The 2022 Legislative Session officially began on January 3rd and your PIFC team is hard at work tracking bills that may affect how you do business. Legislators are beginning to introduce bills and now is the time that many of them will be meeting with constituents and stakeholders to figure out which issues they will rally around. This being the second year of the legislative session, bills that were held in committee in the previous year known as (2-year bills) will need to have passed out of their houses of origin by January 21st in order to move forward this year. However, there is nothing stopping an author from reintroducing a bill, as legislators have until February 21st to introduce new bills.
Check out the bills below to see what your PIFC team has been working on over the break.
AB 1522 (Levine)-The Catastrophic Wildfire Insurance Act-DEAD
Assembly bill 1522 was introduced last year as a way to prohibit an insurer from cancelling or refusing to renew any homeowner or commercial policy solely based on the fact that the property is located in a high-risk wildfire area. However, this measure failed to recognize the fact that insurers may need to cancel policies in high-risk wildfire areas to meet reinsurance or capacity issues, which left unaddressed could drive them to insolvency, threatening insurance availability for all Californians.
After extensive talks with the author and committee staff, AB 1522 was set as a 2-year bill.
In September of 2021, AB 1522 was amended and renamed “The Catastrophic Wildfire Insurance Act.” This amended version of AB 1522 would require all residential and commercial property insurers to offer a policy that specifically covers catastrophic wildfires and would create the California Wildfire Insurance Authority to serve as a marketplace for catastrophic wildfire insurance. The bill would require the authority to be formed as a nonprofit entity that is privately funded and publicly managed.
AB 1522 lacked important details. Specifically, it is unclear how the concept outlined in this bill would interact with the FAIR plan or why the new California Wildfire Insurance Authority is necessary. Also, this bill does not allow a homeowner’s policy to exclude catastrophic wildfire risk, a yet to be defined term, so the policies would provide overlapping coverages that would drive up the price. If the bill eliminates catastrophic wildfire risk from the standard homeowner’s policy, the homeowners could be required to buy two policies.
After extensive talks with the author and committee staff, AB 1522 was not set for hearing and failed the January 14 deadline for carryover bills to have passed out of their policy committees. This bill will not be moving forward.
AB 294 (Santiago)-Vehicle Tow and Storage Act-Stalled in Assembly Appropriations
PIFC co-sponsored Assembly Bill 294 with Assemblymember Santiago and the California Tow Truck Association (CTTA). Currently, the tow business is largely unregulated and there is no reliable database of tow vehicles operating in California, which makes it difficult to identify bad actors and take enforcement actions when appropriate. Although most auto body repair and towing companies behave in a responsible manner, some hold cars hostage for unreasonable and unfair fees. These excessive towing and storage fees harm consumers and inflate insurance claim costs. For example, PIFC documented more than 130 examples of storage fees at auto body repair shops of $200 or more per day from 2019 and 2020 with some charging in excess of $2,000 per day.
AB 294 would require all towing businesses to obtain a Vehicle Tow and Storage Permit prior to operating a tow truck in California or charging for the storage of a towed vehicle. It would also create a Vehicle Tow and Storage Board to resolve disputes between tow companies and vehicle owners. AB 294 would provide much needed accountability for towing and auto collision repair companies, protect consumers from egregious fees, and create stability in the towing and storage industry.
AB 294 was double referred to the Assembly Transportation Committee and the Assembly Business and Professions Committee. After extensive talks with members of each committee, AB 294 passed out of both committees but ultimately stalled in the Assembly Appropriations Committee. PIFC staff is in talks with the Bureau of Automotive Repair (BAR) on ways to increase oversight and go after bad actors in the automotive repair industry.
AB 522 (Fong) Forestry: Forest Fire Prevention Exemption
Current law requires individuals to submit a timber-harvesting plan, prepared by a Registered Professional Forester, to the Department of Forestry and Fire Protection (CalFIRE) before timber-harvesting activities can commence. The Forest Fire Prevention Pilot Program was established to allow CalFIRE to provide certain exemptions to those requirements when people are engaging in forest management activities, such as harvesting of trees for the purpose of reducing the rate of fire spread, duration and intensity, fuel ignitability, or ignition of tree crowns.
PIFC supports Assembly Bill 522, which would improve proactive forest management by removing barriers to use of the Forest Fire Prevention Exemption. This bill would remove the existing 300-acre cap on the total number of acres treated, allow temporary road construction of over 2 miles, and would extend the existing sunset date from February 19, 2019 to January 1, 2026.
PIFC has long supported legislation to encourage proactive pre-hazard mitigation and projects that reduce the risk of wildfire spreading into populated areas from wildlands. By helping property owners to engage in effective fire-risk reduction work, this bill will improve forest health, increase fire resiliency, and help reduce the impacts of wildfires on California communities.
AB 522 recently passed out of the Assembly Appropriations Committee and is currently being heard on the Assembly floor.
SB 449 (Stern)- Climate-related financial risk-DEAD
Senate Bill 449 would require a covered entity to submit an annual climate-related financial risk report to the Secretary of State (SOS) and empower the Governor’s newly created (announced on April 5th, 2021) Climate-Related Risk Disclosure Advisory Group to propose regulatory actions, policies, or reforms in the area of climate-related financial risks.
Since 2010, insurers have worked with the California Department of Insurance (CDI) and the National Association of Insurance Commissioners (NAIC) to submit an annual report on how insurers, across all lines of insurance, assess and manage risks related to climate change. By introducing a new and different report, administered by a different regulator (SOS), SB 449 would upend over a decade of work and circumvent the successful NAIC approach to insurance industry climate reporting.
PIFC worked with the author’s office to exempt insurers from this duplicative reporting. AB 449 was held in the Senate Appropriations Committee and is now dead.
SB 260 (Weiner)- Climate Corporate Accountability Act-Oppose
Senate Bill 260 would require the California Air Resources Board (CARB) to adopt regulations requiring the reporting of greenhouse gas emission data throughout the entire supply chain to include activities such as business travel, employee commutes, procurement, waste, and water usage, regardless of location. These types of emissions, also known as “Scope 3” emissions, are the result of activities from assets not owned or controlled by the reporting entity and encompass activities both upstream and downstream of a company’s main operations.
Requiring reporting of emissions associated with a company’s entire supply chain will necessarily require that large businesses stop doing business with small and medium businesses that cannot meet the onerous reporting requirements required by the bill, leaving these companies without the contracts that enable them to grow and employ more workers.
Recent amendments to SB 260 requires companies to report inaccurate and incomplete emissions data. This is due to the inconsistencies of Scope 3 Accounting and Reporting Standards. The Standard itself states that “companies must either forego accuracy or completeness when assessing Scope 3 emissions”, compromising overall accuracy.
PIFC is working with CalChamber and a large coalition of organizations to oppose SB 260. The bill recently passed out of the Senate and will move to the Assembly where we will continue the fight against unnecessary regulations that increase costs and harm California consumers.