Is CA insurance legislation favoring industry or consumers? Here's why some bills failed

SAN FRANCISCO (KGO) -- The deadline for Governor Gavin Newsom to sign a record number of bills before the end of session has passed. 7 On Your Side is digging into why numerous bills that aimed to hold insurance companies accountable failed and the money trail behind the votes.

7 On Your Side Investigates tracked dozens of insurance-related bills that were discussed or voted on this legislative session. Our analysis found a clear discrepancy between the bills that passed versus those that didn't: money and the interests of insurance companies.

California's insurance crisis

It's reaching a breaking point -- forcing a record number of consumers to the California Fair Plan, the state's insurer of last resort.

It's called that for a reason.

If you look closely at the law - the state's plan promises to "assure stability... availability... and provide equitable distribution."

"We pay over half of our mortgage on our insurance," said Gigi Bannister, a firefighter and veteran who was also dropped by Farmers.

"My rates went up 1,000%," said Bruce Breslow, a California consumer who was dropped by Farmers Insurance. "Our insurer of 20 years dropped us!"

The president of advocacy organization Consumer Watchdog says it's only getting worse.

MORE: CA insurance commissioner reveals plan to tackle insurance crisis, activists find 'many loopholes'

"They're not coming back! State Farm has said it does not need to insure one more policy holder," said Jamie Court, President of Consumer Watchdog.

Instead, consumers are facing wraparound policies with the California Fair Plan offering inflated rates and limited coverage.

At least seven of the state's insurers that made up 85% of the market dropped out of California or restricted issuing new policies. That's leading to 1,000 consumers being forced to the California Fair Plan each day, according to the state.

The state's emergency provider saw a 22% increase in policies last year alone and has more than doubled since its inception in 2019.

"There's nothing standing in the way of insurance companies getting their rate hikes," Court said.

It's no secret the problem is getting worse. The question is, what are the people we elected doing about it?

Tracking insurance bills

7 On Your Side investigates tracked at least 32 insurance-related bills that were discussed in the Assembly and Senate Insurance committees this legislative session.

For example, of the handful of bills that passed, all of them either had support from insurance companies or benefited the California Dept. of Insurance with procedural or technical changes for insurers.

One of the only bills addressing the insurance crisis that passed is SB 505 authored by Sen. Susan Rubio (D-San Gabriel Valley) that aims to reduce the number of California Fair Plan policies with a "clearing house program."

"It will ship more policies back to the admitted market," Sen. Rubio said.

"It is not a threat to the insurance industry- that's why it passed," said Carmen Balber, Executive Director of Consumer Watchdog.

Meanwhile, the other five bills that aimed to lower insurance costs of increase transparency for consumers all failed. Most were met with opposition from the insurance industry.

MORE: '$4M is a lot': Questions raised after CA bills mandating insurers to consider home hardening fail

"We are in respectful opposition," said Laura Curtis, a representative of American Property Casualty Insurance Association. "It would only add additional strain on insurers."

SB 1229 would've required insurance companies to disclose to an applicant if AI was used to make decisions on their application or claim. It failed.

"Additionally, insurers are particularly concerned about the potential scope of the disclosures and any additional burden on their business model," said Alison Adley, a representative with Personal Insurance Federation of California.

"So the complaint from the insurance industry that a consumer protection is too burdensome is simply code for 'we don't want to provide that information,"' Balber said.

"We should expect companies to let us know what they're doing with our information, how their decisions are made," said State Sen. Bill Dodd (D-Napa) who authored another AI-related bill that passed this session.

Senator Anna Caballero (D- Merced) who represents parts of the central valley voted against this bill.

Stephanie Sierra: "Why did you vote against this bill?"
Sen. Anna Caballero: "I have an area that's rural and agricultural and people earn low salaries. And one of the biggest concerns they have is the inability to be able to buy a house because you need insurance. And so, anything that's going to cause a disruption to the insurance industry right now, I'm very careful about."
Sierra: "Consumer advocates argue this bill aimed to increase transparency for consumers. Do you agree that was the intention?"
Sen. Caballero: "Well, you're asking me to remember what happened in the hearing that was a number of months ago... Transparency is good, but just for transparency's sake. That doesn't do you any good, if there's no insurance companies left that are willing to give you a policy."
Sierra: "What do you say to critics who argue some of these decisions are being too lenient to the to the interests of insurance companies?"
Sen. Caballero: "Well, I think it's like I said, I think it's a balancing act."

7 On Your Side investigates found Sen. Caballero received more than $1 million from finance, insurance, and real estate industries since elected to the state legislature in 2006. That's the most out of any of her colleagues serving on the Senate Insurance Committee, according to our analysis of data compiled by nonprofit watchdog group Follow the Money.

Sierra: "Have you ever felt influenced by the insurance industry?"
Sen. Caballero: "I vote what's in the best interests of people in my district. And I've always represented an agricultural, rural farm worker community. And I'm proud of the fact that good, I'm very responsive to the issues that they're concerned about."

7 On Your Side found Sen. Caballero was the only senator absent for a vote on bill AB 970, which aimed to create a series of pilot projects to reduce coverage gaps in high fire and flood risk areas.

"California's most vulnerable communities disproportionately suffer from the impacts of climate change, this bill aims to rectify this by closing insurance protection gaps," said the bill's author, Assemblymember Luz Rivas (D-San Fernando Valley).

AB 970 had overwhelming support and passed in both the Senate and Assembly, but it was vetoed by Gov. Gavin Newsom. He cited budget restraints.

According to a statement from his veto message, Newsom said: "While I support the author's goal to expand insurance options in communities where climate risks are currently underinsured, this bill creates a significant state reimbursable mandate and new cost pressures in the millions of dollars that should be considered in the annual budget process."

North Bay Sen. Bill Dodd was a co-author of AB 970.

MORE: Allstate's homeowners insurance rate to go up an average of 34%, largest increase in CA in 3 years

"Well, certainly the governor's been consistent in vetoing bills that have bring any cost, you know, into our state, our state budget," said Sen. Dodd, (D-Napa). "That said, hopefully he can be creative enough next in next year's budget to put this in that budget. We've got almost $3 billion in our fire resiliency budget."

Records show the Governor has received at least $10,101,048 from Finance, Insurance and Real Estate industries since assuming office in 2003, according to Follow the Money. That's 62% of all the money he's received while in office.

Meanwhile, two other bills that would've required insurance companies to factor in mitigation efforts passed their respective committees. SB 1060 even passed a floor vote 28 to 8.

State Sen. Josh Becker (D-Menlo Park) pulled it because he said, "it didn't have the votes."

According to Follow the Money, Becker received $417,697 from Finance, Insurance and Real Estate industries. Sen. Caballero was absent for that vote too.

"Frankly, by the time it got to the Assembly, Becker's bill was seriously watered down in response to industry complaints," said Consumer Watchdog's Carmen Balber.

Follow the money

The seven lawmakers that make up the Senate Insurance Committee received a combined total of at least $3,509,320 while in office, according to 7 On Your Side's analysis of a report filed by Follow the Money.

Four of them received more than half a million dollars, including North Bay Sen. Bill Dodd.

Sen. Caballero received the most with at least $1,021,317.

"While insurance companies may want to push us one way or the other, we have to do what we think is best for the overall market," Sen. Dodd told ABC7's Stephanie Sierra. "I don't think money has anything to do with any of, you know, my votes."

MORE: 17,000 Liberty Mutual customers in CA to lose fire insurance policy: Here's what you need to know

Meanwhile, the 15 lawmakers who make up the Assembly Insurance Committee received a combined total of at least $6,058,653. Six of them received more than half a million dollars.

Assemblymember Blanca Rubio (D-Baldwin Park) received the most with at least $1,011,333.

"Does the influence of huge campaign contributions from the industry raise questions for the voters? Absolutely," said Balber. "Because it's hard to believe that massive dollars in campaign chests don't equate to favorable action for the industry. And the public has every right to ask those questions."

Another bill (AB1844) that aimed to increase transparency with the California Fair Plan by adding members to its governing committee didn't pass this session, it's stalled in committee.

Take a look at more stories and videos by 7 On Your Side.

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