIS
IS A MULTI-YEAR PROCESS THAT
WOULD NEED TO THAT WOULD NEED TO
GROW FROM THIS STRATEGY GROUP
FOR THE PUBLIC MODEL TO BE
USEFUL, USABLE. IT TAKES TIME,
COMMITMENT AND RESOURCES. LET ME
GIVE YOU AN EXAMPLE. THE STATE
OF FLORIDA CREATED A PUBLIC
MODEL FOR HURRICANES, WHICH TOOK
FIVE YEARS AND MILLIONS OF
DOLLARS. THE MODEL REQUIRES
REGULAR UPDATES TO INCORPORATE
NEW EXPERIENCES AND LESSONS
LEARNED SO THAT IT COULD BE THE
MOST UP TO DATE AND CURRENT.
WITH MY ANNOUNCEMENT TODAY,
WE'RE GOING TO START LAYING THE
GROUNDWORK FOR A PUBLIC WILDFIRE
CATASTROPHE MODEL. AND IT IS.
AND IT AND ITS USE IN THE FUTURE
WOULD ALLOW, UNDER OUR
REGULATIONS, THERE IS NO DOUBT
WE HAVE THE TECHNICAL EXPERTISE
OF OUR STATE TO DEVELOP A PUBLIC
WELFARE CATASTROPHE MODEL. THE
QUESTIONS ARE, CAN WE FIND THE
DEDICATED FUNDING, BUILD THE
CAPABILITIES TO MAXIMIZE FOR OUR
PUBLIC BENEFITS? AND DO WE HAVE
THE VISION AND POLITICAL WILL TO
SEE THIS THROUGH? BUILDING THE
TOOLS THAT WE NEED FOR OUR
FUTURE IS REALLY A TOP PRIORITY
FOR OUR DEPARTMENT, AND MYSELF
AND I WILL AGAIN BE LOOKING TO
THE LEGISLATURE FOR HELP DURING
THIS CRITICAL EFFORT. MEANWHILE,
PRIVATE WILDFIRE CATASTROPHE
MODELS ARE WIDELY USED TODAY AND
THE INSURANCE INDUSTRY AND
ACROSS THE NATION IN BOTH THE
RATE MAKING AND UNDERWRITING
PROCESS. EVEN AS WE DEVELOP OUR
OWN FIRST IN THE NATION PUBLIC
WELFARE CATASTROPHE MODEL, IT IS
CRITICAL THAT WE, FOR THE SPEED
OF OUR REFORMS THAT WE MOVE
FORWARD IN UTILIZING PUBLIC
PRIVATE MODELS. NOW, THE SECOND
COMPONENT OF MY STRATEGY
INVOLVES INCORPORATING
REINSURANCE INTO THE RATE
MAKING. AS YOU KNOW, REINSURANCE
IS IMPORTANT FOR INSURANCE
COMPANIES TO HELP MANAGE THE
RISK. IT ENABLES THEM TO WRITE
POLICIES AND COVER LOSSES
DESPITE GROWING THREATS FROM
CLIMATE CHANGE, CALIFORNIA IS
ONE OF THE FEW STATES THAT DOES
NOT ALLOW INSURANCE COMPANIES TO
RECOVER THE EXPENSE OF THEIR
RATES. THE COST OF REINSURANCE
IS SIGNIFICANTLY INCREASED IN
RECENT YEARS DUE TO THE
INCREASING LOSSES OF CLIMATE
CHANGE PERILS, INCLUDING, OF
COURSE, IN CALIFORNIA,
WILDFIRES. THIS CONTRIBUTES TO
INSURANCE COMPANIES DECISIONS TO
REDUCE NEW POLICIES OR TO
RESTRICT WRITING TO JUST THE
LOWEST POSSIBLE. THE LOWEST RISK
POLICIES AROUND OUR STATE.
THAT'S IF WE EVEN THAT'S IF
THEY'RE EVEN WRITING POLICIES AT
ALL. SO MY DEPARTMENT PLANS TO
INTRODUCE PROPOSED REGULATION
TEXTS BY THE END OF OCTOBER TO
ALLOW INSURANCE COMPANIES TO
TAKE ON GREATER RISK IN
CALIFORNIA, TO INCORPORATE THE
COST OF REINSURANCE IN THEIR
RATE FILINGS TO COVER THOSE
RISKS. SINCE WE LAST TALKED, WE
HAVE ENGAGED WITH AN OUTSIDE
EXPERT CONSULTANT TO PROVIDE
TECHNICAL AND ACTUARY FEEDBACK
ON THE DRAFTING OF THESE
IMPORTANT REGULATIONS. IN
ADDITION TO MEETING INFORMALLY
WITH SOME INTERESTED PARTIES.
THESE REGULATIONS ARE SET TO BE
FINALIZED AGAIN IN TIME BY THE
END OF THE YEAR. THE THIRD
COMPONENT OF MY STRATEGY
INVOLVES MODERNIZING. FINALLY,
THE CALIFORNIA FAIR PLAN AND
ACTUALLY MAKE IT MORE FAIR FOR
CONSUMERS, MADAM CHAIR, YOU
ASKED TO GIVE YOU A BRIEFING ON
THIS, AND I'M VERY PROUD OF THE
WORK THAT WE'VE DONE. ON JULY
20TH 25TH, I ENTERED INTO A
BREAKTHROUGH AGREEMENT WITH THE
CALIFORNIA FAIR PLAN, TO
MODERNIZE ITS OPERATIONS AND
COVERAGE OFFERINGS. THIS
UNPRECEDENTED AGREEMENT WITH THE
FAIR PLAN WAS TARGETED AT
HOMEOWNERS AND CONDO
ASSOCIATIONS THAT NEED TO EXPAND
COVERAGE, AS WELL AS FARMS,
BUILDERS, BUSINESSES WITH
MULTIPLE BUILDINGS IN THE SAME
LOCATION. WE NEED TO STOP THE
NEGATIVE FEEDBACK LOOP WHERE A
GROWING FAIR PLAN CONTRIBUTES TO
THE INSURANCE COMPANIES REDUCING
POLICIES IN HIGH RISK AREAS,
DRIVING EVEN MORE CALIFORNIANS
INTO THE FAIR PLAN. PURSUANT TO
THE AGREEMENT ON AUGUST 27TH,
THE FAIR PLAN ISSUED ITS NEW
PLAN OF OPERATION IMPLEMENTING
THE COMPONENTS OF MY AGREEMENT.
THERE ARE TWO MAIN PARTS OF MY
AGREEMENT WITH THE FAIR PLAN,
NAMELY. FIRST, ITS PLAN OF
OPERATION ESTABLISHES A NEW HIGH
VALUE COMMERCIAL COVERAGE
OPTIONS WITH LIMITS UP TO 20
MILLION PER BUILDING. WITH THE
TOTAL MAXIMUM LIMIT OF 100
MILLION PER LOCATION FOR LARGER
HOUSING AND BUSINESS
DEVELOPMENTS. THIS IS CRITICAL.
AS WE KNOW, PRICES OF OUR
BUSINESSES CONTINUE TO SKYROCKET
AND THEY NEED HIGHER LIMITS IF
THEY'RE GOING TO BE IN THE FAIR
PLAN PER BUILDING, NOT PER
LOCATION. THE NEW COVERAGE LIMIT
WILL SUNSET WHEN THE ADMITTED
INSURERS MARKET IMPROVES. SO
WE'RE TYING IT TO THE
IMPROVEMENT OF OUR OVERALL
WELL-BEING OF OUR MARKET. THE
NEW COVERAGE LIMIT WILL BRING
RELIEF TO HOAS, WHO I KNOW YOU
ALL HAVE HEARD FROM, AND OTHERS
CURRENTLY STRUGGLING TO OBTAIN
COMMERCIAL POLICIES IN THE
ADMITTED INSURANCE MARKET. AS
WELL AS HOME BUILDERS,
AFFORDABLE HOUSING PROJECTS THAT
CURRENTLY ARE STALLED BECAUSE
THEY CAN'T FIND INSURANCE, AND
INFILL DEVELOPMENTS. ALSO
STRUGGLING TO FIND COVERAGE.
SECOND, I ADDRESSED THE FAIR
PLAN'S FINANCIAL STABILITY BY
CREATING A SOUND FINANCIAL
FORMULA FORMULA TO PROTECT
POLICYHOLDERS FROM THE MOST
EXTREME LOSS SCENARIOS. THE FAIR
PLAN CONTAINS HIGH RISK POLICIES
AND MAINTAINING ITS SOLVENCY IS
ESSENTIAL TO PAYING FUTURE
CLAIMS IN THE EVENT OF A
CATASTROPHIC LOSS UNDER THE
EXISTING LAW. TODAY, THE FAIR
PLAN MAY ASSESS ITS MEMBER
INSURANCE COMPANIES IN ORDER TO
MAKE SURE THAT THE CONSUMER'S
CLAIMS ARE PAID WHILE THE FAIR
PLAN HASN'T HAD A SOLVENCY
CRISIS IN 30 YEARS, WE ARE
TAKING NO CHANCES. AN
EXPONENTIALLY LARGE FAIR PLAN
ASSESSMENT OR SERIES OF
ASSESSMENTS COULD LEAD TO
ESCALATING SPIRAL OF UNCERTAINTY
AND NEGATIVE CONSEQUENCES FOR
ALL CALIFORNIA POLICYHOLDERS.
THE CHANGES I HAVE SECURED WILL
STRENGTHEN THE FAIR PLAN'S
FINANCIAL RESERVES AND BACKSTOP,
SO IT CAN FULLY AND
EXPEDITIOUSLY PAY OFF FUTURE
CLAIMS FROM CONSUMERS BEFORE
THESE CHANGES, INSURANCE
COMPANIES COULD ASK FOR APPROVAL
TO PASS ALL 100% OF THE
ASSESSMENT COSTS TO
CALIFORNIANS. IN AN EXTREME
WORST CASE LOSS SCENARIO. NOW,
PURSUANT TO MY BULLETIN RELEASED
TWO WEEKS AGO ON SEPTEMBER
THIRD, I HAVE OUTLINED
PROCEDURES THAT SHIELD
CALIFORNIANS FROM PAYING THE
FULL COST OF. IN THE CASE OF A
MAJOR, MAJOR DISASTER. PURSUANT
TO MY BULLETIN, THE FAIR PLAN
WILL PAY OUT ALL OF ITS RETAINED
EARNINGS REINSURANCE AND OTHER
BACKSTOP FUNDS. FIRST, INSURANCE
COMPANIES AND CONSUMERS WILL
SHARE THE ADDITIONAL COST UP TO
2 BILLION OR 1 BILLION PER LINE.
HOMEOWNERS AND COMMERCIAL. THIS
IS IMPORTANT TO KNOW THAT I
WOULD I WILL NOW, YOU KNOW, HAVE
TO REVIEW AND APPROVE THE
ASSESSMENT ON THE POLICYHOLDERS
BEFORE ANY POLICYHOLDER PAYS
ANYTHING IN A HIGHLY UNLIKELY
EVENT OF AN ASSESSMENT. SO WE'VE
ADDED SOME MORE CONSUMER
PROTECTIONS. A STABLE AND
SOLVENT FAIR PLAN PROVIDES
IMPORTANT CERTAINTY FOR
INSURANCE COMPANIES AND
CONSUMERS WHO OTHERWISE CANNOT
FIND INSURANCE COVERAGE IN THE
TRADITIONAL OR SURPLUS LINES.
THIS MODERNIZATION OF THE FAIR
PLAN IS CRITICAL TO ENSURE A
RELIABLE SAFETY NET THAT WILL BE
THERE WHEN CONSUMERS AND
BUSINESSES ACTUALLY NEED IT. THE
FOURTH COMPONENT OF MY STRATEGY
IS IMPROVING RATE FILING
EFFICIENCY, SOMETHING THAT YOU
ARE ALSO VERY KEEN TO REDUCING
UNNECESSARY DELAYS IS CRITICAL
TO GETTING OUR STATE'S INSURANCE
MARKETPLACE BACK ON TRACK. IT IS
UNACCEPTABLE THAT MORE THAN 30
YEARS AFTER THE PASSAGE OF PROP
103, THE THOROUGH REVIEW OF RATE
FILINGS CAN TAKE MONTHS OR EVEN
YEARS LONGER THAN THE TIMELINE
THAT THE VOTERS SET IN LAW MORE
THAN THREE DECADES AGO. THE
FOURTH COMPONENT WAS
ACCOMPLISHED IN THE RELEASE OF
MY BULLETIN ON 2024, ON AUGUST
9TH, I SHOULD SAY MY
ADMINISTRATIVE ACTION
ACCOMPLISHES THESE REFORMS THAT
WERE INCLUDED IN THE BUDGET
TRAILER LANGUAGE THAT THE
GOVERNOR INTRODUCED BACK IN MAY,
AND WHICH I PROPOSED LAST YEAR
AS PART OF OUR SUSTAINABLE
INSURANCE STRATEGY. I ISSUED
THIS BULLETIN UNDER MY EXISTING
PROP 103 AUTHORITY TO HELP
DEVELOP TO HELP THE DEPARTMENT
CONDUCT A RIGOROUS, RIGOROUS AND
TRANSPARENT REVIEW OF RATE
CHANGES. APPLICATIONS WITHIN THE
ACTUAL 60 DAY TIMELINE
PRESCRIBED UNDER PROP 103. MORE
THAN 30 YEARS AGO. AS I SAID,
THE ADMINISTRATIVE PROCESS WOULD
ALSO ALLOW FOR A 30 DAY
EXTENSION. IF IT'S NEEDED. STILL
MUCH SHORTER THAN THE CURRENT
PROCESS. AT THE CORE OF MY
BULLETIN, I'M STRENGTHENING THE
DEPARTMENT'S ABILITY TO ENFORCE
ITS TIMELINES AGAIN THAT WERE
SET MORE THAN 30 YEARS AGO.
CONSUMER CONSUMERS BENEFIT FROM
A THOROUGH AND TRANSPARENT,
TRANSPARENT RATE REVIEW WITH
MORE INSURANCE PRODUCTS COMING
INTO THE MARKET TO HELP MEET
THEIR DEMANDS OF GREATER
AVAILABILITY AND OF THAT
COVERAGE. MY ACTION HELPS CREATE
CERTAINTY IN THE INSURANCE
MARKET AND HOLDS ALL PARTIES
ACCOUNTABLE FOR MEETING THE
REQUIREMENTS WITHIN PROP 103.
THOSE PARTIES INCLUDE INSURANCE
COMPANIES WHO ARE RESPONSIBLE
FOR REQUESTING THE RATES THEY
NEED TO, YOU KNOW THEY NEED TO
PAY FOR THE FUTURE CLAIMS AND
PROVIDE COMPLETE RATE FILINGS IN
SUPPORT OF THE RATE REQUEST. SO
WE'RE HOLDING EVERYBODY
ACCOUNTABLE. IN TURN, INSURANCE
COMPANIES SHOULD HAVE GREATER
CERTAINTY ON THEIR PENDING RATE
FILINGS SO THAT THEY CAN RESTORE
TO A COMPETITIVE INSURANCE
MARKETPLACE AND FINALLY, CLOSE
THESE DREADED PROTECTION GAPS
THAT KEEP INCREASING. I ALSO
EXPECT INTERVENORS TO ABIDE BY
THE RULES AND NOT DUPLICATE THE
WORK OF MY DEPARTMENT'S EXPERTS,
AND PROVIDE MEANINGFUL AND
ACTUAL SUBSTANTIVE, SUBSTANTIVE
INPUT IN THE PROCESS. AND I'M
ALSO PUTTING THE SAME
EXPECTATIONS ON MY DEPARTMENT TO
DO A TRANSPARENT AND THOROUGH
REVIEW OF EACH FILING WITHIN THE
TIMELINES LAID OUT DECADES AGO.
I KNOW I KEEP SAYING DECADES AGO
IN PROP 103 TO PROTECT
CONSUMERS, SO WE'RE ESSENTIALLY
HOLDING EVERYONE IN THE PROCESS
ACCOUNTABLE. ALSO, IT IS
ESSENTIAL PART OF THE REFORM IS
THAT MY DEPARTMENT WILL CREATE A
DATA RECONCILIATION TOOL AS SOON
AS ADMINISTRATIVELY FEASIBLE, AS
A CHECK THAT INSURANCE COMPANIES
MUST COMPLETE PRIOR TO
SUBMITTING THE RATE.
APPLICATIONS TO THE DEPARTMENT
FOR REVIEW, SO THAT WE'RE ALL
OPERATING UNDER THE SAME DATA
SETS. AGAIN, CUTTING DOWN THE
TIME OF THESE REVIEWS. IN
ADDITION, BACK IN FEBRUARY OF
THIS YEAR, MY DEPARTMENT
PUBLISHED A COMPLETE RATE
APPLICATION REGULATION THAT
CREATES CLARITY IN THE RATE
APPLICATION REVIEW PROCESS FOR
ALL PARTICIPANTS. THIS IS
CRITICAL, A CRITICAL PART OF
REDUCING, AGAIN, THE UNNECESSARY
DELAYS THAT CAN CAUSE RATE
FILINGS TO TAKE MORE THAN A YEAR,
A MORE COMPLETE RATE APPLICATION
UPFRONT. THE RATE APPLICATION
PROCESS THEN, WILL BE ENSURED
THAT MY RATE REGULATION EXPERTS
HAVE THE NECESSARY COMPREHENSIVE
INFORMATION THAT THEY NEED AT
THE OUTSET TO MAKE QUICKER
DECISIONS ON THE PENDING RATE
FILINGS. I'M PROUD TO SAY THAT
THIS REGULATION WAS SUBMITTED TO
THE STATE OFFICE OF
ADMINISTRATIVE LAW LAST WEEK.
GIVEN THAT MY LEGAL STAFF HAS
BEEN WORKING CLOSELY WITH OLE
SINCE DAY ONE, THIS REGULATION
IS ON ALL OF OUR PENDING. AS IN
ALL OUR PENDING REGULATIONS,
THIS REGULATION SHOULD GO INTO
EFFECT AGAIN BY THE END OF THE
YEAR. ABOVE ALL, THESE TWO
ACTIONS IN THIS FOURTH STRATEGY
COMPONENT STRENGTHENS OUR REVIEW
PROCESS, WHICH IS INTEGRAL TO
OUR ONGOING REFORMS. LET ME BE
CLEAR. THE DEPARTMENTS OF
INSURANCE, AGAIN, IS ALWAYS THE
PUBLIC CHECK ON RATES AND MARKET
SOLVENCY. AND WE WILL CONTINUE
TO THOROUGHLY REVIEW EACH OF THE
RATE APPLICATIONS FILED TO MAKE
SURE THAT THEY'RE COMPLIANT WITH
OUR LAWS AND JUSTIFIED UNDER
PROP 103, AND THAT CONSUMERS ARE
BEING PROTECTED. THE FIFTH
COMPONENT IS TRANSPARENCY AND
ACCOUNTABILITY FOR INTERVENORS.
THE LAST COMPONENT OF MY
STRATEGY IS TO INCREASE
TRANSPARENCY, TO MAXIMIZE
EFFICIENCIES IN THE INTERVENER
PROCESS. UNDER PROP 103, PUBLIC
PARTICIPATION IS ALLOWED IN ANY
PROCEEDING BEFORE THE
COMMISSIONER AND WHILE THE
STATE, WHILE THE RATE
APPLICATION PROCESS HAS ALWAYS
BEEN OPEN TO THE PUBLIC, SUCH AS
INTERVENORS SIMILARLY HAS NOT
APPLIED FOR THE SAME PROCESS OF
BECOMING AN INTERVENER. SO MY
DEPARTMENT NOW PROVIDES PUBLIC
NOTICE ON OUR WEBSITE REGARDING
INDIVIDUALS AND GROUPS THAT WISH
TO RECEIVE ELIGIBILITY. BE
RECOGNIZED AS AN INTERVENER IN
ORDER TO RECEIVE COMPENSATION
FOR THEIR PARTICIPATION, IT IS
IMPORTANT TO UNDERSTAND HOW
INTERVENORS PARTICIPATE IN THE
RATE APPLICATION PROCESS AND
ENSURE ACCOUNTABILITY BY
INTERVENORS FOR THEIR
PARTICIPATION. AGAIN, THE GOAL
OF THIS PART OF THE STRATEGY IS
TO ADDRESS AND IMPROVE ALL
ASPECTS OF THE INSURANCE CRISIS
IN CALIFORNIA. UNDER MY
AUTHORITY, AND THAT INCLUDES MY
DEPARTMENT AND THOSE THAT
INTERACT WITH MY DEPARTMENT,
SUCH AS INTERVENORS WHO
PARTICIPATE AND RECEIVE
SIGNIFICANT COMPENSATION FOR
THEIR PARTICIPATION. WE HAVE
UPDATED OUR WEBSITE WITH THE
INTERVENER PROCESS. THE
DEPARTMENT NOW PROVIDES
INCREASED PUBLIC TRANSPARENCY ON
THE INTERVENER PROCESS,
INCLUDING HOW THE PROCESS WORKS,
PETITIONS AND ORDERS FILED, AND
HOW MUCH HOW MUCH MONIES ARE
BEING PAID OUT TO THESE
INTERVENORS THAT ULTIMATELY THE
COST GETS PASSED TO THE CONSUMER.
SO IN CLOSING, WE CONTINUE TO
MEET ACROSS THE STATE WITH FIRE
CHIEFS, REALTORS, THE INSURANCE
INDUSTRY, CONSUMERS, AGRICULTURE
GROUPS, HOAS, COMMUNITY
ASSOCIATIONS, AND OF COURSE WITH
LOCAL ELECTEDS AND OUR STATEWIDE
ELECTED LEADERS AND MEMBERS OF
BOTH HOUSES. AS WE CONTINUE TO
CONDUCT TOWN HALLS AROUND THE
STATE, WE ARE MOVING AT THE
SPEED OF TRANSPARENCY AND GOOD
DECISIONS. CALIFORNIA'S HISTORY
IS LITTERED WITH TOO MANY FAST
REMEDIES THAT HAVE NOT STOOD THE
TEST OF TIME. PROP 103 REQUIRES
ALL INFORMATION PROVIDED TO THE
DEPARTMENT TO BE SUBJECT OF
PUBLIC INSPECTION. WE CANNOT NOT
SIDESTEP THESE REQUIREMENTS
BECAUSE WE DON'T WANT THIS MUCH
NEEDED REFORM TO BE TIED UP IN
ANY AVOIDABLE LITIGATION. THIS
IS TRUE EVEN UNDER THE
GOVERNOR'S EXECUTIVE ORDER OF
LAST SEPTEMBER. AND IF WE LOSE
IN COURT OVER PROCESS, AS I SAID
BEFORE AND NOT SUBSTANCE, ALL
THIS WOULD WORK WOULD HAVE BEEN
DONE IN VAIN. INSURANCE
COMPANIES AND INSURANCE
CONSUMERS HAVE HAD STRONG
FEEDBACK TO EVERYTHING THAT WE
HAVE DONE NOW PUBLICLY RELEASED
TODAY. AND WE RECOGNIZE THAT WE
ARE CONTINUING. THERE ARE
CONTINUING CONCERNS AND WE WOULD
NOT ARE NOT GOING TO SATISFY
ULTIMATELY EVERYONE, THE
GOVERNOR'S EXECUTIVE ORDER
SUPPORTS MY AUTHORITY TO MOVE
FORWARD AS EXPEDITIOUSLY AND
THOUGHTFULLY AS POSSIBLE. AND MY
DEPARTMENT, ESPECIALLY MY RATE
REGULATION BRANCH, NEEDS TO BE
SUPPORTED AND STAFFED AS UMA
MENTIONED, WE MADE SIGNIFICANT
STRIDES IN THAT IN ADDITION,
WITH ENTIRELY NEW PROCEDURES
BEING DEVELOPED FROM THE GROUND
UP, INSURANCE COMPANIES WILL
NEED TO KNOW WHAT TO FILE, HOW
TO FILE IT, WHEN TO FILE IT, AND
WHEN THE WORK IS COMPLETE IN
DECEMBER. SO WE WANT TO MAKE
SURE WE'RE ALL READY JANUARY
ONE. THIS IS WHY WE NEED TO BE
FULLY STAFFED. WE NEED THOSE
INTERNAL PROCESSES FINALIZED BY
JANUARY SO THAT WE'RE READY TO
START ACCEPTING THE NEW RATE
FILES UNDER THE NEW RULES. SO I
CANNOT EMPHASIZE ENOUGH HOW
IMPORTANT THAT IS. AND AS A
LARGE REGULATORY DEPARTMENT,
THINK ABOUT, EFFECTIVE
IMPLEMENTATION SO THAT WE CAN WE
ALL SUCCEED IS CRITICAL. AND SO
AGAIN, I WANT TO THANK YOU FOR
YOUR TIME AND UNDERSTAND THAT WE
ARE RIGHT ON SCHEDULE TO MEET
OUR DEADLINE, THAT WE COMMITTED
TO YOU. THE GOVERNOR, AND THE
PUBLIC TO GETTING ALL THESE
REFORMS DONE BY DECEMBER,
DECEMBER OF THIS YEAR AND ALSO
SIMULTANEOUSLY BE READY TO
ACCEPT AND HAVE THE PROCESSES
INTERNALLY IN PLACE TO START
ACCEPTING THE NEW RATE FILES BY
JANUARY 1ST. SO THAT WE CAN
START SEEING, HOPEFULLY, SOME
REPRIEVE. BY MID 2025, IN, IN
CALIFORNIA, WHERE WE HAVE
INSURANCE COMPANIES WRITING BACK
IN EVERY CORNER OF THE STATE,
WE'LL HAVE THE DATA TO BE ABLE
TO MONITOR THAT OF WHERE
INSURANCE COMPANIES ARE GOING IN
AND ALSO SIMULTANEOUSLY, WHAT
PROPERTIES ARE TAKING OUT OF THE
FAIR PLAN SO THAT WE GET TO OUR
ACHIEVE GOAL OF GETTING US TO
MORE COMPETITION, MORE
AVAILABILITY, SO WE CAN
EVENTUALLY DRAW DOWN THE COST TO
CONSUMERS. THANK YOU. THANK YOU,
COMMISSIONER LARA. AND THERE'S
WATER AT THE END OF THE TABLE.
THAT WAS THAT WAS, A LONG THANK
YOU, PRESENTATION, SO RIGHT NOW
I'M GOING TO BRING IT BACK TO
QUESTIONS FROM THE COMMITTEE
MEMBERS, ASSEMBLY MEMBER RUBIO,
THANK YOU, THANK YOU FOR ALL OF
THAT INFORMATION. BACK TOGETHER
INSURANCE FOR THIS, THANK YOU
FOR PUTTING THIS TOGETHER IN LA.
IT ONLY TOOK ME 18 MINUTES TO
GET HERE, WHICH WAS INCREDIBLE.
BUT REALLY APPRECIATE THE
PRESENTATION AND APPRECIATE THE
OPPORTUNITY TO, TO BE ABLE TO BE
PART OF, HOPEFULLY A HISTORIC,
PROCESS. I DO HAVE A COUPLE
QUESTIONS. I'VE HEARD THIS IS MY
FIRST YEAR ON THE INSURANCE
COMMITTEE. SO, YOU KNOW, I'M
TRYING TO CATCH UP TO
EVERYTHING, YOU KNOW, I'VE
SPOKEN TO THE CONSUMER, WATCH
GROUP AS WELL, BUT I HAVE
QUESTIONS ABOUT THE INTERVENER
PROCESS, BECAUSE YOU TALKED
ABOUT OPENING IT TO THE PUBLIC.
I WAS UNDER THE IMPRESSION THAT
IT WAS ALREADY OPEN TO THE
PUBLIC. SO, HOW MANY INTERVENORS
DO YOU CURRENTLY OR ARE
CURRENTLY REGISTERED, IF THAT'S
THE CORRECT TERM, I, I DON'T
KNOW HOW MANY ARE ACTUALLY
REGISTERED, BUT WE CAN TELL YOU
THERE'S ROUGHLY 2 OR 3, BUT I
WOULD SAY 80% OF THE 2 OR 3.
YEAH. THAT LIKE TWO PEOPLE OR
THREE PEOPLE. YEAH. RIGHT.
THERE'S LIKE 2 OR 3. OH, WOW.
AND THE MAJORITY OF THE
INTERVENTIONS ARE BY ONE, ONE
ENTITY. RIGHT. WELL THEN THEN SO
THEN THAT LEADS ME TO THE NEXT
QUESTION. IS THAT PART OF THE
REASON WHY A LOT OF THESE RATE
FILINGS ARE DELAYED? BECAUSE
THERE'S ONLY A HANDFUL OF. SO
THE INTERVENER PROCESS,
ASSEMBLYWOMAN, IS VERY UNIQUE TO
CALIFORNIA. NO OTHER STATE HAS
THIS PROCESS. AND UNDER OUR WHEN
WE WERE LOOKING AT EVERYTHING
LITERALLY LIFTING THE HOOD AND
BEING, WHY IS IT SO DIFFICULT
FOR THESE RATE FILINGS TO GET
APPROVED ON TIME, WHAT IS
HAPPENING? SO WE, YOU KNOW, WE
HAD TO LOOK AT THE INTERVENER
PROCESS ITSELF, WHICH IS ALLOWED
BY PROP 103. BUT PROP 103 ALSO
SAYS THAT WHEN AN INTERVENER IS
READY TO INTERVENE, THEY'RE
READY TO INTERVENE DAY ONE, NOT
WHENEVER THEY FEEL THAT THEY
CAN. YOU KNOW, THEY THEY WANT TO
BRING A CLAIM FORWARD OR
INTERVENE. AND THEN WE WOULD
HAVE TO WAIT FOR WHENEVER THEY
WERE READY TO ACTUALLY COME IN
AND HAVE A CONVERSATION. AND SO
WHAT WE STARTED LOOKING AT IS
ONE, IS THERE ANY REPETITIVENESS
WITHIN THESE CERTAIN FILES AND
SOME OF THE GRIEVANCES THAT WERE
BROUGHT? WERE SOME OF THE SAME
GRIEVANCES THAT WE WERE BEING,
THAT WE WERE BRINGING WITHIN THE
DEPARTMENT? RIGHT. AND SO WE'RE
LIKE, WELL, YOU CAN'T TAKE
CREDIT FOR THE WORK THAT WE'VE
BEEN DOING. SO WE THEN EMBARKED
IN ONE. HOW DO WE CUT DOWN THE
AMOUNT OF TIME THAT INTERVENORS,
YOU KNOW, AS IT SAYS PER PROP
103, ALSO, YOU CANNOT REPLICATE
THE WORK THAT WE'VE THAT MY TEAM
HAS BEEN DOING BECAUSE THAT
JUST, AGAIN, ELONGATES THE
PROCESS AND YOU HAVE TO BE READY
TO INTERVENE. DAY ONE, MEANING
THAT WE'RE READY TO HAVE A
MEETING SO THAT WE CAN GET TO
SOME RESOLUTION WHICH IS ALREADY
PRESCRIBED WITHIN PROP 103. THE
OTHER THING THAT WE WERE LOOKING
AT IS, THE OTHER ISSUE WITHIN
THE RATE PROCESS IS THAT WE WERE
OPERATING UNDER DIFFERENT DATA.
DATA SETS. RIGHT? SO WE NEEDED
TO REALLY WORK ON A DATA
RECONSOLIDATION. RECONSOLIDATION
RECONCILIATION TOOL SO THAT
WE'RE OPERATING UNDER THE SAME
DATA SO THAT WHEN INSURANCE
COMPANY SEND US SOME DATA, WE'RE
NOT YOU KNOW, WE'RE SPEAKING THE
SAME LANGUAGE. SO WE REALIZE WE
NEED TO GET SOME MONEY FOR THAT,
AND WE GOT SOME MONEY FROM THE
LEGISLATURE TO HELP US GET THAT
DONE SO THAT WE'RE LOOKING AT
ALL THE ASPECTS AGAIN. ALSO, ON
OUR SIDE, WE WERE LOOKING AT THE
FACT THAT WE NEED TO HIRE MORE
PEOPLE AFTER THE PANDEMIC. WE'VE
LOST SO MANY FOLKS, SO WE NEEDED
TO, YOU KNOW, GET TO HIRING
FOLKS. AND SO WE'RE LOOKING AT
EVERY PROCESS. AND THIS IS WHY
THE BULLETIN THAT WE PUT OUT IS
CRITICAL, BECAUSE NOW WE WANT TO
GO BACK TO THE 60 DAYS AT WHICH
WERE INTENDED UNDER PROP 103.
ALSO, IF THERE'S STILL SOME
ISSUES THAT WE CAN'T RESOLVE,
YOU GET AN EXTRA 30 DAYS THAT
JUST IN HEARING THAT WE ARE
SENDING THE RIGHT MARKET SIGNALS
TO THE INDUSTRY, RIGHT. TOTAL 90
DAYS IF WE HAVE TO. RIGHT. BUT
JUST EVEN SENDING THAT MARKET
SIGNAL THAT WE'RE NOT GOING TO
WAIT A YEAR, A YEAR AND A HALF
OR MONTHS TO APPROVE THESE RATES
BY THE TIME THE DEPARTMENT WOULD
APPROVE A RATE, IT WOULD TO FOR
A CERTAIN RISK, THE RISK WAS
ALREADY OUT PRICED. AND WE
CONTINUE TO GROW THIS PROTECTION
GAP. SO WE'RE NEVER GOING TO
CATCH UP TO CLOSING IT, AND SO
THAT IS ALSO ANOTHER REASON WHY
SOME OF THE INSURANCE COMPANIES
WERE RETRACTING, BECAUSE THEY'RE
SAYING, WELL, WE DON'T KNOW WHEN
IT'S WHEN WE'RE GOING TO GET
APPROVAL. SO WE ARE NOW
COMMITTING OURSELVES. EVERYBODY
INSURANCE COMPANIES, THE
DEPARTMENT INTERNALLY AND THE
INTERVENORS WE'RE FORCING THEM
TO MAKE SURE THAT WE'RE
OPERATING UNDER THESE RULES THAT
WERE WRITTEN 30 YEARS AGO. SO
NOW WE'RE HOLDING EVERYBODY'S
FEET TO THE FIRE. WELL, AND THAT
WAS MY I WROTE SOME QUESTIONS ON
THE NEXT ONE WAS DOES THE
INTERVENER PROCESS HAVE SPECIFIC
INSTRUCTIONS AND DO THE
INSURANCE COMPANIES HAVE THE
SAME? I THINK YOU JUST ANSWERED.
THAT'S EXACTLY WHAT THAT'S
EXACTLY WHAT WE DID TO CLARIFY
UNDER THIS BULLETIN THAT WE ARE
WE ARE COMMITTING OURSELVES. I
IMAGINE IT HASN'T BEEN AN EASY
PROCESS FOR EITHER SIDE. YOU CAN
IMAGINE THESE ARE THESE ARE
REALLY ENTRENCHED INTERESTS ON
EITHER SIDE THAT HAVE BENEFITED
FINANCIALLY FROM OUR CURRENT
PROCESS. AND SO WHEN YOU'RE
TALKING ABOUT AN ENTITY THAT'S
MADE CLOSE TO $10 MILLION, I
MEAN, THAT MONEY HAS TO COME
FROM SOMEWHERE. SO WHAT WE NEED
TO DO AS THE DEPARTMENT IS MAKE
SURE ONE THAT THEY'RE ACTUALLY
BEING THOUGHTFUL WHEN THEY'RE
INTERVENING, THAT THEY'RE READY
TO INTERVENE BECAUSE WE WANT
INTERVENERS. WE ALSO WANT MORE
DIVERSE INTERVENERS DIVINERS
THAT INTERVENERS THAT COME FROM
OUR COMMUNITIES, THAT ACTUALLY
GO OUT AND TALK TO THE PUBLIC,
THAT HAVE MEMBERS THAT ACTUALLY
GO OUT AND HAVE TOWN HALLS THAT
ARE ACTUALLY PARTICIPATING. AND
WHAT WE'VE BEEN DOING IN TERMS
OF TALKING TO CONSUMERS BECAUSE
AS YOU KNOW, AND AS EVERYBODY
KNOWS, CONSUMERS, CONSUMERS
NEEDS AND, YOU KNOW, THE WOODS
DISTRICT AND IN YOUR DISTRICT
ARE VERY DIFFERENT. AND SO WE
NEED CONSUMERS THAT ARE ACTUALLY
PROACTIVELY OUT IN THE PUBLIC
ACTUALLY DOING THE WORK AND NOT
JUST INTERVENING, COMING TO A
HEARING AND THEN BILLING 100,000
FOR COMING TO LIKE, SPEAK ON,
YOU KNOW, OF WHAT THE PUBLIC
ALREADY HAS THE RIGHT TO DO. AND
SO THIS IS ALL THINGS THAT WE'RE
LOOKING AT NOW. AND YEAH, WE'RE
GETTING SOME HEAT OVER IT. BUT
MY, MY OBLIGATION IS TO THE
CONSUMERS OF CALIFORNIA AND
GETTING INSURERS WRITING BACK
INTO OUR COMMUNITIES. AND THAT
MEANS WE'RE HOLDING EVERYBODY.
AS I SAID, WE'RE HOLDING
OURSELVES ACCOUNTABLE IN THE
DEPARTMENT TO MEET THESE THESE
TIMELINES AND MAKING SURE THAT
THE INSURANCE COMPANIES WHO HAVE
WHO HAVE NOW, YOU KNOW, UNDER
THIS AGREEMENT, HAVE COMMITTED
TO COMING BACK TO THESE
COMMUNITIES. WE HAVE ALL THE
AUTHORITY WE NEED TO HOLD THEM
TO ACCOUNT FOR THAT. AND SO THIS
IS REALLY A HISTORIC TIME FOR US
AS WE'RE TRYING TO, YOU KNOW,
UNDERTAKE THIS MASSIVE INSURANCE
CRISIS THAT, AGAIN, IS HAPPENING
GLOBALLY. IT'S HAPPENING IN
EVERY SINGLE STATE IN
CALIFORNIA. BUT WE'RE FEELING IT
MORE ACUTE BECAUSE WE ARE THE
LARGEST MARKET IN THE COUNTRY,
FOURTH IN THE WORLD. AND SO WE
NEED TO TAKE BOLD DECISIONS NOW.
AND WE'RE DOING IT ALL WITHIN
ONE YEAR. OKAY. JUST ONE MORE
QUESTION, I PROMISE, SO, SO JUST
SO THAT I UNDERSTAND, HOW MANY
RATE FILINGS VERSUS HOW MANY, IN
INTERVENORS DO YOU HAVE? SO IS
THAT ALSO PART OF THE ISSUE? YOU
HAVE TOO MANY AND NOT ENOUGH
INTERVENORS OR VICE VERSA. WELL,
WHAT I FOUND OUT IS WHEN, WHEN I
FIRST CAME INTO THIS POSITION
BECAUSE AS WE WERE APPROVING
THESE RATE FILINGS, I'M LIKE,
WELL, HOW MANY DO WE HAVE LEFT?
I MEAN, WE'VE APPROVED. SO
INSURANCE COMPANIES, BECAUSE
THEY WERE THEY DIDN'T KNOW HOW
LONG IT WAS GOING TO TAKE. THEY
WOULD IMMEDIATELY SUBMIT ANOTHER
ONE. AND SO WE WERE IN THIS
CONSTANT LOOP. AND SO THE, YOU
KNOW, THE INTERVENER PROCESS,
THEN THEY THEY CONTINUE TO
INTERVENE, THEY CONTINUE TO MAKE
MONEY. I MEAN, YOU KNOW, WE
SHOULD ASK THEM HOW MUCH THEY'RE
GOING TO MAKE OFF THE STATE FARM
SETTLEMENT. RIGHT? SO THIS IS
ALL DONE UNDER CURRENT LAW, AND
IT'S ALL LEGAL, AND SO AGAIN,
THIS IS WHY IT'S IMPORTANT FOR
US. AND FOR ONE, INSURANCE
COMPANIES, TO BE HONEST ABOUT
HOW MUCH RATE THEY NEED TO BE
ABLE TO COVER THAT RISK. AND
THEY WE ALSO, AS A DEPARTMENT,
HAVE TO MAKE SURE THAT WE'RE
WE'RE DOING IT WITHIN THE
TIMELINE THAT IS PRESCRIBED
UNDER PROP 30. AND THAT
INTERVENORS ARE BEING HONEST AND
READY TO INTERVENE DAY ONE AND
NOT HOLDING THESE RATES HOSTAGE
UNTIL THEY DECIDE THAT THEY WANT
TO INTERVENE AND NOBODY'S
QUESTIONED THEM BEFORE. AND
YEAH, WE'RE RUFFLING FEATHERS,
BUT WE HAVE TO MAKE SURE
EVERYBODY IS ADHERING TO THESE
RULES THAT WERE WRITTEN 30 YEARS
AGO. RIGHT. AND SO THIS IS WHAT
WE'RE DOING. WE'RE AND AS YOU
SAID, YOU KNOW, AS I SAID,
THERE'S ENTRENCHED INTEREST. AND
PEOPLE HAVE BEEN MAKING MONEY
OFF THIS BROKEN SYSTEM FOR
YEARS. AND SO WE'RE NOW HOLDING
EVERYBODY TO ACCOUNT. THANK YOU.
ASSEMBLY MEMBER GIBSON, DO YOU
HAVE A QUESTION? I DO, THANK YOU
VERY MUCH, TO OUR CHAIR, AS WELL
AS TO THE COMMISSIONER. THANK
YOU VERY MUCH FOR COMING. I
APPRECIATE YOUR ARTICULATION OF
YOUR PLAN. RIGHT, AND SO
CERTAINLY, WE ALL HAVE A DESIRE
TO MAKE SURE THAT WE DO THE
BEST, FOR CALIFORNIA'S
RATEPAYERS AND MAKING SURE THAT
ONE, WE BRING IN THOSE COMPANIES
WHO LEFT THE STATE OF CALIFORNIA
AND BRING THEM BACK IN, ENSURING
PEOPLE YOU MADE A STATEMENT AND
I WANT US TO ELABORATE ON IT.
AND THAT IS THE FAIR PLAN SHOULD
NOT BE THE BE COMPETING AGAINST
WITH THE OTHER INSURANCE
COMPANIES, WHICH I AGREE WITH
THAT STATEMENT, IT'S A IT'S A
IT'S A CATCH ALL KINDS OF
PROGRAM. BUT IT SHOULD NOT BE
THAT. RIGHT. AND I'M VERY
CONCERNED WITH THAT AND WANT TO
MAKE SURE THAT WE DO EVERYTHING
WE CAN, TO ADDRESS THAT
INEQUITY, BECAUSE PEOPLE ARE
HURTING. AND I DON'T NEED TO
UNDERSCORE THAT WITH YOU. I
THINK THAT THIS BODY, THIS,
COMMITTEE UNDERSTANDS THAT, IN A
VERY PERSONAL WAY, I THINK ABOUT
DOCTOR WOOD, WHO SITS TO MY
RIGHT, AND HOW HIS COMMUNITY
HAVE SUFFERED GREATLY, AND NOT
TO MENTION THE PEOPLE WHO HAVE
LOST THEIR LIVES AS A RESULT OF
IT. SO WE HAVE TO TAKE THIS IN A
VERY COMPREHENSIVE APPROACH, A
VERY SERIOUS APPROACH. AND I
APPRECIATE YOU PUTTING A PLAN
TOGETHER, BECAUSE WITHOUT A
PLAN, THE PEOPLE PERISH, RIGHT?
RIGHT AND THE VISION THAT GOES
ALONG WITH THAT PARTICULAR PLAN.
AND SO IS THERE ANY, THOUGHTS
ABOUT, RESTRUCTURING OR LOOKING
AT TACKLING, PROP 103 ONE, AND
THEN IS THERE, REGARDING THE,
THE, THE NOT ONLY THE FAIR PLAN,
BUT I'M ASSUMING THAT THE
CONVERSATIONS YOU HAVE HAD,
YOU'VE ALSO BROUGHT THOSE
STAKEHOLDERS TO THE TABLE,
INCLUDING THE INSURANCE
COMPANIES, CAN YOU ELABORATE ON
THAT A LITTLE BIT? AND THEN I
HAVE A FOLLOW UP QUESTION FOR
YOU. ABSOLUTELY. AS WE'VE HAD
CONVERSATIONS ONGOING WITH THE
FAIR PLAN SINCE 2019, WHEN WE
FIRST STARTED LOOKING AT THE
INADEQUACY OF THE OF THEIR THEIR
COVERAGE LIMITS, WHICH HADN'T
BEEN UPDATED SINCE THE 70S. AND
SO WE REALIZED WE NEED ONE. WE
NEEDED TO UP THESE COVERAGE
LIMITS TO MEET THE NEEDS OF
CALIFORNIANS NOW AND THEN
THROUGH THE CONVERSATIONS WITH
OUR HOA'S, WITH BUILDERS, WITH
WHO ARE, BY THE WAY, ALSO
INSURANCE CONSUMERS. RIGHT?
THESE ARE ALL PEOPLE THAT
CONSUME INSURANCE. IF YOU IF A
AFFORDABLE HOUSING ORGANIZATION
NONPROFIT CANNOT GET INSURANCE,
THEIR PROJECT'S NOT GOING TO GET
BUILT, WHICH IS WHAT WE WERE
SEEING. RIGHT. AND SO AGAIN,
WHEN WE TALK ABOUT INSURANCE
CONSUMERS, FARMERS WHO ARE
LOSING THEIR COVERAGE, WINE
GROWERS WHO CAN'T STORE, THEIR,
THEIR WINE IN CERTAIN IN CERTAIN
AREAS, THEY'RE ALL LOSING THEIR
INSURANCE COVERAGE. THEY'RE ALSO
INSURANCE CONSUMERS. RIGHT? SO
WE WON. WE WENT OUT AND HAD
THESE CONVERSATIONS OF HOW DO WE
JUST AS THE FAIR PLAN WHEN IT
WAS CREATED AFTER THE WATTS
RIOTS TO PROVIDE COVERAGE FOR
SOUTH LA, WHEN INSURERS WEREN'T
WRITING AND NOW HAVE MODERNIZED
TO BECOME THE INSURER OF LAST
RESORT IN A WOODS DISTRICT AND
THROUGHOUT THE SIERRAS AND
EASTERN SAN DIEGO COUNTY, YOU
NAME IT, EASTERN SAN BERNARDINO,
RIVERSIDE, AND IN VENTURA AND
SANTA BARBARA, THEY NEED TO BE
MODERNIZED NOW TO BE ABLE TO
LIKE, FOR EXAMPLE, ACCEPT
MONTHLY PAYMENTS TO HAVE PEOPLE
TO BE ABLE TO CALL YOU BACK
WITHIN A COUPLE OF MINUTES, NOT
HOURS, THAT WE HAVE APPROPRIATE
COVERAGE LIMITS. AND THIS IS WHY
THE AGREEMENT WITH THE FAIR PLAN
IS HISTORIC, BECAUSE WE'RE
LITERALLY MODERNIZING A FAIR
PLAN. YOU KNOW, THERE'S OTHER
THINGS I WANT TO GET DONE. I
THINK THERE NEEDS TO BE A PUBLIC
MEMBER ON THE FAIR PLAN THAT
REPRESENTS THE PUBLIC'S, THE
PUBLIC'S INTEREST, NOT THAT THE
INSURANCE COMPANIES DON'T. BUT I
THINK WE NEED TO HAVE THAT
PERSPECTIVE. THAT'S IMPORTANT.
AND SO THOSE ARE ALL THINGS THAT
WE'RE CONTINUE TO WORK WITH. BUT
THIS AGREEMENT FINALLY PROVIDES
THE APPROPRIATE COVERAGE LIMITS,
THE CONSUMER PROTECTION
STANDARDS THAT WE EXPECT AS, AS
AS A FAIR PLAN. AND NOW WITH
MODERN COVERAGE LIMITS THAT ARE
GOING TO GET US THROUGH THIS
INSURANCE CRISIS AS WE'RE
FOCUSING ON HOMEOWNERS. RIGHT,
THAT THE FAIR PLAN IS RELEASING
THESE THESE PROPERTIES. INSURERS
ARE WRITING NOW IN THESE
COMMUNITIES, AND WE'RE GOING TO
BE ABLE TO MONITOR, MONITOR THAT
UNLIKE WE'VE EVER BEEN BEFORE,
BECAUSE NOW WE'RE GOING TO HAVE
THE DATA TO DO THAT. AND THEN
THIS IS WHY WE PUT A SUNSET
CLAUSE BY, YOU KNOW, THEN WE
WILL BE ABLE TO KNOW, OKAY, THE
FAIR PLAN IS BEING UNLOADED.
INSURANCE COMPANIES ARE NOT
GETTING COVERED. THE HOMEOWNERS
ARE GETTING COVERAGE IN IN THESE
AREAS. AND HOPEFULLY AS THAT
STABILIZES, THERE'LL BE MORE
COVERAGE AVAILABLE FOR ALL THESE
ORGANIZATIONS. RIGHT. EVEN
OUTDOOR YOUTH CAMPS WHO COULDN'T
GET IN COULDN'T GET INSURANCE.
RIGHT. AND SO IT'S AFFECTING
EVERY ASPECT OF OUR ECONOMY. AND
SO THEY NEED THEY NEED SOME
REPRIEVE AND A MODERN FAIR PLAN
THAT WE JUST ANNOUNCED WILL BE
ABLE TO COVER THAT FOR THEM AS
WE GET OUT OF THIS CRISIS.
CORRECT, ONE OTHER FOLLOW UP
QUESTION, ARE THERE ANY
PREDICTIONS IN TERMS OF OUTCOMES
FOR THE MOST VULNERABLE
COMMUNITIES AFFECTED BY THE
DESTABILIZATION OF THE INSURANCE
MARKET? SHOULD WE BE EXPECTING
THROUGH THIS PLAN, THE RESULTS
THAT YOUR PLAN IS ENVISIONING?
ABSOLUTELY. AND THE OTHER BEAUTY
ABOUT OUR REPORTING REQUIREMENTS
NOW, THAT IS THAT YOU ARE ALL
GOING TO GET REPORTS AS WELL ON
ON THE FAIR PLAN, DEPOPULATION
INSURANCE COMPANIES GOING INTO
THESE COMMUNITIES. SO THE
GOVERNOR YOU ALL I WILL NOW HAVE
DATA TO BE ABLE TO SEE HOW WE'RE
TRACKING IT BECAUSE WHAT I DON'T
WANT IS ANOTHER 30 YEARS TO GO
BY AND WE'RE STUCK WITH OUTDATED
REGULATIONS. WE WANT TO BE ABLE
TO MOVE AS NEW PERILS. YOU KNOW,
WE HAVE NO IDEA. YOU KNOW WHAT 5
TO 10 YEARS IS GOING TO LOOK
LIKE IN CALIFORNIA NOW WITH THE
EXTREME HEAT. RIGHT? AND HOW
IT'S CONNECTED TO, HEALTH AND
LIFE INSURANCE POLICIES OR HOW
IT'S IMPACTING WILDFIRES. I
DON'T WANT TO GET STUCK AGAIN OR
HAVE AN INSURANCE COMMISSIONER
NOW STUCK WITH ANOTHER
REGULATIONS THAT MAYBE THESE ARE
GOING TO BE OUTDATED BY THE TIME
YOU KNOW, WE'RE ALL DONE WITH
OUR SERVICE. SO ONE, WE'RE GOING
TO BE ABLE TO HAVE DATA WHICH IS
CRITICAL THAT WE DON'T HAVE
ACCESS NOW, WHICH IS ANOTHER BIG
COMPONENT TO THESE FAIR PLAN
REFORMS. RIGHT. SO WHEN YOU KNOW
A MEMBER WOULD ESTÁN ALVAREZ
TELLS ME, LIKE, WELL, WHAT ARE
THE NUMBER OF POLICIES I'LL BE
ABLE TO ACTUALLY SHOW YOU WITH
REAL TIME NUMBERS, SO THAT'S
CRITICAL, THE COMPONENT AROUND
THE WILDFIRE PRIORITY AREAS, WE
DID INCORPORATE, AN INCOME CHECK
IN THERE IN TERMS OF MAKING SURE
THAT WE DON'T LOSE OUR LOW
INCOME COMMUNITIES WHO ARE AS
WHO ARE YOU KNOW, SCATTERED
AROUND THE SIERRAS. THE REALITY
IS THAT OUR MANY OF THESE
HOMEOWNERS HAVE BEEN PUSHED OUT
OF THE URBAN CORE AND ARE NOW
LIVING IN THESE COMMUNITIES. AND
OR WE'RE ALSO LIVING UNDER THIS
FALLACY THAT SOMEHOW WE'RE JUST
TALKING ABOUT, YOU KNOW, SKI
CHALETS AND LAKE TAHOE. IT IS IT
IS ECONOMICALLY DIVERSE. IT IS,
A LOT OF FOLKS WHO HAVE, HAVE,
HAVE BEEN RETIRING WHO HAVE BEEN
WANTING TO MOVE THESE AREAS, BUT
ALSO HAVE BEEN PUSHED OUT. AND
SO THEY ALSO NEED COVERAGE,
RIGHT, FOR THEIR FOR THEIR HOMES
AND FOR THEIR PROPERTIES. AND SO
THIS IS WHY THE CRITICAL
COMPONENT OF OUR FORMULA OF HOW
WE IDENTIFIED WILDFIRE
DISTRESSED AREAS OR WILDFIRE
PRIORITY AREAS ALSO HAS AN
INCOME COMPONENT, BECAUSE I WANT
TO MAKE SURE NOBODY GETS LEFT
BEHIND AND THAT THOSE HOMES,
THAT INSURER INSURERS ARE
ACTUALLY ALSO ON THE HOOK TO
PROVIDE COVERAGE FOR THOSE HOMES
AS WELL. AND I WANT TO SAY THANK
YOU VERY MUCH FOR THAT, BECAUSE
I'M JUST THINKING ABOUT MISS
JOHNSON, WHO LIVES IN MY
DISTRICT, ABOUT A YEAR AND A
HALF AGO. AT A TOWN HALL THAT I
HAD, IT WASN'T RELATED, BUT SHE
WAS WATCHING ON TELEVISION ABOUT
THE WILDFIRES, AND SHE JUST
SAID, BABY, BECAUSE, YOU KNOW,
ALL BLACK MOTHERS SAY BABY. SHE
SAID, BABY, PLEASE DON'T GO UP
ON MY INSURANCE. I'M BARELY
MAKING IT RIGHT. AND WE CAN'T
PUT THAT THOSE VULNERABLE
COMMUNITIES IN THAT, IN THAT
POSITION. RIGHT. PEOPLE CHOOSE
TO LIVE WHERE THEY, WHERE THEY
CHOOSE TO LIVE. AND WE GET THAT,
BUT WE HAVE TO DO IT IN A VERY
BALANCED APPROACH, EVEN WHEN IT
COMES DOWN TO INSURANCE
COMPANIES, A BALANCED APPROACH,
WE DON'T WANT TO DRIVE PEOPLE IN
TERMS OF LOSING OR HAVING TO
MAKE A DECISION TO BUY DRUGS OR
PAY THEIR INSURANCE BILL, RIGHT,
BECAUSE IT'S INCREASED. AND SO
WE HAVE TO DO IT IN A VERY
BALANCED APPROACH. AND I LOOK
FORWARD TO SEEING, A VERY
COMPREHENSIVE PLAN THAT YOU,
THAT YOU'VE ARTICULATED HERE
TODAY, I ALSO WANT TO, ONE FINAL
QUESTION IS HOW DO YOU PLAN TO
INFORM THE COMMUNITY,
CALIFORNIANS OF THIS PLAN,
EVERYBODY MAY NOT SEE IT ON TV
TONIGHT, BUT WE NEED TO MAKE
SURE THAT THERE IS A COMFORT
LEVEL THAT PEOPLE ARE FEELING
THAT THEIR GOVERNMENT INSURANCE
COMMISSIONER, THE LEGISLATURE,
ARE HEARING THEIR VOICES. WE
HEAR THEM. WE SEE YOU AND WE
SUPPORT YOU. HOW IS THAT? IF YOU
CAN ARTICULATE THAT FOR ME, LET
ME LET ME JUST FURTHER,
HIGHLIGHT ONE OF THE POINTS
YOU'RE MAKING IN YOUR PREVIOUS
COMMENT, WHICH IS THE GOAL FOR
US AND FOR ME PERSONALLY IS FOR
PEOPLE TO PAY FOR THE AMOUNT OF
RISK OF WHERE THEY LIVE. AND
THAT, I THINK IS WOULD BE THE
MOST FAIR AND ACCURATE FOR
EVERYBODY. RIGHT. DEPENDING ON
WHERE YOU LIVE, YOU TAKE ON A
CERTAIN AMOUNT OF RISK. YOU
SHOULD BE PAYING FOR THAT RISK,
THE SECOND COMPONENT IS A
SURNAME. GIBSON NO OTHER
DEPARTMENT AND NO OTHER
INSURANCE COMMISSIONER HAS GONE
OUT TO EVERY 58 COUNTIES, HAVE
HAD MULTIPLE TOWN HALLS IN EVERY
CORNER OF THIS STATE. AND WE
CONTINUE TO HAVE THOSE WE'RE
MEETING AGAIN WITH. WE'LL MEET
WITH ORGANIZATIONS, NONPROFITS,
CONSUMER GROUPS. WE PARTNER WITH
UNITED POLICYHOLDERS, WHICH IS
AN AMAZING NONPROFIT WHO
ACTUALLY IS MADE UP OF FOLKS
THAT HAVE LOST THEIR HOMES AND
GO OUT THERE AND TALK TO
COMMUNITIES AND HELP THEM
REBUILD. THIS IS WHY WHEN WE
TALK ABOUT INTERVENORS, WE NEED
TO A DIVERSIFY THE TYPE OF
INTERVENORS AND THEN PROVIDE
SOME REQUIREMENTS THAT THEY
ACTUALLY GO OUT AND DO THE WORK
BEFORE YOU'RE GOING TO BUILD THE
PEOPLE OF CALIFORNIA AND HAVE
THESE CONVERSATIONS. ONE
DEPARTMENT CAN'T DO IT ALONE.
WE'VE DONE SEVERAL TOWN HALLS
WITH, MOSTLY EVERY MEMBER OF THE
LEGISLATURE, AND SO WE CONTINUE
TO DO THAT WORK. I'VE TRIPLED
THE SIZE OF OUR OUTREACH TEAM.
THERE ARE NOW DEPARTMENT STAFF
THAT ARE ASSIGNED TO MEMBERS TO
DISTRICTS, SO THAT WE'RE
ACTUALLY OUT THERE GOING TO THE
TOWN HALLS, BECAUSE YOU'RE
ABSOLUTELY RIGHT. WE CAN NEVER
DO ENOUGH OUTREACH. BUT THE
TIMES THAT WE'VE MET WITH FOLKS,
WHETHER WE'RE MEETING WITH
PEOPLE IN MARIPOSA COUNTY TO
PEOPLE IN LAGUNA NIGUEL WHO HAVE
THE SAME ISSUES AND ARE SCARED
ABOUT WHAT'S HAPPENING WITH
INSURANCE, AT THE END OF THE
DAY, WHEN THEY HEAR ABOUT OUR
WORK AND WHAT WE'RE DOING,
PEOPLE TURN ON THE TV AND SEE
THE FIRES. THEY SEE THE FLOODS,
THEY KNOW THAT IT'S RISKY RIGHT
NOW AND THAT CLIMATE CHANGE IS
HAPPENING, BUT THEY JUST WANT
SOME CERTAINTY THAT THEY'RE NOT
GOING TO LOSE THEIR COVERAGE
EVERY YEAR, THAT THEY GET
RENEWED SO THAT THEY CAN THEY
WANT TO BE ABLE TO PLAN FOR THE
FUTURE. AND THIS IS THE GREATEST
INVESTMENT. RIGHT. SO I HEAR
THOSE STORIES AS WELL. SO WE'RE
GOING TO CONTINUE TO DO THAT
OUTREACH AND CONTINUE TO GET OUT
THERE REGARDLESS OF, YOU KNOW,
WHERE WE ARE IN CALIFORNIA.
WE'VE REALLY BEEN EVERYWHERE.
AND WE'RE GOING TO CONTINUE TO
DO SO BECAUSE, AGAIN, IF PEOPLE
DON'T KNOW WHAT THEIR RIGHTS
ARE, IF PEOPLE DON'T KNOW THAT
THROUGH THE SAFER FROM
WILDFIRES, REGULATION THAT WE
DID TWO YEARS AGO THAT INSURANCE
COMPANIES CAN ACTUALLY GIVE YOU
A DISCOUNT FOR HARDENING YOUR
HOME, THAT IS CRITICAL, RIGHT?
THAT'S THE FIRST IN THE NATION
REGULATION THAT WE DID. SO NOW
WE'RE INCENTIVIZING PEOPLE TO DO
THE RIGHT THING, WHICH IS INVEST
MONEY INTO HARDENING THEIR
HOMES. NOW WE KNOW THAT THERE
ARE PEOPLE THAT ARE STILL NOT
GOING TO BE ABLE TO AFFORD THAT.
HENCE WHY WE'RE GOING TO COME TO
YOU, HOPEFULLY WITH A PROPOSAL
NEXT YEAR TO ACTUALLY PROVIDE A
ROOF HARDENING FOR WILDFIRE
PROGRAM. SIMILAR TO WHAT
ALABAMA, SOUTH CAROLINA,
OKLAHOMA, SOUTH CAROLINA,
OKLAHOMA JUST DID THEIRS. I
MEAN, LOUISIANA HAVE DONE AROUND
FLOODING AND HURRICANES. AND
THOSE ARE LEGITIMATE PROGRAMS
THAT ARE REALLY TRANSFORMING AND
MAKING COMMUNITIES SAFER. SO
WE'RE GOING TO BE COMING TO YOU
WITH HOPEFULLY A PROPOSAL TO GET
THAT DONE, BECAUSE NO MATTER
WHAT WE DO, IF PEOPLE CANNOT
AFFORD TO DO SOME OF THE MOST
CRITICAL THINGS THAT THEY NEED
TO DO, WE'RE NEVER GOING TO GET
TO LOWERING THE RISK AND GETTING
INSURERS WRITING BACK IN THE
COMMUNITY, BRINGING DOWN THE
COST FOR EVERYBODY.
ASSEMBLYMEMBERS WOULD GREAT.
THANK YOU. THANK YOU. AND, MR.
COMMISSIONER, YOU, I WANT TO
JUST COMPLIMENT YOU WHERE WE
WERE A YEAR AGO AND WHERE WE ARE
NOW. WE MIGHT AS WELL BE IN AN
IN ANOTHER GALAXY QUITE FRANKLY,
AND I WANT TO THANK YOU FOR
THAT. YOU'VE BEEN WORKING ON A
VARIETY OF FRONTS, AND OBVIOUSLY
THE INTERACTIONS YOU'VE HAD WITH
THE PUBLIC AND, AND THROUGHOUT
THE PROCESS HAS IS ADMIRABLE.
AND I WANT TO THANK YOU. THANK
YOU AND RECOGNIZE YOU FOR THAT.
I GOT NOTES ALL OVER THE PLACE
HERE, SO I'LL TRY TO I'LL TRY TO
BE BRIEF AND TRY TO ORGANIZE
THIS IN SOME WAY. I WANT TO YOU
TO, ONE OF THE THINGS THAT, IN
THE LAST YEAR THAT BECAME MORE
APPARENT FROM OUTREACH FROM
PEOPLE IN OUR COMMUNITY, WHICH
WHICH WHICH THESE REGULATIONS,
YOU'RE DOING NOW WILL HELP WITH
THE FAIR PLAN, WAS THE CHALLENGE
AROUND AFFORDABLE HOUSING? SO WE
HAVE, PEOPLE THAT ARE BUILDING
LOW, LOW INCOME HOUSING PROJECTS
AND OR ACTUALLY OWN LOW INCOME
HOUSING PROJECTS. AND WE'RE
HAVING THOSE POLICIES CANCELED.
SO WHICH PUTS THOSE COMPANIES,
THE COMPANIES THAT MANAGE THEM.
AND THESE ARE NON-PROFITS THAT
HAVE BEEN AROUND FOR YEARS AT
RISK OF BANKRUPTCY AND FAILURE
BECAUSE OF THEIR INABILITY TO
GET INSURANCE. AND SO, THE
CHANGES IN THE FAIR PLAN, I
THINK, ARE SIGNIFICANT THERE.
BUT EVEN SO, THE RATES CONTINUE
TO BE REALLY, REALLY HIGH. YOU
TALKED ABOUT THE, BEING ABLE TO
MONITOR AND, YOU KNOW, REAL TIME
ESSENTIALLY, AS THE NUMBER OF
PEOPLE COME OFF OF THE FAIR
PLAN. SO DO WE HAVE DATA THAT,
THAT THAT SHOWS WHAT YOU KNOW,
HOW HOW AN INSURANCE COMPANY,
HOW MANY POLICIES THEY HAVE, HOW
MANY THEY DROP? I MEAN, AND IN A
GIVEN YEAR OR IS THAT
PROPRIETARY? SO BECAUSE PEOPLE
IN THE COMMUNITY, IT'S KIND OF
ANECDOTAL SOMETIMES LIKE, OH
YEAH, I LOST MY POLICY WHILE I
DIDN'T. AND SO HOW DO WE KNOW
WHAT'S REALLY GOING ON IN THE
MARKETPLACE, OR IS THAT
PROPRIETARY INFORMATION PERFECT?
I'LL HAVE, ONE OF OUR EXPERTS
ANSWER THAT FOR YOU. THANK YOU
VERY MUCH. YOU KNOW, ON THE
QUESTION OF DATA, THERE'S A
COUPLE OF DIFFERENT SOURCES. I'M
SORRY, MIKE PETERSON, I'M THE
DEPUTY COMMISSIONER ON CLIMATE
AND SUSTAINABILITY FOR THE
CALIFORNIA DEPARTMENT OF
INSURANCE. THANKS FOR THE DATA.
THERE'S A COUPLE OF DIFFERENT
SOURCES THAT COULD BE HELPFUL TO
THAT. YOU KNOW, ONE, NOW THAT
THE FAIR PLAN WILL BE REPORTING
QUARTERLY INFORMATION ON THEIR
BOOK OF BUSINESS, THAT'S GOING
TO PROVIDE A MORE FREQUENT LOOK
PUBLICLY AT WHERE THE FAIR PLAN
STANDS. AND THAT'S GOING TO
DRIVE ONE THING. THE QUESTION
ABOUT PROPRIETARY DATA VERSUS
NOT, WITHIN A RATE FILING THAT
AN INSURANCE COMPANY BRINGS IN
THE INFORMATION IN THAT IS, IS
ACCESSIBLE TO THE PUBLIC FOR
DATA THAT THE DEPARTMENT
COLLECTS FROM ALL COMPANIES.
SOME OF THAT IS PUBLICLY
AVAILABLE. WE POST REPORTS.
OTHER TIMES IT IS PROPRIETARY,
AND WE USE IT FOR OUR INTERNAL
ANALYSIS. AND SO THE DEGREE THAT
WE CAN AGGREGATE AND PROVIDE
INFORMATION TO THE PUBLIC, WE
REALLY HAVE BUILT OUT OUR,
ABILITY TO DO THAT FOR
COMMERCIAL INSURANCE AND FOR
RESIDENTIAL. BUT SOME OF THAT IS
PROPRIETARY, BECAUSE THAT'S THE
WAY THE STATUTES ARE WRITTEN,
AND THAT'S HOW WE GET THE BEST
INFORMATION TO MAKE DECISIONS.
AND THE REASON I BRING THAT UP,
I WORRY THAT, YOU KNOW, SOME
PEOPLE HAVE CAN'T, CAN'T GET A
TRADITIONAL POLICY, THEY GO TO
THE FAIR PLAN AND THEN THEY
CAN'T EVEN AFFORD THE FAIR PLAN.
SO THEY DROP IT AND GO TO
NOTHING. AND SO HOW DO YOU YOU
KNOW, SO YOU HAVING PEOPLE COME
OFF THE FAIR PLAN MAY NOT BE THE
TOTAL PICTURE. THEY MAY NOT BE
ABLE TO AFFORD EVEN THE FAIR
PLAN ANY LONGER. AND SO, HOW WE
GET DATA THAT HELPS. YOU KNOW
WHAT? SORRY TO INTERRUPT YOU,
BECAUSE WE ALSO WANTED TO MAKE
IT CLEAR THAT WE ARE WORKING
CURRENTLY, CURRENTLY ON A
CLEARINGHOUSE OF THESE
PROPERTIES THAT ARE FULLY
MITIGATED, BECAUSE WHAT I DON'T
WANT IS I DON'T WANT THE
INSURANCE COMPANIES TO THEN SAY,
WELL, WE COULDN'T FIND ANY HOMES
THAT ARE MITIGATED IN THE FAIR
PLAN. NO, NO, WE HAVE A LIST OF
THESE PROPERTIES THROUGHOUT THE
STATE. AND WHAT WE TELL
CONSUMERS WHEN WE HAVE THIS
CONVERSATION IS THIS IS WHY IT'S
IMPORTANT FOR YOU TO INVEST IN
MITIGATION. NOW, IF YOU'RE ON
THE FAIR PLAN. SO YOU COULD PUT
YOURSELF ON THAT CLEARINGHOUSE
SO YOU'LL BE ONE OF THE FIRST
HOMES TO GET OFF THE FAIR PLAN
AND BE OFFERED A TRADITIONAL
POLICY. OKAY AND THEN, JUST FROM
A MECHANICS PERSPECTIVE, BECAUSE
YOU TALKED ABOUT YOU TALKED
ABOUT THE LOOP THAT, THAT, THAT
INSURERS GET INTO. THEY THEY MAY
HAVE MULTIPLE RATE FILINGS IN
PROGRESS OUT THERE BECAUSE THE
PROCESS HAS BEEN SO SLOW, SO
LET'S FAST FORWARD TO JANUARY
2025. WE'RE IN. WE HAVE WE HAVE
A WE HAVE A CATASTROPHIC
MODELING PROGRAM IN PLACE. IT'S
NOT THE ONE WE ULTIMATELY HOPE
TO GO TO WITH THE PUBLIC, BUT WE
HAVE SOMETHING IN PLACE. WE'VE
GOT REINSURANCE, WE'VE GOT ALL
THESE OTHER THINGS IN PLACE. SO
WHAT DOES THE INSURER EXPECT?
AND YOU SAID MID 2025. SO
THERE'S A PROCESS PERIOD. BUT
IT'S YOU'VE GOT THE INTERVENER
PROCESS WHICH SHOULD BE 60 DAYS
BUT COULD BE AS MUCH AS 90 DAYS.
SO DOES THAT MID 2025 INCLUDE
ALL OF THAT. AND THEN THE OTHER
PART OF THAT, WHAT IS DAY ONE TO
THE INTERVENER. SO THE I CAN'T
SPEAK FOR HOW THEY DECIDE, BUT
WHAT I CAN TELL YOU SOME TRENDS
THAT THEY TRADITIONALLY WILL
INTERVENE ON THE BIGGEST
COMPANIES. I'M ASSUMING THEY GET
THE MOST MONEY OUT OF THESE
COMPANIES RIGHT, SO NOT EVERY
COMPANY IS GOING TO GET
INTERVENED ON, JANUARY 1ST,
RIGHT. AND SO WHAT WE WANT TO DO
IS TO MAKE SURE WE HAVE THE
STAFFING, THE PROCESS IN PLACE
SO THAT WE START ACCEPTING THESE
THESE APPLICATIONS. SO THE ONES
THAT DON'T GET INTERVENED ON
THAT, WE'RE GETTING OUT AS
QUICKLY AS POSSIBLE, AND THE
ONES THAT ARE INTERVENED ON ARE
NOW GOING TO BE OPERATING UNDER
THE NEW RULES AND REGULATIONS
THAT YOU'RE READY TO INTERVENE.
DAY ONE, YOU HAVE TO COME UP
WITH NEW GRIEVANCES OR
OPPOSITIONS TO THE FILING. YOU
CANNOT JUST, YOU KNOW,
ESSENTIALLY CUT AND PASTE WITH
THE DEPARTMENT SAYS AND SAY, OH,
THESE ARE OUR ISSUES AS WELL. WE
DON'T WANT THAT, WE WANT THEM TO
BRING UP NEW, NEW, GRIEVANCES
THAT WE HAVEN'T BROUGHT UP AND
THAT YOU'RE READY TO INTERVENE
DAY ONE. AND SO NO LONGER AND WE
STARTED DOING THIS ALREADY, NO
LONGER JUST LEAVING IT AS AN
OPEN BOOK UNTIL, LIKE, WHENEVER
YOU'RE READY TO INTERVENE. WE
USED TO STRUGGLE TO EVEN GET A
TIME TO HAVE THEM MEET, HAVE THE
THIRD PARTIES MEET. NOW OUR
LEGAL DEPARTMENT IS VERY CLEAR.
THESE ARE THE DATES YOU HAVE, OR
ELSE, YOU KNOW, WE'RE NOT GOING
TO APPROVE THE INTERVENTION. AND
SO THAT'S PROVEN TO CUT DOWN THE
TIME SIGNIFICANTLY. BUT AGAIN,
THAT TAKES AN INSURANCE
COMMISSIONER TO BE PUSHING FOR
THIS, AND SO WE'RE GOING TO
COMMIT TO DOING THAT. AND, AND
HOPEFULLY GET THAT IN REGULATION
MOVING FORWARD SO THAT EVERYBODY
IS ADHERING TO THIS TIMELINE.
THAT WAS SET OVER 30 YEARS AGO.
THAT ALONE. COMMISSIONER,
INSURANCE ASSEMBLY MEMBER.
SENATOR, YOU KNOW, RIGHT,
EVERYTHING THAT ALONE IN
SPEAKING TO SOME OF THE
COMPANIES WILL SAY THAT WOULD BE
REVOLUTIONARY BECAUSE IT WILL
ALLOW THEM TO PLAN OUT THEIR
INVESTMENTS AND THEIR MARKET IN
THE STATE, AND SO THAT'S WHY
THAT'S CRITICAL FOR US. AND THE
OTHER REASON WHY THE, THE
POPULATION, THE FAIR PLAN IS
CRITICAL BECAUSE THE INSURANCE
COMPANIES ARE MONITORING THIS
FAIR PLAN GROWTH. AND THEY'RE
SAYING, WELL, WE DON'T KNOW IF
IT'S GOING TO END UP IMPLODING.
WE'RE GOING TO BE ON THE HOOK
FOR THAT. SO WE'RE NOT GOING TO
WRITE NEW BUSINESS AND
PARTICULARLY THE RISKIER AREAS
BECAUSE NOW WE HAVE TO SAVE
MONEY TO MAKE SURE THAT THE FAIR
PLAN IS IN IN GOOD SHAPE,
ALTHOUGH THAT HASN'T HAPPENED,
BUT WE DIDN'T HAVE THE DATA TO
BE ABLE TO CONFIRM IF THAT WAS
THE CASE OR NOT. NOW WE'LL BE
ABLE TO GET THAT DATA TO SEE
WHAT THE ACTUAL HEALTH OF THE
FAIR PLAN IS, SO THAT WE'RE NOT
JUST OPERATING UNDER HEARSAY,
WE'RE ACTUALLY GETTING DATA. AND
TO BE ABLE TO UNDERSTAND HOW BIG
IS THE FAIR PLAN, HOW MANY
POLICIES DO THEY HAVE SO THAT
WE'RE ABLE TO THEN MONITOR THAT
MOVING FORWARD. THAT'S WHY THE
DATA PIECE IS THE DATA. AND THE
TRANSPARENCY IS ONE OF THE MOST
IMPORTANT THINGS COMING OUT OF
THESE REFORMS. GREAT. THANK YOU,
AND JUST A COUPLE OF THINGS THAT
ARE JUST MORE COMMENTS THAN,
THAN QUESTIONS, I LIKE THE IDEA
OF SOMEONE FROM THE PUBLIC ON
THE, ON THE FAIR PLAN. ACTUALLY,
THERE WAS A PROPOSAL BY THE
CHAIR TO HAVE SOMEONE FROM
LEGISLATIVE REPRESENTATIVE
REPRESENTATION ON THERE AS WELL.
AND I THINK THAT'S I THINK
THAT'S I THINK THAT'S, THAT'S
IMPORTANT. OBVIOUSLY PEOPLE ARE
HUGELY SENSITIVE TO ANY PRICE
INCREASES OF ANYTHING. AND
RECOGNIZE THAT. AND CERTAINLY IN
SOME OF OUR MORE, MORE
VULNERABLE COMMUNITIES THAT THE
SPECTER OF THAT IS EVEN MORE,
SCARY, SO TO SPEAK, THAN
ANYTHING, I WOULD JUST SAY THAT
CERTAINLY IN A LOT OF THE
COMMUNITIES THAT I REPRESENT,
THE SPECTER OF, OF THE FAIR OF
HAVING TO GO ON THE FAIR PLAN
AND, AND PAYING 2 TO 3 TIMES
WHAT THEY POTENTIALLY WERE
PAYING FOR TRADITIONAL
INSURANCE, IS, IS REALLY, REALLY
SCARY, AND SO FOR THEM, A 30%
RATE INCREASE ON THEIR
TRADITIONAL INSURANCE LOOKS LIKE
A BARGAIN, LIKE A BIG TIME
BARGAIN. AND SO WHILE IT MAY NOT
TO SOMEBODY IN ANOTHER AREA, I
RECOGNIZE THAT. BUT WE LIVE IN A
REALLY, REALLY DIVERSE STATE AND
SO IT'S IT IS HOW YOU HOW YOU
DEAL WITH THE COMPLEXITY OF THAT
IS, IS A REAL CHALLENGE. BUT
FINALLY, JUST ONCE AGAIN, THANK
YOU FOR YOUR YOUR EFFORTS ON
THIS. AND, I APPRECIATE THAT.
AND I KNOW MY CONSTITUENTS WILL
AS WELL. SO JUST TO CLOSE OUT
THE CONVERSATION WITH YOU, WE'VE
WE'VE HEARD THE MESSAGE LOUD AND
CLEAR FROM FOLKS IN YOUR
COMMUNITY AND THROUGHOUT THE
SIERRAS THAT THE LAST THING THEY
WANT IS TO BE IN THE FAIR PLAN.
THEY WANT TO GET OUT AS QUICKLY
AS POSSIBLE BECAUSE THEY KNOW
IT'S MUCH MORE EXPENSIVE, AND
THE COVERAGE IS SMALLER. AND SO
WE NEED TO GET THEM BACK INTO
THE TRADITIONAL INSURANCE AND
COVERAGE. AND THAT IS WHAT OUR
GOAL HAS BEEN SINCE DAY ONE.
GREAT. THANK YOU, ASSEMBLYMAN
ALVAREZ. GOOD AFTERNOON. NOW
AFTERNOON, I WANT TO START OFF
BY THANKING OUR CHAIR OF THIS
COMMITTEE. I THINK IT'S
IMPORTANT THAT THE PUBLIC
UNDERSTAND THAT WHEN WE HAVE
MAJOR PROBLEMS, A CRISIS LIKE
THIS DEFINITELY CAN BE DEFINED
AS WE MUST DO DILIGENT WORK, NOT
JUST THE TIME WHEN WE WERE IN
SACRAMENTO, BUT THE MONTHS WHEN
WE ARE SUPPOSED TO BE OUT, AS WE
ARE TODAY IN CALIFORNIA,
THROUGHOUT CALIFORNIA, HAVING
HEARINGS AND HAVING PUBLIC
ENGAGEMENTS. SO I REALLY WANT TO
RECOGNIZE OUR CHAIR FOR DOING
THAT. I THINK IT'S IMPORTANT AND
FOR CONTINUING THIS CONVERSATION
THAT STARTED, LESS THAN A YEAR
AGO WITH THE COMMISSIONER ON HOW
WE'RE GOING TO MOVE, TRY TO MOVE
FORWARD, BEYOND THIS CRISIS. AND
I NOW WANT TO TURN OVER AND
THANK THE COMMISSIONER FOR, FOR
THE ONGOING EFFORTS FOR THE
ONGOING, CONVERSATION THROUGH
THROUGH THESE HEARINGS,
PARTICULARLY. BUT IN OTHER WAYS,
IN ORDER TO KEEP CALIFORNIANS
INFORMED, I REALLY WANT TO
SPECIFICALLY ACKNOWLEDGE,
COMMISSIONER, YOUR WORK
THROUGHOUT CALIFORNIA. I
REPRESENT, YOU KNOW, MORE
URBANIZED AREA, BUT CALIFORNIA
IS SO DIVERSE, SOMETHING THAT
I'VE COME TO LEARN AS A MEMBER
OF LEGISLATURE. AND YOU'VE
REALLY TAKEN THAT TO HEART. AND
I THINK THAT THAT MATTERS IN, IN
THE WORK THAT YOU DO. SO I WANT
TO I WANT TO START BY SAYING
THAT, AT SOME POINT I WON'T BE
ABLE TO SAY THIS ANYMORE, BUT
I'M RELATIVELY NEW TO THE
INSURANCE CONVERSATION, BUT THE
REASON WHY I CARE ABOUT IT, AND
YOU MENTIONED IT, COMMISSIONER,
IN ONE OF YOUR COMMENTS, IS
BECAUSE I'M VERY PASSIONATE
ABOUT HOUSING AND I'M VERY
PASSIONATE ABOUT MAKING SURE
THAT CALIFORNIANS HAVE
OPPORTUNITIES FOR HOUSING, AND
WE CAN PASS ALL THE LAWS WE WANT
AND REDUCE REGULATION TO MAKE IT
EASIER TO BUILD. BUT IF YOU
CAN'T GET INSURANCE, YOU STILL
WON'T HAVE A PLACE TO LIVE AND
THAT IS WHY THIS MATTERS TO ME.
IN ADDITION TO ALL THE OTHER
GOOD REASONS WHY THIS IS
IMPORTANT TO THE REST OF
CALIFORNIA, EARLIER THIS YEAR,
WE ALL SAW THE REPORT FROM THE
REALTORS WHERE 7% OF HOME BUYING
TRANSACTIONS HAD TO BE CANCELED
AS A RESULT OF LACK OF
INSURANCE. THIS IS HOW REAL THIS
PROBLEM IS IN MY OWN BACKYARD IN
SAN DIEGO, A PROJECT THAT WAS
AGAIN ZONED APPROPRIATELY, READY
TO MOVE FORWARD TO BUILD, FIRST
TIME HOME OPPORTUNITIES, HAS
BEEN SORT OF UNABLE TO MOVE
FORWARD BECAUSE OF THE LACK OF
BEING ABLE TO GET THE PROJECT
INSURED AND THAT IS, SOMETHING
THAT I WANT TO WANT TO ASK YOU
ABOUT AS IT RELATES TO, TO THE
WORK THAT YOU'RE DOING. BUT THAT
IS WHY IT MATTERS TO ME. THAT'S
WHY IT SHOULD MATTER TO SOME
CALIFORNIANS. EVEN IF YOU DON'T
LIVE IN THESE REMOTE, REMOTE,
RURAL AREAS WHERE IT IS BECOMING
EVEN MORE PROBLEMATIC, IT SHOULD
MATTER TO YOU IF YOU'RE RAISING
KIDS, IF YOU WANT THEM TO LIVE
IN CALIFORNIA LONG TERM. SO, I
WANT TO START OFF BY ASKING SOME
OF THE QUESTIONS THAT I ASKED AT
A PREVIOUS HEARING, BECAUSE I
THINK IT'S IMPORTANT TO HAVE
CONTINUITY AND TRY TO UNDERSTAND
WHERE WE STAND AT THE PREVIOUS
HEARING, I ASKED ABOUT HOW MANY,
RATE FILINGS WERE BEYOND SIX
MONTH PERIOD. AT THAT HEARING.
COMMISSIONER, YOU SAID THERE
WERE NONE. I'M CURIOUS AS TO
WHERE THAT STANDS TODAY. DO YOU
WANT TO? I DON'T KNOW WHAT THAT
NUMBER IS. SO THAT. AND IF YOU
COULD SHARE WITH ME WITH THE
INTERVENER PROCESS AND WITHOUT
THE INTERVENER PROCESS, BECAUSE
WE KNOW THAT'S VERY DIFFERENT.
MICHAEL MARTINEZ, CHIEF DEPUTY
COMMISSIONER, CALIFORNIA
DEPARTMENT OF INSURANCE. SO JUST
FROM A BIG PICTURE, BECAUSE I
HAVE ACTUALLY BEEN PERSONALLY
INVOLVED WITH A LOT OF THESE
FILINGS AND IN PARTNERSHIP WITH
OUR RATE REGULATION BRANCH
EXPERTS. AND SO JUST TAKING A
STEP BACK, BECAUSE IT REALLY IS
BEYOND NUMBERS HERE, BECAUSE
WHAT WE DO, WE ARE SEEING THIS
HUGE PENDULUM SWING BECAUSE OF
THE PANDEMIC, BECAUSE WE'VE HAD
I MEAN, YOU'VE HEARD IT WITH THE
GLOBAL ECONOMIC RECESSION
BECAUSE OF, OF THE INFLATION OF
SUPPLY CHALLENGES OF, OF JUST, I
MEAN, YOU NAME THE GAMUT. WE
HAVE SEEN THE LAST FEW YEARS,
SEVERAL HUNDREDS, I WOULD SAY,
OF FILINGS THAT ARE COMING FROM
HÌ INSURANCE COMPANIES AS WELL
AS PPA, PRIVATE PASSENGER AUTO,
WHICH IS ON BOTH ON THE PERSONAL
LINES, AND WE HAVE REALLY
DEDICATED STAFF TO FOCUSING ON
THOSE FILINGS. AND THROUGH THE
TIME THAT WE'VE BEEN, AGAIN,
FOCUSING ON ON THESE FILINGS AND
WHAT THE COMMISSIONER HAD STATED
IS THAT APPLY FOR THE RATE THAT
YOU NEED. WE HAVE BEEN REALLY
FOCUSING ON HAVING INSURERS,
AGAIN, COME TO THE DEPARTMENT
SEEKING THE RATE THAT THEY NEED,
RATHER THAN SEQUENTIAL 6.9%. AND
SO AS, AS AS WE'RE LOOKING AT
THE IN REGARD TO, I GUESS YOUR
THE QUESTION THAT YOU WERE
HAVING IS LET ME JUST LOOK, HOLD
ON A SEC BECAUSE I ON NUMBERS
AGAIN WE HAVE QUITE A BIT OF SO
I'D SAY FOR, FOR HÌ FILINGS THAT
AND THIS IS JUST AS OF, WE HAD
Ó DO, DO DO DO WE HAD ABOUT I'D
SAY FROM 2015 TO 2019. AND THIS
IS JUST A PERSPECTIVE THAT WE
HAD 120 TO 150 ISH. FILINGS THAT
WERE HÌ FILINGS THAT WERE,
SUBMITTED TO THE DEPARTMENT OF
INSURANCE AND ABOUT 20, 20 TO
2022, WE SAW AN EXPONENTIAL
GROWTH, NEARLY DOUBLE IN 2020,
AND THEN NEARLY THREE TIMES THE
AMOUNT IN 2022. AND SO AGAIN,
THESE ARE JUST PURE. SO FOR
EXAMPLE AGAIN ABOUT 450 ISH IN
2022 THAT WE SAW AGAIN FOR HÌ
FILINGS. AND BECAUSE OF THAT WE
HAVE AND THIS IS AN AREA THAT
I'VE BEEN REALLY FOCUSING ON IS
AS WHAT THE COMMISSIONER HAD
STATED IS REALLY MAKING SURE
THAT WE HAVE ENOUGH STAFF IN
ORDER TO BE ABLE TO, TO TACKLE,
WHICH BY AND LARGE HAS BEEN A
BACKLOG AT THE DEPARTMENT. AND
BEING ABLE TO THINK THOUGHTFULLY
AND BEING ABLE TO DISPENSE WITH
THESE FILINGS AS SOON AS WE
COULD AND CAN AND SO, BY AND
LARGE, WE'VE SEEN FOR GOING
THROUGH THE RATE FILINGS, FOR
HÌ, FOR HOMEOWNERS, IT COULD
TAKE ABOUT SIX. AND THEN AGAIN,
IT REALLY DEPENDS 6 TO 7 MONTHS
IT COULD TAKE TO DISPENSE WITH
THE FILING. BUT AGAIN, THERE ARE
SOME OUTLIERS. THERE ARE
CERTAINLY LARGE OUTLIERS THAT
COULD TAKE AS WHAT THE
COMMISSIONER SAID MORE THAN A
YEAR, BECAUSE IT IS QUITE
COMPLEX. IT COULD BE ENTIRELY
NEW MODELING, IT COULD BE
ENTIRELY VERY DIFFERENT
UNDERWRITING. IT COULD BE ALSO
WHAT WE'VE SAID AND LOOKING AT,
ALL THE PLAYERS THAT ARE
INVOLVED UNDER PROP 103, IT
COULD BE THE INTERVENOR GROUP IS
JUST NOT READY TO MEET. MAY HAVE
A LOT OF QUESTIONS IN ORDER TO
GET MORE ANSWERS TO THE
DEPARTMENT AS WELL. IN ADDITION
TO THE INSURANCE COMPANY NOT
PROVIDING AN ENTIRELY COMPLETE
APPLICATION, I APPRECIATE THAT.
THAT'S JUST YEAH, I APPRECIATE
THE RESPONSE ON THE REASONING.
THAT'S THAT'S WHAT YOUR RESPONSE
WAS ON THE REASONS. AND WE'VE
HEARD THAT BEFORE. AND I THINK
IT'S IMPORTANT THAT WE REMIND
PEOPLE WHY. BUT I'M ASKING ABOUT
ACTUAL NUMBERS. IF IT'S 6 TO 7
MONTHS IS THE TRADITIONAL HOW
MANY RATE FILINGS HAVE BEEN IN
FOR SEVEN MONTHS, LET'S SAY
TODAY. AND THAT'S SOMETHING THAT
WE WILL HAVE TO GET BACK TO YOU.
AND, AND I THINK WHAT, YOU ARE
PERHAPS BECAUSE WHAT I'M REALLY
FOCUSED ON IS WHAT WELL, PUT IT
THIS WAY, WE CAN PROVIDE NUMBERS
YET WITHOUT THE CONTEXT OF AGAIN,
WHAT WHAT WE ARE ACTUALLY
TACKLING IN ORDER TO, TO
DISPENSE WITH THESE FILINGS AS
QUICKLY AS WE COULD WITH
JUSTIFIED RATE FILINGS, THESE
JUSTIFIED RATE INCREASES, THAT
THAT IS SOMETHING THAT I, I
BELIEVE THAT WE NEED TO MAKE
SURE THAT WE HAVE THAT LARGER
CONTEXT TO. SO THESE THE NUMBERS
WE CAN WE CAN FOLLOW UP AND
PROVIDE BECAUSE AND WE CAN HAVE
THE I CAN FOLLOW UP WITH YOUR
STAFF AND WE CAN ASK A BIT MORE
OF WHAT SPECIFICITY THAT YOU'RE,
YOU'RE REALLY WANTING TO TACKLE.
AND WE WILL DO THAT. THIS IS
HEADED. YEAH WE WILL DO THAT. I
THINK IT'S JUST IMPORTANT I IF
YOU RECALL AT THE LAST MEETING I
TALKED ABOUT EITHER KEY
PERFORMANCE INDICATORS OR
MEASUREMENTS. AND I THINK THE
POINT OF THIS QUESTION IS REALLY
WE NEED TO WE NEED TO BE VERY
TRANSPARENT, AS YOU HAVE BEEN
WITH EVERYTHING YOU'RE DOING, ON
WHAT OUR EXPECTATIONS WILL BE ON
YOUR NEW BULLETINS AND ON THE ON
THE STRATEGY THAT YOU'VE
OUTLINED, WHICH IS, I THINK, THE
APPROPRIATE STRATEGY. BUT, YOU
KNOW, YOU ARE GOING TO, OVER THE
COURSE OF THE NEXT TWO YEARS
WHILE YOU, YOU SERVE AS OUR
COMMISSIONER, PROBABLY SET THAT
UP. BUT THERE WILL BE SOMEONE
NEW WHO COMES IN AND
EXPECTATIONS MIGHT CHANGE, MIGHT
DIFFER. AND I THINK WE WOULD DO
A DISSERVICE TO ALL OF US AND TO
THIS TIME THAT WE'VE ALL
INVESTED IN THIS AND YOU MORE
THAN ANYBODY ELSE. IF WE GET TO
THAT POINT AND WE DON'T HAVE
METRICS OF WHAT WE EXPECT IN
TERMS OF, EVEN IF IT IS THESE
NEW, WITH THE NEW BULLETIN AND
THE NEW STRATEGY, THE 60 DAYS
AND, AND I THINK I JUST WANT TO
UNDERSCORE TO YOU THAT I THINK
THE FACT THAT THAT STILL THE
DATA IS, IS STILL NOT EASILY,
READILY, READILY AVAILABLE ON ON
THE CURRENT PROCESS, NOT YOUR
NEW PROCESS. I DON'T THINK IT'D
BE GOOD TO CONTINUE WITH THAT.
PRACTICE IS WHAT MY INPUT WOULD
BE. SO I WILL ASK FOLLOW UPS AND
YOU DEFINITELY, YOU KNOW, WILL
HAVE OUTLIERS THAT THAT MAKES
TOTAL SENSE, AND THERE'S
DIFFERENCE BETWEEN THOSE WHO ARE
INTERVENING AND THOSE WHO ARE
NOT. AND, AND SO I THINK WE'LL
ASK VERY SPECIFICALLY ABOUT
THAT, I WANT TO NOW GO ON TO,
THINGS THAT I LEARNED TODAY,
COMMISSIONER, WHICH, I JUST WANT
TO MAKE SURE I'M CLEARLY
UNDERSTANDING. SO RELATED TO THE
20 MILLION PER BUILDING VERSUS
20 MILLION IN AGGREGATE UNDER
FAIR PLAN AREA, RIGHT, WHICH
WE'VE ALREADY TALKED ABOUT, WE
DON'T NEED TO TALK ABOUT MORE
ABOUT FAIR PLAN. AND THAT
SIGNIFICANCE THERE. I'M
UNDERSTANDING THAT THE AGGREGATE
NOW BECOMES 100 MILLION. RIGHT.
SO THERE'S TWO DIFFERENT TYPES
OF COVERAGE LIMITS OKAY. SO FOR
AND THIS IS IN DIRECT AS AS YOU
RIGHTFULLY MENTIONED HOW IT'S
IMPACTING HOUSING DEVELOPMENT
CAME FROM OUR REALTORS
CALIFORNIA BUILDERS AND OUR
HOMEOWNERS, AFFORDABLE HOUSING
ADVOCATES, WHICH MAY FOR MANY OF
THEM, FOR THE SMALLER HOME
DEVELOPMENTS, ESPECIALLY
AFFORDABLE HOUSING, 20 MILLION
PER AREA WAS ENOUGH, RIGHT? BUT
NOWHERE NEAR ENOUGH FOR OUR BIG,
COMMERCIAL DEVELOPMENTS THAT
HAVE MULTIPLE BUILDINGS OR FOR A
BIG HOUSING DEVELOPMENT. AND SO
THE WHEN WE WHEN WE ENTERED INTO
NEGOTIATIONS WITH THE FAIR PLAN,
THEY WANTED SOME SORT OF CAP OR
LIKE, OKAY, IF WE'RE GOING TO DO
I MEAN, IS IT GOING TO BE OPEN
ENDED? IS IT. THIS IS FOR
THEY'RE GOING TO PUT A STRAIN.
SO WE ALL AGREED THAT, 20
MILLION PER BUILDING FOR THOSE
BIG DEVELOPMENTS, UP TO 100
MILLION. SO AND THEN IF YOU'RE,
YOU'RE TELLING ME LET ME GET
CLARITY, 100 MILLION PER
BUILDING OR 100 MILLION FOR
THEIR ENTIRE COMPLEX, FOR THE
ENTIRE COMPLEX OF BUILDINGS. AND
THEN IF YOU NEED MORE, THEN WE
YOU CAN GO INTO THE EMITTED
MARKET OR UNTIL INTO THE NON
EMITTED MARKET TO COVER THE REST
KIND OF TO GET THAT UMBRELLA
COVERAGE. OKAY. THAT WAS AN, AN
AGREEMENT WITHIN THE FAIR PLAN
SO THAT WE PROVIDE SOME SORT OF
LIMIT. AND WE WERE ALL KIND OF
COMFORTABLE SAYING THAT THIS
WOULD BE APPROPRIATE. AND THAT
WAS MY FOLLOW UP, DID YOU GET
FEEDBACK ON WHETHER THAT WAS
SIGNIFICANT ENOUGH TO BE ABLE TO
COVER, YOU KNOW, AS MANY AS
POSSIBLE? NOT EVERYBODY, BUT.
OKAY. YEAH. AND THIS WAS OUR IN
DIRECT NEGOTIATIONS WITH THE
BUILDING ASSOCIATION. THE
REALTORS GOT IT. AND OUR HOA IS
ON AFFORDABLE HOUSING.
APPRECIATE THAT, ANOTHER THING I
LEARNED TODAY, YOU MENTIONED
BULLETIN FROM SEPTEMBER 3RD. SO
ONLY A WEEK AGO OR A LITTLE OVER
A WEEK AGO, THIS IS RELATED TO
THE CONSUMER ASSESSMENT. IF THE
FAIR, PLEASE CORRECT ME BECAUSE
THIS IS WHAT I UNDERSTOOD FROM
YOUR YOUR REMARKS, I ALWAYS
ASSUMED AND AGAIN, I'M LEARNING
A LOT HERE, THAT UNDER THE FAIR
PLAN, CONSUMERS BEYOND PERHAPS
THEIR, VERY BASIC WORD INSURANCE
THAT I'M MISSING, BUT THEIR,
THEIR, THEIR DEDUCTIBLE, WOULD
NOT BE ON THE HOOK ESSENTIALLY
FOR A CATASTROPHIC EVENT THAT'S
COVERED BY FAIR THAT THAT WOULD
BE ALL, RESPONSIBILITY OF THE
CARRIERS INSURANCE CARRIERS
POLICIES AND THE FAIR AND THE
FAIR. YEAH, THE FAIR PLAN. THE
FAIR PLAN IS NOW 300,000,000
BILLION. RIGHT, IN POTENTIAL,
EXPOSURE, EXPOSURE AND 350,000
PLUS, INDIVIDUAL POLICIES. SO,
CAN YOU CAN YOU JUST CLARIFY
THAT? BECAUSE I HEARD SOMETHING
THAT I HAD NOT HEARD THAT
CONSUMERS WOULD ONLY BE CAPPED
AND THEY WOULDN'T. I THOUGHT THE
CAP WAS MUCH MORE LIMITED TO
THAN WHAT I HEARD YOU DESCRIBE
UNDER THE AGAIN, THE
NEGOTIATIONS WITH THE FAIR PLAN.
WAS THE FACT THAT, YOU KNOW, THE
ONGOING THREAT OF IT COMBUSTING
CREATES ALL THIS FEAR AND
CONTRIBUTES TO A HARDENING OF
THE MARKET. SO WHAT WE AGREED ON
WAS OBVIOUSLY THE FAIR PLAN IS
FIRST, ON THE HOOK FOR A MAJOR
CATASTROPHE TO COVER ITS, ITS,
LIABILITIES. YEAH. ITS
LIABILITY. AND, AND, AND THOSE,
THOSE AND THEN THE FAIR, THE
FAIR PLAN CAN ASSESS THE
INSURANCE COMPANIES RIGHT TO
COVER ANY REMAINING. AND IN THE
MOST SEVERE, CATASTROPHIC EVENT
THAT WE HOPEFULLY WON'T HAVE TO
EXPERIENCE. AND THEY STILL CAN'T
COVER IF THERE'S YOU KNOW, I
ALWAYS SAY, LIKE, IF THERE'S
THREE FIRES THAT CONNECT AND END
UP RAVAGING LIKE SOMETHING WE'VE
NEVER SEEN AND THEY'RE STILL ON
THE HOOK, THEN THEY HAVE TO THEY
COME TO THE INSURANCE
COMMISSIONER FOR PERMISSION TO
ASSESS THE COMMERCIAL POLICIES
AND THE CONSUMERS, THE INSURANCE
CONSUMERS, UP TO A CERTAIN
AMOUNT, LIKE 5050. RIGHT. BUT
THOSE EVENTS HAVEN'T OCCURRED.
BUT JUST THE FACT THAT WE'RE
PROVIDING A PLAN FOR THE WORST
CASE SCENARIO THAT WE'VE NEVER
SEEN PROVIDES SOME STABILITY IN
THE FAIR PLAN, BECAUSE
CURRENTLY, AGAIN, THE FEAR OF
JUST HAVING THE SOLE THE
ASSESSMENT ON THE FAIR PLAN AND
THEN THE FAIR PLAN, ASSESSING
THE INDUSTRY CONTRIBUTES TO THIS
CONSTRICTION OF PROVIDING MORE
POLICIES. NOW WE HAVE A PLAN FOR
A LONG TERM SOLUTION. SHOULD THE
WORST CASE, THE WORST OF THE
WORST CASE SCENARIO HAPPEN. NOW,
WE CLEARED A PROCESS BY WHICH
THEY COME TO THE INSURANCE
COMMISSIONER AT THAT TIME. GOOD
LUCK TO THAT PERSON, AND THEY
HAVE THEY CAN APPROVE AN
ASSESSMENT ON COMMERCIAL
POLICIES AND CONSUMER POLICIES
TO COVER THE REMAINING OF WHAT
THAT CATASTROPHIC EVENT WOULD
LOOK. JUST TO BE CLEAR, WHEN
YOU'RE SAYING POLICIES, IT'S TO
THE POLICYHOLDERS, POLICYHOLDERS.
CORRECT. OKAY. SO I DO THINK
THIS IS IMPORTANT. I MEAN, WE
DEFINITELY HOPE AND PRAY AND
EVERYTHING THAT WE NEVER FIND
OURSELVES IN THAT SITUATION. BUT
I, I DO THINK, AT LEAST FOR ME,
AGAIN, I'M SHARING WHAT I'VE
LEARNED HERE IS THAT THAT THERE
IS POTENTIALLY UNDER AN EXTREME
SCENARIO WHICH WE HOPE NEVER TO
FACE. AND I THINK WE JUST HAVE
TO BE VERY CLEAR WITH THE PUBLIC
AS TO WHAT WE'RE GETTING
OURSELVES INTO. SO I JUST
APPRECIATE YOU BEING VERY CLEAR
THAT IN THIS CASE, THIS IS WHAT
IT COULD MEAN TO A CONSUMER. AND
THEN YOUR OTHER BULLETIN, FROM
AUGUST THE 9TH, I HEARD YOU
MENTION, I JUST WROTE A QUICK
NOTE OF DELAY OF REVIEWS. NOW IS
60 DAYS, SO THAT TOOK EFFECT
LAST MONTH. HAVE THERE BEEN SO,
SO IS THIS DID IT TAKE EFFECT
AND HAVE THERE BEEN SUBMISSIONS
SINCE THEN? SO I JUST WANT TO BE
CLEAR FOR THE RECORD THAT AS
COMMISSIONER, I DON'T I DON'T
INVOLVE MYSELF IN THE DIRECT
RATE FILINGS BECAUSE OF CLEAR
DELINEATIONS. BUT I'LL HAVE.
OKAY. MICHAEL. SURE. AGAIN,
MICHAEL MARTINEZ, CALIFORNIA
DEPARTMENT OF INSURANCE. SO
ASSEMBLYMAN, YOU'RE SEEKING
YOU'RE ASKING A QUESTION ABOUT
THE AUGUST 9TH BULLETIN. THIS IS
ABOUT THE RATE EFFICIENCY. AND
SO, SO JUST, FROM A BIG PICTURE,
IS THAT WE THIS IS PART OF IN
CONVERSATIONS WITH THE, THE
ADMITTED CARRIERS AND WITH THE
INDUSTRY OF HOW CAN WE LOOK BACK
AND GET BACK TO WHAT VOTERS
PASSED MORE THAN THREE DECADES
AGO, RIGHT OF, OF THE, 60 DAY
TURNAROUND, OF THE 60 DAY
TURNAROUND REVIEW AND APPROVAL
OF A FILING. AND SO THE BULLETIN
WAS RELEASED AND IT WAS THIS
DESIRE TO, TO, TO PUT THAT OUT
THERE IN A PUBLIC WAY UNDER THE
COMMISSIONERS EXISTING AUTHORITY
GRANTED TO HIM UNDER PROPOSITION
103, IN ORDER TO SAY, OKAY, HEY,
THIS IS THIS IS IN ORDER TO
PROVIDE TO THE ADMITTED THE
REGULATED COMMUNITY, THAT ONE WE
FOLLOW THROUGH BECAUSE THIS WAS
PART OF THE SUSTAINABLE
INSURANCE STRATEGY, THAT ONE WE
FOLLOW THROUGH UNDER
COMMISSIONER LATTA. WE ARE
MOVING FORWARD. AND HERE IT IS
IN A BULLETIN. AND SO THAT WAS
ONE IS TO BE ABLE TO ACTUALLY
CRYSTALLIZE A SOMEWHAT COMPLEX
PROCESS IN WRITING SO THAT
INSURANCE COMPANIES KNOW EXACTLY
WHAT THEY CAN EXPECT ONCE THAT
PROCESS IS FULLY IMPLEMENTED.
AND THE REASON WHY THAT IS A BIT
UP IN THE AIR, IN A SENSE THAT
WE WANTED TO GET THAT OUT FIRST,
BECAUSE FIRST OF ALL, PUT THE
STRATEGY, THE POLICY IN WRITING
OUT THERE, THAT WAS ONE THAT WAS
THE BIG STEP. AND THEN SECONDLY,
GEARING UP TO ACTUALLY GET
READY, IN ORDER TO BE TO, TO
GREENLIGHT GO. AND I CAN FROM
YOUR THE PAST, SET OF QUESTIONS
YOU WERE HAVING AROUND FILINGS.
THIS ACTUALLY DOVETAILS IN PART
OF THE FILINGS CONVERSATION THAT
WE WILL HAVE IS THAT WE NEED TO
MAKE SURE THAT WE HAVE ENOUGH
STAFF. AND SO THE RATE
REGULATION BRANCH HAS BEEN ABOUT
100 PEOPLE FOR THE LAST COUPLE
DECADES, EVEN THOUGH THE AMOUNT
OF FILINGS HAS INCREASED
EXPONENTIALLY. SO I HAVE, IN
PARTNERSHIP WITH OUR RATE REG
STAFF, HAVE ROLLED UP THE SLEEVE
TO SAY, OKAY, HOW MANY STAFF DO
WE ACTUALLY NEED IN ORDER TO
HEARKEN BACK TO THE PROP 103 60
DAYS? AND THAT'S WHAT THE
COMMISSIONER HAD STATED, THAT WE
ARE DOING A WHOLE ORGANIZATIONAL
REVIEW THAT'S NEVER BEEN DONE AT
THE DEPARTMENT TO ACTUALLY LOOK
AT WHAT WHAT COULD A GOOD
PROCESS WORK? WHAT WHAT HOW CAN
WE RESTRUCTURE THE RATE
REGULATION BRANCH BECAUSE IT
HASN'T IT HAS BEEN PRETTY STATIC
IN FOR THE LAST COUPLE DECADES.
AND HOW IT HAS RECEIVED AND
KICKED OUT RATE FILINGS. AND SO
WE ARE CURRENTLY UNDERGOING THAT.
AND THIRDLY IS ACTUAL THE
INFORMATION THAT'S RECEIVED,
WE'VE TALKED A LOT ABOUT THESE
RATE FILINGS. THEY ARE VERY
COMPLEX AND SO AS YOU LOOK,
SINCE YOU READ THE BULLETIN, YOU
ARE ABLE TO SEE A DATA
RECONCILIATION TOOL AS SOON AS
EXPEDITIOUSLY POSSIBLE. AND SO
THAT IS SOMETHING. AND A SLIGHT
ASIDE, I MEAN, IT IS AN IT
PROJECT AT IN GOVERNMENT. AND WE
WANT TO BE VERY THOUGHTFUL IN
HOW WE ROLL THAT OUT. AND IT
WILL REQUIRE A GOOD CHUNK OF
CHANGE. BUT JUST KNOW THAT WE
WANT TO GET THAT DONE AND OUT.
AND WE HAVE BEEN HAVING MEETINGS
WITH THE REGULATED COMMUNITY TO
TALK ABOUT THAT BECAUSE THEY
ARE, IN TURN, THE USERS OF THAT.
AND IN ADDITION TO THE RATE RATE
BRANCH. AND SO WE WANT TO MAKE
SURE AS STATED IN THE BULLETIN.
AND SO THE EYES WIDE OPEN, THE
INSURANCE COMMUNITY KNOWS THAT
THIS WHOLE THE EXPEDITE, THE
EXPEDITE, THE EFFICIENCY OF THE
AND THE HEIGHTENED
ACCOUNTABILITY. THEY KNOW THAT
THAT'S NOT THAT THAT WON'T BE
TRIGGERED UNTIL THE RATE
RECONCILIATION TOOL IS UP AND
RUNNING. THEY KNOW FULL WELL
THAT THAT IS A WELL UNDERWAY.
THE RATE RECONCILIATION TOOL, UP
AND RUNNING AS SOON AS
EXPEDITIOUSLY AS EXPEDITIOUSLY
AS POSSIBLE SO THAT WE CAN IN
TURN START THE 60 DAY PLUS 30
DAY PLUS 30 DAY, BECAUSE THAT'S
THE EXTENSION. AND THEN WHICH
EXTENSIONS CAN CONTINUE, IF AS
THE PARTIES WANT TO CONTINUE TO,
TO ENGAGE IN THOSE CONVERSATIONS
AND ENGAGE IN THE BACK AND
FORTH. SO AT LEAST LET ME KNOW
THAT THAT THAT IS THE KEY PART
OF THE BULLETIN THAT YOU READ.
THANK YOU. SO I DID NOT READ THE
BULLETIN. THE NEWS WAS FROM THE
COMMISSIONER'S STATEMENT TODAY,
AND I PERHAPS WAS AGAIN, THE
REASON WHY I ASKED IT PERHAPS
WAS, INCORRECTLY ASSUMING THAT
THE BULLETIN SORT OF SET NEW NEW
POLICY, WHICH IT DOESN'T IT
SOUNDS LIKE IT'S JUST WE'RE
GETTING READY TO GO IN THIS
DIRECTION. YOU SHOULD ALL KNOW
IS WHAT THE BULLETIN IS. WELL,
THE BULLETIN IS ACTUALLY POLICY.
I'D SAY THE DEPARTMENT OF
INSURANCE. THE BULLETIN IS
ACTUALLY UNDER THE COMMISSIONERS
EXISTING AUTHORITY IN A PROP
103. THAT THAT IS SUCH AN
INCREDIBLE AMOUNT OF, YOU KNOW,
VOTER PASSED INITIATIVE THAT
GIVES WIDE LATITUDE TO IN ORDER
TO BASICALLY RUN THE DEPARTMENT
AS EFFICIENTLY AS POSSIBLE. AND
SO THE POLICY IS ACTUALLY OUT
THERE IN THE BULLETIN, BUT IT'S
NOT BEEN IMPLEMENTED YET UNTIL
WE ARE GETTING READY FOR THAT
IMPLEMENTATION. FOR WITH THE
STATUTE THAT WAS THE POINT WITH
THE IT MODERNIZATION TOOL, WITH
GETTING THE ORGANIZATIONAL
EFFICIENCY CONSULTING, WITH
GETTING. AND WE APPRECIATE THE
LEGISLATURE AND THE GOVERNOR
GIVING US THE BUDGET BILL
LANGUAGE TO HIRE. WE'VE HIRED
OVER HALF A DOZEN PROPERTY AND
CASUALTY FIRMS TO HELP US, WORK
THROUGH THE, THE BACKLOG SO THAT
ALSO IS A HUGE COMPONENT HERE.
SO ALL OF THESE COMPONENTS, IT'S
A BIG PUZZLE. YEAH. THAT WE ARE
NOT WANTING TO GET AHEAD OF
OURSELVES IN TERMS OF TIMING. I
ASKED ABOUT WE ACTUALLY HAD
AGAIN WHY THESE HEARINGS ARE
GOOD BECAUSE WE FOLLOW UP. WE
DID. I ASKED ABOUT THIS. I
REMEMBER I'M DOING THIS BY
MEMORY NOW ON DATA
RECONCILIATION AND THAT THAT
TOOL WAS NOT GOING TO BE THE
FIRST PHASE, I THINK IS WHAT IT
WAS CALLED UNTIL THE END OF THIS
YEAR. YEAH, END OF THIS YEAR.
AND NEXT YEAR, THE FULL THE FULL
IMPLEMENTATION. AND JUST AS, AS
OUR CHIEF DEPUTY SAID WE'RE IN
WE'RE IN CONSTANT COMMUNICATION
WITH THE INSURERS WHO UNDERSTAND
THAT, YOU KNOW, THAT THIS IS
THAT NEEDS TO HAPPEN WHERE WE
STAND. OKAY. AND THEN ON THE
ISSUE OF STAFFING, I ALSO ASKED
THAT TO YOU, COMMISSIONER,
BECAUSE I WAS CONCERNED THAT THE
BUDGET WAS MAKING, YOU KNOW,
REDUCTIONS TO ALL DEPARTMENTS
AND WHAT THAT WOULD MEAN TO THE
WORK THAT YOU'RE TRYING TO DO.
AND I THINK I JUST HEARD IT
AGAIN. WHAT I HAD HEARD FROM YOU
IS THAT YOU HAVE THE RESOURCES,
BUT YOU'RE STILL TRYING TO
RIGHTSIZE FROM YOUR 100.
INDIVIDUALS AS STAFF FOR RATE
REVIEWS TO WHATEVER IT NEEDS TO
BE. AND HOPEFULLY IN YOUR
REVIEW, OF THE DEPARTMENT,
THAT'S WHERE I THINK IT WOULD BE
Kò TO UNDERSTAND, YOU KNOW, WHAT
IS THE CASELOAD? WHAT IS THE
WHAT ARE THE MEASUREMENTS TO
WHICH WE SHOULD EXPECT TO HAVE
FOR EACH OF THESE STAFF MEMBERS
TO MAKE SURE THAT THE RATE
FILINGS GET REVIEWED
APPROPRIATELY. SO, I GUESS WE'LL
CONTINUE THE CONVERSATION AGAIN.
I JUST WANT TO ACKNOWLEDGE YOU
FOR, FOR CONTINUING TO BE
PRESENT AND ENGAGED WITH US AND
CERTAINLY THE WORK THAT YOU'VE
PERSONALLY DONE THROUGHOUT THIS
ENTIRE STATE. AND THANK YOU
AGAIN TO OUR CHAIR FOR REALLY
MAKING SURE WE HAVE THE
OPPORTUNITY TO DO THIS. THANK
YOU. AND MEMBER ALVAREZ, JUST AS
WHEN YOU BEGAN YOUR COMMENTS, I
REALLY TOOK WHAT YOU SAID TO
HEART IN THE LAST COMMITTEE
AROUND PERFORMANCE METRICS AND
MAKING THOSE TRANSPARENT FOR THE
PUBLIC, AS WELL, BECAUSE
HOMEOWNERS SHOULD KNOW. AND OF
COURSE, THE LEGISLATURE, ONE OF
THE THINGS I TOOK BACK FROM THAT
HEARING WAS LIKE, WE NEED TO
INCORPORATE YOUR THOUGHTS IN IN
OUR WILLINGNESS TO AS WE'RE
GOING TO IF WE'RE GOING TO DO
ALL THIS REFORM, IT'LL BE IN
VAIN IF WE'RE NOT GOING TO BE
ABLE TO PUT SOME INTERNAL
METRICS TO BE ABLE TO QUANTIFY,
THAT WHAT WE'VE ACTUALLY PUT IN
PLACE ARE WORKING. RIGHT,
BECAUSE IT'S NOT IT'S ALL GOING
TO BE IN VAIN IF WE DO ALL THESE
REFORMS. AND YET WE'RE STILL NOT
ABLE TO BE ABLE TO MOVE QUICKLY
TO ADJUST TO AN EVER CHANGING
MARKET. SO WE ARE PUTTING THOSE
METRICS IN PLACE. WE WANT TO
MAKE SURE THAT WE TAKE THAT
SERIOUSLY, BECAUSE I DON'T WANT
ANOTHER INSURANCE COMMISSIONER
TO BE HERE, NOT BE NOT BE ABLE
TO HAVE THE DATA TO BE ABLE TO
ASSESS IF WE'RE ACTUALLY BEING
SUCCESSFUL TRYING TO MEET,
BECAUSE THIS IS NOT GOING TO BE
THE LAST CRISIS AROUND CLIMATE
CHANGE AND INSURANCE. AND SO
THIS IS WHY, AGAIN, WHAT YOU'VE
SAID LAST, LAST HEARING, WE TOOK
THAT TO HEART. AND WE'RE PUTTING
THOSE METRICS IN PLACE. THANK
YOU. WELL, I GREATLY APPRECIATE
YOU BEING HERE TODAY. I JUST
WANT TO TOUCH ON A COUPLE OF
THINGS. SO REGARDING THE FAIR
PLAN MODERNIZATION, YOU
MENTIONED A SUNSET. CAN YOU JUST
TALK ABOUT THAT A LITTLE BIT
MORE? SURE. IT IS A33 YEAR
SUNSET, AGAIN, WE FEEL THAT
WITHIN THOSE THREE YEARS, WE'LL
BE ABLE TO HAVE A FULL GRASP OF
WHERE WE'RE AT, OBVIOUSLY, WE'RE
GOING TO WE WANT TO START SEEING
CHANGE STARTING 2025. BUT WE
ALSO WANTED TO GIVE SOME
REPRIEVE TO THE FAIR PLAN, TO BE
ABLE TO UNDERSTAND THAT, YOU
KNOW, ONCE WE NEED TO MODERNIZE,
MEET THIS MOMENT WITH THESE NEW
INDUSTRIES AND FOLKS THAT WE'VE
NEVER HAVE WHO HAVEN'T HAD
ACCESS TO THE FAIR PLAN, WE
THINK A THREE YEAR SUNSET, WE'RE
GOING TO BE OBVIOUSLY MONITORING
AS THESE CHANGES START BEING
IMPLEMENTED, TO SEE IF WE NEED
TO ADAPT OR MOVE, OR MAYBE WE
DON'T. WE NO LONGER INCLUDE A
CERTAIN INDUSTRY BECAUSE NOW
THEY'RE HAVING ACCESS AGAIN.
HOPEFULLY THAT'S OUR HOUSING
COMMUNITY, WHICH WE KNOW WE NEED
TO BUILD HOMES, WE NEED TO, YOU
KNOW, REINVEST IN THE URBAN
CORE. AND SO WE'VE BEEN WORKING
WITH THEM TO, TO MAKE SURE THAT
WE'RE ALL MONITORING THE
PROGRESS OF THE FAIR PLAN. SO
WE'VE GIVEN OURSELVES A THREE
YEAR SUNSET TO LOOK AT HOW THE
MARKET IS REACTING TO THESE
CHANGES. THANK YOU. AND THEN, I
HAVE TO ASK, YOU KNOW, THERE'S
BEEN A LOT OF PRESS COVERAGE
ABOUT THE LANDSLIDES IN SOUTHERN
CALIFORNIA LATELY. SO IF CAN
CONSTITUENTS OR CONSUMERS NEED
INFORMATION, CAN THEY REACH OUT
TO YOUR OFFICE? ABSOLUTELY. WE
ARE IN WE ARE IN COMMUNICATING
COMMUNICATION WITH THOSE
COMMUNITIES, HAVE PEOPLE
UNDERSTAND WHAT THE RIGHTS ARE
AROUND THESE LANDSLIDES. AGAIN,
ONE MORE THING THAT WE HAVE TO
WORRY ABOUT HERE IN CALIFORNIA,
AND UNDERSTANDING WHAT THEIR
POLICIES ARE, A LOT OF IT IS
MAKING SURE PEOPLE UNDERSTAND
WHAT'S COVERED IN THEIR POLICY.
AND UNFORTUNATELY, YOU KNOW, YOU
KNOW, SOME OF THESE LANDSLIDES
MAY OR MAY NOT BE COVERED, BUT
WE ARE HELPING EDUCATE THE
COMMUNITY AROUND WHAT THE RIGHTS
ARE IN TERMS OF WHAT THEIR WHAT
THEIR COVERAGE IS. AS YOU KNOW,
EVERYBODY'S POLICY IS VERY
INDIVIDUALIZED. AND SO WE NEED
TO MAKE SURE THAT THEY, AT THE
VERY LEAST UNDERSTAND WHAT THE
RIGHTS ARE AND WHAT THEIR
COVERAGE ARE, WHAT THEIR
COVERAGE IS. OKAY. THANK YOU.
APPRECIATE THAT. AND THEN LASTLY
I JUST WANT TO THANK YOU FOR ALL
THE WORK YOU'VE BEEN DOING, THIS
IS THE THIRD HEARING WE'VE HAD.
AND YOU MENTIONED THAT THIS HAS
BEEN A BIG YEAR FOR
ADMINISTRATIVE ACTION, AND NEXT
YEAR YOU'RE GOING TO BE FOCUSING
ON IMPLEMENTATION. SO I LOOK
FORWARD TO GETTING AN UPDATE
FROM YOU ON THAT. WHEN THAT
PHASE BEGINS, AND DO YOU HAVE
ANY FINAL COMMENTS? AGAIN,
MEMBERS, I JUST WANT TO THANK
YOU AGAIN FOR YOUR QUESTIONS AS
WE REALLY WORK TOGETHER TO TRY
TO SOLVE THIS UNPRECEDENTED
CRISIS AND THAT WE, YOU KNOW,
MODERNIZE THIS REGULATORY,
SCHEME THAT WE HAVEN'T TOUCHED
IN SO MANY YEARS. WHY IT'S
IMPORTANT FOR US TO LOOK AT, YOU
KNOW, PAST PROPOSITIONS, LOOK AT
BILLS THAT HAVE BEEN IMPLEMENTED
FOR YEARS TO SEE IF IT NOW STILL
MEETS THE MODERN NEEDS FOR US AS
CALIFORNIANS, AS WE CONTINUE TO
TACKLE AN EVER CHANGING
ENVIRONMENT, YOU KNOW, KNOW THAT
TODAY'S ANNOUNCEMENT AROUND A
PUBLIC YOU KNOW, A PUBLIC, FIRST
OF ITS KIND, WILDFIRE MODEL WILL
AGAIN PUT US AT THE VANGUARD IN
CALIFORNIA USING OUR CSU SYSTEM,
WHICH IS NOT JUST GOING TO BE
HUMBLE. IT'S GOING TO BE SAN
DIEGO STATE. IT'S GOING TO BE
SAN JOSE STATE, CAL POLY SLO,
AND A WHOLE NUMBER OF THEM WHO
HAVE REALLY BEEN LEADERS IN THIS
AREA, ALONG WITH THE UC AND SOME
PRIVATE UNIVERSITIES, TO GET US
TO A POINT THAT WE PROVIDE A
PUBLIC MODEL, THE FIRST OF ITS
KIND. AND IF WE DO THIS RIGHT,
IT CAN BE A STANDARD BEARER FOR
ALL THE WESTERN STATES, ALASKA
AND HAWAII, WHO ARE ALL WORKING
TO TRY TO DO SOMETHING SIMILAR.
AND SO AGAIN, WE'RE WE'RE BEING
BOLD. WE'RE BEING INNOVATIVE,
WE'RE HOLDING EVERYBODY TO
ACCOUNT. AND YEAH, WE'RE
RUFFLING PEOPLE'S FEATHERS. BUT
THAT'S WHAT OUR JOB IS ON BEHALF
OF THE CONSUMERS IS TO GIVE THEM
THE INSURANCE THAT INSURANCE IS
GOING TO CONTINUE TO GROW AND
THRIVE AND PROVIDE COVERAGE FOR
CALIFORNIANS. AS WE ALL NOW KNOW,
INSURANCE TOUCHES ABSOLUTELY
EVERY ASPECT OF OUR LIFE. AND SO
WE NEED TO MAKE SURE THAT WE'RE
MEETING THIS MOMENT. WE'RE BEING
TRANSPARENT. WE'RE GETTING THE
DATA WE NEED TO BE ABLE TO HELP
US UNDERSTAND. THIS IS WHY AT
THE NATIONAL LEVEL, WE'RE
ENGAGING IN A NATIONAL WIDE,
DATA CALL SO THAT ALL STATES GET
THE DATA THAT THEY NEED TO BE
ABLE TO MANAGE THEIR, THEIR
MARKETS. AND THAT'S ALSO BEEN A
BIT CONTROVERSIAL, BECAUSE YOU
CAN IMAGINE GETTING ALL STATES
AND TERRITORIES AND ISLANDS TO
AGREE. BUT WE ALL UNDERSTAND
THAT WE'RE ALL IN THIS TOGETHER.
AND SO THE BIG MARKETS, THE
SMALL MARKETS ARE WE'RE WORKING
TO ADDRESS THIS MOMENT. AND WE
NEED THAT DATA BECOMES Kò DATA
TRANSPARENCY FOR EVERYONE AND
THOSE PERFORMANCE METRICS. SO
THAT WE DON'T GET STUCK IN
ANOTHER 30 YEARS OF THIS
REGULATORY SCHEME THAT WON'T BE
ABLE TO MEET THIS NEED FOR THE
FUTURE IS CRITICAL. AND SO I
THINK WE'RE WE'RE MEETING THAT
MOMENT. THANK YOU. THANK YOU.
AND I'D LIKE TO THANK MY
COLLEAGUES WHO WERE UP VERY,
VERY EARLY TO FLY HERE OR DRIVE
HERE. AND ALSO MY STAFF AND,
CITY HALL FOR LETTING US HOST
THIS HEARING. SO NOW WE'RE GOING
TO GO TO PUBLIC COMMENT, PLEASE
STATE YOUR NAME. ORGANIZATION
AND KEEP YOUR COMMENTS TO TWO
MINUTES OR LESS. PLEASE.
THANK YOU. CHAIR AND MEMBERS, WE
REALLY APPRECIATE THE
OPPORTUNITY TO BE HERE TODAY AND
WE APPRECIATE YOU HOLDING THIS
HEARING. I'M LAURA CURTIS ON
BEHALF OF THE AMERICAN PROPERTY
CASUALTY INSURANCE ASSOCIATION.
WE'RE ONE OF THE MAJOR TRADE
ASSOCIATIONS REPRESENTING
INSURERS IN CALIFORNIA. AS YOU
KNOW, CALIFORNIA'S OUTDATED
REGULATORY ENVIRONMENT IS IN
NEED OF SOME FIXING. IT IS
FAILING FAMILIES AND THE
CONSUMERS. SINCE 2022, MORE THAN
HALF OF THE STATE'S TOP 15
INSURERS HAVE BEEN FORCED TO
EITHER RESTRICT ACCESS TO NEW
POLICIES OR HAVE BEEN FORCED TO
LEAVE THE MARKET ENTIRELY. I
WANT TO BE CLEAR INSURERS ARE
COMMITTED TO THE CALIFORNIA
MARKET. WE WANT TO CONTINUE TO
PROTECT CALIFORNIA'S MOST
VALUABLE ASSETS, LIKE PROPERTIES
AND CARS, AS WE ALWAYS HAVE, AND
WE WANT TO BE PART OF THE
SOLUTION. BUT THE PROBLEM HAS
BEEN A LONG TIME COMING, AND
THERE ARE NO QUICK OR EASY
FIXES. WE'RE WORKING WITH
COMMISSIONER LARA AND HIS
PROPOSED REGULATIONS THROUGH THE
DEPARTMENT'S SUSTAINABLE
INSURANCE STRATEGY. WE SUPPORT
URGENT ACTION TO STREAMLINE THE
RATE MAKING PROCESS, BETTER
ACCOUNT FOR CLIMATE DRIVEN
WILDFIRES, AND CATASTROPHES, AND
TO ELIMINATE THE MANY OBSTACLES
THAT HAVE LED TO THIS CRISIS. WE
REMAIN COMMITTED TO WORKING WITH
THE COMMISSIONER, THE GOVERNOR
AND LEGISLATIVE LEADERS IN ORDER
TO PROMOTE COMPREHENSIVE REFORMS
TO ENSURE ALL CALIFORNIANS HAVE
ACCESS TO THE INSURANCE THAT
THEY NEED. THANK YOU AGAIN FOR
YOUR TIME TODAY, AND WE
APPRECIATE YOU HOLDING THIS
HEARING. GOOD AFTERNOON, MADAM
CHAIR. MEMBERS OF THE COMMITTEE.
FIRST, WE WANT TO THANK THE
COMMITTEE AND COMMITTEE STAFF
FOR THE WORK THAT'S BEEN DONE
OVER THE LAST YEAR, AS WELL AS
THE COMMISSIONER AND HIS TEAM
FOR THE MONUMENTAL LIFT THAT
THEY HAVE DONE OVER THE LAST
YEAR. THIS HAS NOT BEEN EASY
WORK TO GET DONE, AND THERE'S
STILL A LOT TO GO. THE INDUSTRY
HAS LOTS OF THOUGHTS ABOUT THE
85% COMMITMENT. THIS IS NOT A
COMMITMENT THAT IS REQUIRED
ANYWHERE ELSE IN THE COUNTRY IN
ORDER TO UTILIZE THESE TOOLS. WE
DO UNDERSTAND CALIFORNIA IS A
UNIQUE MARKET AND WITH THAT
COMES NEW OBLIGATIONS. SO WE ARE
COMMITTED TO WORKING WITH THE
COMMISSIONER, WORKING WITH THE
LEGISLATURE TO ENSURE THAT WE
ARE ABLE TO STABILIZE THIS
MARKET AS SOON AS POSSIBLE. WE
REMAIN HOPEFUL THAT THAT WILL BE
COMING SOON. THANK YOU. GOOD
AFTERNOON, MADAM CHAIR, AND THE
COMMITTEE. MY NAME IS BRUCE
BRESLOW. I GUESS MY TITLE IS
FORLORN HOMEOWNER, LIKE
ASSEMBLYMAN, ALVAREZ AND
ASSEMBLYMEMBER RUBIO. I'M NEW TO
THIS. I DIDN'T REALLY WANT TO
KNOW ABOUT INSURANCE. MY
KNOWLEDGE OF INSURANCE WAS
WRITING A CHECK WHEN THE CAR
PREMIUM CAME DUE. I LIVE IN A
TOWNHOME COMMUNITY HÌ COMMUNITY
IN CHATSWORTH, COMPRISED OF 290
MIDDLE CLASS HOMEOWNERS ON THE
HISTORIC IVERSON MOVIE RANCH. I
INVITE YOU ALL TO TAKE A LOOK.
FOUR MONTHS AGO, FARMERS PULLED
OUT, LEFT US IN THE LURCH
BECAUSE WE'RE AN HOA. WE
COULDN'T USE THE FAIR PLAN AND
OUR BROKER PUT US INTO A
UNDERWRITERS WHO ARE ON THE
NON-ADMITTED MARKET, THE
DOWNSIDE OF THAT, OBVIOUSLY, IF
THERE'S A CASUALTY AND THEY
CAN'T PAY, WE HAVE NO RECOURSE.
THE OTHER SIDE OF THAT COIN IS
WE HAVE WE'RE CARRYING 50% LESS
INSURANCE THAN WE DID A YEAR
AGO, THE OTHER PART OF THAT IS
OUR PREMIUM BALLOONED 400% FROM
$349,000 TO $1.7 MILLION, AND
THAT IS A $4,700 SPECIAL
ASSESSMENT TO EVERY ONE OF OUR
HOMEOWNERS, YOUNG COUPLES, OLD
COUPLES, RETIREES, PEOPLE ON,
FIXED INCOMES AND PEOPLE WHO ARE
CURRENTLY UNEMPLOYED. STILL, DUE
TO THE STRIKES OF THE LAST
COUPLE OF YEARS, I HEARD THE
COMMISSIONER SAY THINGS TODAY. I
SEE NO IMMEDIATE RELIEF WHEN
THIS CAME DOWN. AND LITERALLY
THIS IS JUST SINCE MAY AND JUNE.
I WROTE LETTERS TO OUR ASSEMBLY
PERSON, TO OUR STATE SENATOR, TO
THE COMMISSIONER, AND TO
CONSUMER WATCHDOG, AS DID
SEVERAL OTHER MEMBERS IN OUR
COMMUNITY. WE HEARD BACK FROM
THREE OF THEM. THE ASSEMBLY
MEMBER, RESPONDED, WE HAVEN'T
HEARD BACK FROM OUR STATE
SENATOR. THE COMMISSIONER SENT
US A TEMPLATED RESPONSE, WHICH
DOESN'T APPLY TO OUR SITUATION.
BUT IMMEDIATELY WE HEARD BACK
FROM CONSUMER WATCHDOG. I WAS
REALLY SURPRISED TO HEAR SOME OF
THE SOME OF THE SWIPES HE TOOK
AT THIS ORGANIZATION. I'M
LOOKING FOR, NOT JUST ME. OUR
COMMUNITY IS LOOKING FOR RELIEF
FOR A $5,000 HIT ANNUALLY IS
SOMETHING THAT CAN'T TRANSPIRE.
I REALLY APPRECIATE YOUR
OPPORTUNITY HERE. GOOD
AFTERNOON. HOW ARE YOU? MY NAME
IS GIGI BANNISTER. I LIVE IN
CRESTLINE IN SAN BERNARDINO
MOUNTAINS. YES, IT'S STILL
SMOKING OUT THERE. I AM A FORMER
VETERAN AND A FIREFIGHTER, AND I
HAVE LIVED UP HERE, UP THERE FOR
20 YEARS, AND 2019 FARMERS
CALLED ME AND OR CANCELED ME,
AND I WAS FORCED INTO A
CALIFORNIA FAIR PLAN FOR FIRE
COVERAGE. I HAD TO BUY
WRAPAROUND POLICY TO COVER
EVERYTHING ELSE. AND YOU CAN'T
GET A FAIR PLAN WITHOUT IT. MY
PREMIUM DOUBLED. I FIGURED AT
LEAST I WAS COVERED FOR
SOMETHING CATASTROPHIC IF IT
HAPPENED, BUT IT TURNED OUT I
WASN'T IN 2023, AN ICE DAM BROKE
LOOSE ON MY ROOF AND WRECKED MY
DECK. THE WRAPAROUND INSURER
WOULDN'T COVER MY 40 K CLAIM,
AND THEN THEY CANCELED ME. THE
COMMISSIONER, LARA AND THE
INSURANCE DEPARTMENT ARE DOING
NOTHING TO HELP PEOPLE LIKE ME,
AND IT'S GOT TO STOP. I TAKE
CARE OF MY 79 YEAR OLD HUSBAND
WHO IS ILL. HE'S ALSO A VETERAN
AND I TAKE CARE OF MY PLACE.
IT'S ALL ON ME, BUT I DO THE
REST THE BEST THAT I CAN TO KEEP
THE BRUSH CLEAR TO MITIGATE
AGAINST FIRE, WE SHOULD BE ABLE
TO REASONABLY GET A REASONABLY
PRICED REGULAR HOME INSURANCE IF
WE KEEP OUR PLACES SAFE. NO, I
WASN'T GIVEN A DISCOUNT.
INSURANCE COMPANIES SHOULD BE
FORCED TO HONOR CLAIMS OR
OTHERWISE. WHAT IS INSURANCE
FOR? COMMISSIONER LARA ISN'T
DOING HIS JOB. HE'S LETTING
INSURANCE COMPANIES GET AWAY
WITH HIGH PREMIUMS. HE'S LETTING
THEM RAISE THE RATES BUT NOT
EXPAND COVERAGE. HE'S LETTING
THEM USE THE SECRET BLACK BOX
SOFTWARE TO PRICE YOU OUT OF
INSURANCE, AND THEN NOT
GUARANTEE PEOPLE CAN GET
COVERAGE AT ALL. MY INSURANCE
SHOULD. INSURANCE SHOULDN'T COST
ME AS MUCH AS MY MORTGAGE, AND
IT'S TIME LARA DID SOMETHING
ABOUT IT. IF I PROTECT MY PEACE
PLACE FROM FIRE, I SHOULD GET A
TRADITIONAL HOME INSURANCE
POLICY THAT PAYS FOR MY DECK
WHEN IT BREAKS. HE NEEDS TO HOLD
THE INSURANCE COMPANIES FEET TO
THE FIRE. OTHERWISE GET OUT OF
THE KITCHEN. JAMIE COURT,
CONSUMER WATCHDOG. THIS IS THE
THIRD HEARING YOU'VE HAD WITH
INSURANCE COMMISSIONER LARA. TWO
PRIOR HEARINGS. THERE WAS NO
REGULATION ON THE TABLE ON
CATASTROPHIC MODELING. NOW THERE
IS AND IT'S VERY CLEAR THE
COMMISSIONER LARA LIED. HE SAID,
IN EXCHANGE FOR ALLOWING
COMPANIES TO RAISE RATES BASED
ON THESE SECRET ALGORITHMS AND
THE CATASTROPHIC MODELS, HE
WOULD EXTEND COVERAGE TO 85% OF
PEOPLE IN THE WILDFIRE RISK
AREAS, 85%. AND HIS REGULATION
DOESN'T DO THAT. IT GIVES THE
COMPANIES THE CHOICE OF
EXPANDING JUST 5%, OR AFTER TWO
YEARS COMING IN AND SAYING, OH,
WE TRIED, BUT WE COULDN'T DO IT.
SO WHAT WE'VE CREATED IS A
SITUATION WHERE AFTER TWO YEARS
OF TALK, WE'VE GIVEN THE
INSURANCE COMPANIES WHAT THEY
WANT THE RIGHT TO RAISE RATES
BASED ON SECRET ALGORITHMS AND
THE RIGHT TO RAISE RATES BASED
ON REINSURANCE COMING NEXT WITH
NO GUARANTEE THAT PEOPLE ARE
GOING TO BE COVERED. SO WHAT WE
ARE GOING TO HAVE NEXT YEAR IS
RATES THAT ARE GOING UP
SUBSTANTIALLY, AND WE'RE GOING
TO HAVE MORE STORIES BECAUSE
BRUCE AND GIGI AND PEOPLE LIKE
THEM AREN'T GOING TO GET
COVERAGE. SO I ASKED YOU, DO
THIS IF THAT'S WHAT HAPPENS NEXT
YEAR WHEN ALL THESE METRICS COME
IN AND WE ARE NOT EXPANDING
COVERAGE IN WILDFIRE AREAS AND
THE PREMIUMS ARE GOING UP, THAT
YOU CONSIDER THE ONE REFORM THAT
WILL WORK, REQUIRING THESE
COMPANIES TO INSURE WITH A
TRADITIONAL REAL HOMEOWNER'S
POLICY, PEOPLE WHO FIRE PROOF
THEIR HOMES, LIKE GIGI AND
BRUCE. THAT BILL WAS TWICE CAME
BEFORE THE COMMITTEE AND TWICE
DIDN'T EVEN GET A HEARING. AND
IF AND IF THIS TIME NEXT YEAR,
IN SIX MONTHS, IF ALL OF THIS
PANDERING TO THE INSURANCE
INDUSTRY DOESN'T WORK, I ASK YOU
TO CONSIDER WHAT IS THE REAL
SOLUTION TO THIS PROBLEM. THANK
YOU, THANK YOU. THIS CONCLUDES
THE ASSEMBLY INSURANCE OVERSIGHT
COMMITTEE.