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AB 1554

Disasters: data.

2025-2026 Regular Session Introduced by Lisa Calderon

The bill strengthens CEA transparency and requires risk-transfer and natural-infrastructure strategies to reduce climate-related disaster risks.

Referred to Com. on INS.
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Bill Summary · AB 1554

Overview

AB 1554, introduced in the 2025-2026 California Legislature by Assembly Member Calderon (with co-sponsor Lisa Calderon), focuses on two main areas related to disaster risk and resilience: (1) how the California Earthquake Authority (CEA) reports and discloses information about its finances and operations, and (2) how California pursues risk-transfer and natural-infrastructure strategies to mitigate climate-related disasters, including hazard mitigation projects.

Main purpose and intent

  • Strengthen transparency and oversight of the California Earthquake Authority’s (CEA) financial condition and operations by expanding reporting requirements.
  • Promote the incorporation of hazard mitigation and natural-infrastructure-based risk transfer mechanisms into state policy and insurance practice to reduce climate-related disaster risks.

Key provisions and changes

  1. California Earthquake Authority (Sections 10089.13)

    • The CEA must continue its annual reporting to the Legislature and the Insurance Commissioner, but the bill requires:
      • The annual report to also be provided to the Senate Committee on Insurance and the Assembly Committee on Insurance.
      • The certified examination and verification report (verifying the annual report) to be posted on the CEA’s website.
    • The annual report must include:
      • Financial condition, rates and rating plans, and evaluation of the authority’s effectiveness in increasing availability of residential property and earthquake insurance.
      • Analysis of market share changes between participating and nonparticipating insurers, and any adverse impacts on insurance distribution systems or homeowners’ insurance market.
      • Analysis of recommended program changes to better fulfill the authority’s purpose, with attention to market competitiveness.
      • Detailed information on assets, liabilities, income, expenditures, and the costs of reinsurance and capital-market contracts.
      • A separate summary report on the financial capacity to pay claims, including available capital, liabilities, prior and potential future assessments, reinsurance, debt, surcharges, and private capital commitments.
    • Verification: The Department of Finance will certify an independent audit of the authority’s finances and operations, with the audit report sent to legislative leaders and Insurance Committees and posted on the CEA site. Audit expenses paid from the authority’s funds.
    • Seismic event reporting: After a seismic event, the authority must provide a concise written report within 120 days (and within one year for a major event) detailing claim payments, progress, and the authority’s response, with public access to the report.

  2. Risk transfer and natural infrastructure (Section 12922.5)

    • The Insurance Commissioner must convene a working group to identify and recommend risk-transfer market mechanisms that:
      • Promote investment in natural infrastructure to reduce climate-change risks from catastrophic events.
      • Create incentives for community-level investment in natural infrastructure and hazard mitigation.
      • Provide incentives for private investment in natural lands to reduce exposure and protect public safety, property, utilities, and infrastructure.
    • If recommendations involve insurance or reinsurance mechanisms, they should be profitable for insurers and may target communities or regions rather than individual parcels.
    • The working group’s policy questions should explore international analogies, incentives for wetland restoration and coastal defense, forest management to reduce fire risk, innovative pricing or policies to reduce climate-related losses, and community-risk-based rating systems.
    • A final requirement: by January 1, 2028, hazard-mitigation projects must be incorporated into the group’s recommendations.

Who is affected

  • California Earthquake Authority and its operations, governance, and reporting obligations.
  • California Senate and Assembly Insurance Committees (increased oversight and access to information).
  • Insurance Commissioner, Department of Finance, and participating insurers (through enhanced reporting, audits, and potential policy development around risk transfer and natural infrastructure incentives).
  • Communities and property owners potentially benefiting from hazard-mitigation and enhanced risk-transfer mechanisms.

Procedural and timeline notes

  • The bill adds reporting and posting requirements, with annual updates due by August 1 each year.
  • The audit verification is to be completed and filed within 10 days of receipt and posted publicly.
  • Seismic-event reporting requirements specify deadlines (120 days for standard events; within one year for major events).
  • The hazard-mitigation emphasis requires incorporation of mitigation projects into risk-transfer recommendations by no later than January 1, 2028.
  • Legislative action history shows active consideration and committee referrals in 2026.

Compiled from official sources — confirm details with the bill’s official record.

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