Yesterday, the California Senate Judiciary Committee voted down the “Affordable Insurance and Recovery Act” (SB 982), introduced by Sen. Scott Wiener (D) to authorize the California State Attorney General to sue oil and gas companies over the impacts of climate change.
The bill stalled under bipartisan opposition as lawmakers from both sides of the aisle either abstained or voted “no,” citing immense concerns about affordability and the state’s economic climate.
Yet, despite the pushback in California, and concerns expressed by the insurance industry itself, the Hawaii House of Representatives voted to advance SB 1166, its own iteration of the bill.
Concerns in California
In California, a diverse coalition spanning building trades and labor unions, economic development groups, and litigation reform groups opposed the legislation, citing concerns around basing liability on events “attributable to climate change,” allowing civil action without proof of causation, and exacerbating long-standing issues with affordability in a state where drivers pay routinely pay more than $6 per gallon of gasoline.
The fringe legislation is sponsored by the same activist groups behind the highly-coordinated, nationwide climate litigation campaign, including the Rockefeller-funded Center for Climate Integrity (CCI).
The Rockefeller Family Fund (RFF) “helped develop” Sen. Chris Van Hollen’s federal climate superfund bill in 2021. After it failed to advance out of the Senate, RFF and other activist groups shifted their focus to promoting superfund legislation at the state level. CCI played a major role in pushing climate superfund legislation in New York and Maine, and RFF Executive Director Lee Wasserman personally lobbied in support of those efforts.
Several Democrats on the committee echoed these concerns. Notably, Sen. Angelique Ashby (D) abstained from supporting the legislation due to concerns about affordability:
“Last year, one of my biggest concerns was affordability. That concern is even greater this year than it was last year, particularly on this issue, two of the biggest issues: insurance and access to being able to transport yourself and afford gasoline and earn a living wage in this community”
“I also have concerns, which I have shared with the author about the due process component of this on the retroactive piece, I think there is a question about changing the law retroactively and not allowing an opportunity to be compliant with that in advance. So well, while everything stated is fair and true that folks have known about climate change, when you change the rules, regardless of the topic of the rules in the law, you have to give an opportunity for due process. And I don’t think this bill quite affords that.”
Similarly, Sen. Maria Elena Durazo (D) cited concerns about affordability and impacts on the most economically vulnerable:
“Those renters would be net losers under this proposal. They don’t have homeowners’ insurance policies, but they are consumers of gasoline and other goods that were increasing costs under this proposal. So as we look to hold accountable those who yes, have profited from harming the environment and deepening the climate crisis, we must also closely examine the impact of our policies on the most economically vulnerable. Unfortunately, this proposal does not do that, and for that reason, I will not be supporting today.”
Hawaii Moves Ahead Despite Key Concerns
If a fringe bill like SB 982 can’t succeed in deep-blue California, other states should take notice. Hawaii – one of the only states that rivals California in high energy costs – is considering similar legislation (SB 1166) which would allow property insurers, including entities like the Hawaii Hurricane Relief Fund (HHRF), to file lawsuits against energy companies in an attempt to recover costs after natural disasters.
Ironically, the bill is advancing as Hawaii Governor Josh Green’s Office embraces a plan to recalibrate O’ahu’s energy grid to run on LNG—produced by the very industry that SB 1166 seeks to penalize.
The stakes are high in Hawaii, which already has some of the highest energy costs in the country – with residents facing some of the nation’s highest prices for electricity, gasoline, and everyday goods.
Expanding liability for the companies that supply that energy only risks pushing prices even higher by passing insurance premiums hikes on to consumers.
The insurance industry itself has not held back from voicing these concerns. Ahead of a hearing earlier this month, the National Association of Mutual Insurance Companies wrote:
“SB 1166, HD 2 would establish a concerning legal and public policy precedent of directly connecting an insurers’ or the associations’ legal subrogation decision to a politically charged issue (climate change liability) and the insurers’ or associations filed insurance rates, which are currently reviewed by the state insurance regulator to make sure that the rates are actuarially sound and not excessive, inadequate or unfairly discriminatory. Insurance rate making needs to be strictly connected to analysis of risk of loss exposure associated with standard rating variables that are evaluated by considering claims loss histories and predictive risk models”
“…NAMIC is concerned about the proposed legislation and respectfully requests your NO VOTE on SB 1166, HD2”
Similarly, the American Property Casualty Insurance Association wrote:
“The American Property Casualty Insurance Association (APCIA) has concerns regarding SB 1166 SD2 HD2 and its potential impacts on Hawaii’s already constrained property insurance market. While the challenges the bill seeks to address—rising premiums, higher costs of coverage, insurer withdrawal, reduced coverage options, and the cessation of new business writings—are real and significant, SB 1161 SD2 HD2 is unlikely to resolve these issues and may, in some respects, exacerbate them.”
Yet despite these very real concerns, the Hawaii House of Representatives voted to advance the bill.
Bottom Line
When even California – which pursues some of the most aggressive climate policies in the country – backs off legislation because of affordability concern, it should send a clear signal to other states on the risks of burdening consumers with higher costs. This is especially true in Hawaii, where, due to its isolated geographical position, is heavily reliant on reliable and affordable energy sources.
