Bill Status Update

Bill Status Update

The California State Assembly and California State Senate recently held their Appropriations Suspense hearings on May 14. These hearings are an important step in the legislative process, where bills with significant fiscal impacts are reviewed by the appropriations committees to determine whether they will continue moving forward, be amended, or be held based on their projected cost to the state.

We’ve seen meaningful progress on several bills PIFC has been working on and wanted to provide our members with an update on where things stand. While this progress is encouraging, important work remains as a number of key bills now move to their second house for further consideration.

Residential Property Insurance

While we appreciate the intent behind this measure, the proposed extension of nonrenewal moratoriums raises significant concerns regarding the long-term health and sustainability of California’s property insurance market.

Limiting insurers’ capacity to appropriately manage and rebalance risk for extended periods of time eliminates insurers’ ability to respond to changing conditions, including increased wildfire exposure, inflation in rebuilding costs, and evolving catastrophe modeling. Without the ability to appropriately adjust portfolios, insurers are forced to retain risks that may no longer be actuarially sound.

Status: The PIFC team is in ongoing negotiations with the author’s office, however no meaningful amendments have been agreed to and we remain opposed.

Prior to the latest amendments, SB 876 was a sweeping bill that contained more than 20 proposals that would negatively impact insurers and policyholders.

Status: While some of the most harmful provisions were removed through negotiations, including: 1) mandatory 50% of extended replacement cost following a disaster, 2 100% additional living expenses following a disaster, and 3)  100% of personal property coverage without an inventory, there is more work to be done. As SB 876 moves over to the Assembly it still contains more than a dozen proposals that adversely impact insurance availability and affordability at a time the Sustainable Insurance strategy (SIS) reforms are just beginning to show progress.

SB 877 would have required insurers to provide every version of all claim-related documents within 15 days of creation, including draft and internal working documents, along with the names and titles of individuals involved in revisions and detailed explanations for each change. Thanks to the coordinated efforts of PIFC lobbyists, agents and stakeholders this bill was amended to delete the previous language and instead expand the definition of “claim-related documents” under the California Standard Form Fire Insurance Policy to include all documents that relate to the evaluation of damages, whether preliminary or final, that relate in any way to the amount of loss, covered damage, and cost of repairs.

Status: The bill is much improved.  However, the PIFC team recently met with the author’s office and sponsor to negotiate additional changes to address concerns about vague and subjective language. The bill still needs additional work to ensure it does not increase disputes and litigation.

SB 1301 imposes extensive new operational, reporting, underwriting, and compliance mandates, including a 180-day nonrenewal notice requirement. The bill replaces functional existing frameworks with a prescriptive system that increases costs, reduces underwriting flexibility, and strains market capacity without clearly improving consumer outcomes.

Status: The PIFC team was able to negotiate amendments that reduce the proposed nonrenewal notice timeline down to 90 days, consistent with many carriers current practice. There remains significant work ahead to negotiate a functional notice process for policyholders that could do mitigation work to stave off a pending nonrenewal decision.

Insurance Business Practices

The introduced version of SB 878 would have expanded and codified regulatory prompt‑payment timelines for fire insurance claims and impose automatic penalties for noncompliance, including interest at a rate of 20 percent per year and mandatory payment of the insured’s attorney’s fees. These penalties would apply even when delays are caused by factors outside an insurer’s control, such as incomplete information, large‑scale catastrophes, or ongoing coverage investigations. Such inflexible statutory damages are disproportionate, untethered from actual consumer harm, and provide incentives for attorneys to draw out settlement disputes. PIFC lobbyists, agents, and stakeholders were able to secure amendments that change the focus of the bill to address timely payment of actual cash value and replacement cost within 30 days.

Status: While the bill is much improved, additional changes are needed to ensure the process is reasonable, fair, and workable. The PIFC team continues to meet with the author’s office and CDI to add language that ensures appropriate access to the site and information necessary to determine the value of the insured structure.

PIFC opposed this bill because it would have turned recommendations into mandates, creating a pathway for binding requirements outside statute or formal rulemaking. It would create market uncertainty by allowing standards to shift based on examiner interpretation, leaving carriers without clear compliance guidance.

Status: We have moved to a neutral position on the bill after amendments narrowed penalties to legally required conduct, removed references to “recommendations,” prevented stacking of penalties for the same conduct, and added a safe harbor for companies needing additional time to comply.

SB 354 would impose excessive regulatory burdens on insurers and businesses, creating operational inefficiencies, potential privacy risks, and confusion among consumers.

Status: PIFC continues to work with the author of SB 354, Senator Limon, and other stakeholders on significant revisions for the bill to become workable.

Smoke Claims

AB 1795 introduces a comprehensive new framework governing wildfire smoke testing, remediation, and insurance claims handling. While intended to improve consistency and consumer outcomes, several provisions raise significant concerns for insurers related to contract certainty, retroactive application, operational feasibility, and cost escalation.

Status: The changes made in Assembly Insurance Committee address certain concerns from the industry and improve the feasibility of the bill. However, we continue to have concerns around the correct legal standard, cost concerns for policy holders and insurers, and technical revisions to the insurance contract terms. We are continuing to have negotiations with the author’s office to make the bill more workable.

This bill requires the Department of Toxic Substances Control to adopt emergency regulations for lead, asbestos, and hazardous chemical testing and cleanup after wildfires, including health-based standards for safe reoccupancy of homes, schools, workplaces, and other residential structures.

Status: We have raised concerns with the author’s and his team about the impact that the expanded the scope of the bill has on insurance, though, no meaningful amendments have been taken as of this writing, and we remain opposed.

Bills We Support

AB 1726 would authorize California homeowners to establish a Catastrophe Savings Account (CSAs) within financial institutions. Funds deposited in these accounts would be exempt from state income tax. These CSAs will help Californians cover emergency-related expenses incurred due to damage to, or loss of, a home caused by a wildfire, flood, or earthquake that has been declared an emergency by the Governor.  Californians should have access to all the available tools to assist with recovery after disaster. Allowing Californians to open a state income tax exempt account to prepare in advance for the future is a responsible financial step forward.

Status: This bill failed to pass out of Assembly Appropriations Committee.

SB 894 would establish the California Wildfire Resilience Loan Program, administered by the California Alternative Energy and Advanced Transportation Financing Authority (CAEATFA) and modeled after the state’s successful GoGreen financing platform. SB 894 creates a state-backed loan loss reserve that can leverage public dollars at roughly 10-to-1, unlock private capital, reduce interest rates, and finance home hardening and defensible space improvements for residential and small business properties.

Status: This bill passed the Senate committee process and is awaiting a vote of the full Senate in the coming days.