By Timothy Darragh, BestWire

April 22, 2022

A bill requiring greater disclosure between California Department of Insurance personnel and insurance companies and other measures failed to get out of a state House committee, virtually dooming them for this legislative session.

The California House Insurance Committee held AB 2323 without a recommendation.

The bill, which would have required full disclosure of ex parte communications between the department and regulated businesses, was sponsored by state Rep. Marc Levine, one of the candidates running in the Democratic primary election against incumbent Insurance Commissioner Ricardo Lara.

According to bill supporters Consumer Watchdog, the committee refused to hold a hearing on two other bills imposing mandates on the insurance industry: AB 1694 requiring insurance companies to disclose their fossil fuel underwriting and investments and AB 1755 requiring insurers to offer homeowners policies to those who meet state standards to protect their homes from wildfire.

Consumer Watchdog said insurance companies have made $1.5 million in contributions to committee members in the past four years.

"It's anti-democratic and demonstrates the insurance industry's capture of the Assembly Insurance Committee that members refused to even allow a vote on a transparency bill that would have shone light on industry influence at the Department of Insurance," said Carmen Balber, executive director of Consumer Watchdog.

"I always knew it was an uphill battle and that Lara's staff and his insurance company allies were working against the bill," Levine said in a statement. "I had hoped it would be set for a vote, but came to the realization that it wasn't going to happen."

The Personal Insurance Federation of California declined to comment.

Levine's ethics disclosure bill was in response to the filing of a declaration in Los Angeles Superior Court by Rusty Areias, a lobbyist representing workers' compensation insurer Applied Underwriters, stating he had "multiple" phone calls with a deputy commissioner and that another department staffer also was on the calls but did not participate. He also said he had a brief conversation with Lara in 2019 regarding his lobbying for Applied Underwriters (BestWire, Feb. 24, 2022).

The department at the time defended its transparency.

The department looks at all introduced and amended bills as they move through the legislative process to ensure consumer protection, "as we always do," said spokesman Michael Soller. "Like other agencies that conduct administrative adjudications under the Administrative Procedure Act, the department follows the ex parte communication provisions of that law."

Additionally, the department also has a "Communication with Decisionmakers in Pending Quasi-Adjudicatory Proceedings" page on its website to further transparency, he said.

Regarding the climate-related issues, Soller noted Lara recently co-chaired the National Association of Insurance Commissioners Climate Risk & Resiliency Task Force. The association approved requiring the Task Force on Financial Disclosures in the NAIC's annual climate risk survey, now being done by 15 states representing 80% of the insurance market.

As for his wildfire efforts, the department under Lara issued new regulations requiring insurance companies to factor consumers' and businesses' wildfire safety actions into their pricing of residential and commercial coverage, Soller said. The new regulations also will provide consumers with transparency about their "wildfire risk score" that insurance companies assign to properties, he said.

This follows the new release of Safety from Wildfires, which Lara developed with other emergency agencies, the first time California has issued a wildfire safety framework for insurance, Soller said.

Public Citizen, another consumer group supporting Levine's bills, did recognize and applaud the department's recent reports on insurer investments in fossil fuel enterprises, but it does not reveal insurer underwriting of their projects, it said.